[House Report 115-52]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-52
_______________________________________________________________________
AMERICAN HEALTH CARE
ACT OF 2017
__________
R E P O R T
of the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
to accompany
H.R. 1628
together with
MINORITY VIEWS
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
March 20 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_________
U.S. GOVERNMENT PUBLISHING OFFICE
24-617 WASHINGTON : 2017
____________________________________________________________________
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COMMITTEE ON THE BUDGET
DIANE BLACK, Tennessee, Chairman
TODD ROKITA, Indiana, Vice Chairman JOHN A. YARMUTH, Kentucky,
MARIO DIAZ-BALART, Florida Ranking Minority Member
TOM COLE, Oklahoma BARBARA LEE, California
TOM McCLINTOCK, California MICHELLE LUJAN GRISHAM, New Mexico
ROB WOODALL, Georgia SETH MOULTON, Massachusetts
MARK SANFORD, South Carolina HAKEEM S. JEFFRIES, New York
STEVE WOMACK, Arkansas BRIAN HIGGINS, New York
DAVE BRAT, Virginia SUZAN K. DelBENE, Washington
GLENN GROTHMAN, Wisconsin DEBBIE WASSERMAN SCHULTZ, Florida
GARY J. PALMER, Alabama BRENDAN F. BOYLE, Pennsylvania
BRUCE WESTERMAN, Arkansas RO KHANNA, California
JAMES B. RENACCI, Ohio PRAMILA JAYAPAL, Washington,
BILL JOHNSON, Ohio Vice Ranking Minority Member
JASON SMITH, Missouri SALUD CARBAJAL, California
JASON LEWIS, Minnesota SHEILA JACKSON LEE, Texas
JACK BERGMAN, Michigan JANICE D. SCHAKOWSKY, Illinois
JOHN J. FASO, New York
LLOYD SMUCKER, Pennsylvania
MATT GAETZ, Florida
JODEY C. ARRINGTON, Texas
A. DREW FERGUSON IV, Georgia
Professional Staff
Richard E. May, Staff Director
Ellen Balis, Minority Staff Director
C O N T E N T S
Page
Introduction by the Committee on the Budget...................... 1
Title I--Energy and Commerce:
Transmittal Letter (Chairman Walden)......................... 13
Committee print begins and includes:
Committee votes.......................................... 18
CBO estimate............................................. 39
Section-by-Section Analysis.............................. 73
Ramseyer................................................. 78
Minority Views........................................... 323
Legislative Text............................................. 337
Title II--Ways and Means:
Transmittal Letter (Chairman Brady)...................... 363
Subtitle A--Repeal and Replace of Health-Related Tax Policy:
I. Summary and Background................................ 367
II. Explanation of Provisions............................ 370
III. Votes of the Committee.............................. 406
IV. Budget Effects of the Provisions..................... 412
JCT Table............................................ 413
CBO Estimate......................................... 415
V. Other Matters to be Discussed Under the Rules of the
House.................................................. 415
VI. Changes in Existing Law Made by the Budget
Reconciliation Legislative Recommendations, As
Transmitted............................................ 420
VII. Dissenting Views.................................... 421
Legislative Text......................................... 431
Subtitle B--Repeal of Certain Consumer Taxes:
I. Summary and Background................................ 454
II. Explanation of Provisions............................ 455
III. Votes of the Committee.............................. 458
IV. Budget Effects of the Provisions..................... 459
CBO Estimate......................................... 461
V. Other Matters to be Discussed Under the Rules of the
House.................................................. 461
VI. Changes in Existing Law Made by the Budget
Reconciliation Legislative Recommendations, As
Transmitted............................................ 463
VII. Dissenting Views.................................... 464
Legislative Text......................................... 469
Subtitle C--Repeal of Tanning Tax:
I. Summary and Background................................ 472
II. Explanation of Provision............................. 473
III. Votes of the Committee.............................. 474
IV. Budget Effects of the Provisions..................... 475
CBO Estimate......................................... 475
V. Other Matters to be Discussed Under the Rules of the
House.................................................. 476
VI. Changes in Existing Law Made by the Budget
Reconciliation Legislative Recommendations, As
Transmitted............................................ 477
VII. Dissenting Views.................................... 478
Legislative Text......................................... 483
Subtitle D--Remuneration from Certain Insurers:
I. Summary and Background................................ 486
II. Explanation of Provision............................. 487
III. Votes of the Committee.............................. 489
IV. Budget Effects of the Provision...................... 496
CBO Estimate......................................... 497
V. Other Matters to be Discussed Under the Rules of the
House.................................................. 497
VI. Changes in Existing Law Made by the Budget
Reconciliation Legislative Recommendations, As
Transmitted............................................ 498
VII. Dissenting Views.................................... 499
Legislative Text......................................... 511
Subtitle E--Repeal of Net Investment Income Tax:
I. Summary and Background................................ 514
II. Explanation of Provision............................. 515
III. Votes of the Committee.............................. 517
IV. Budget Effects of the Provision...................... 518
CBO Estimate......................................... 519
V. Other Matters to be Discussed Under the Rules of the
House.................................................. 553
VI. Changes in Existing Law Made by the Budget
Reconciliation Legislative Recommendations, As
Transmitted............................................ 555
VII. Dissenting Views.................................... 731
Legislative Text......................................... 735
Amendments Considered by the Committee on Ways and Means..... 737
Committee on the Budget:
Votes of the Committee on the Budget......................... 745
Other House Report Requirements.............................. 759
Views of Committee Members................................... 761
American Health Care Act of 2017 (legislative text).............. 767
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-52
======================================================================
AMERICAN HEALTH CARE ACT OF 2017
_______
March 20, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mrs. Black, from the Committee on the Budget, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1628]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Budget, to whom reconciliation
recommendations were submitted pursuant to title II of S. Con.
Res. 3, the concurrent resolution on the budget for fiscal year
2017, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
INTRODUCTION BY THE
COMMITTEE ON THE BUDGET
----------
What is often called President Obama's ``signature''
achievement is now well known to be a defining failure. The
Affordable Care Act [ACA]\1\ has led to higher insurance
premiums and deductibles; has limited consumers' choices of
doctors and health plans; has deprived millions of the coverage
they had; and has imposed taxes aimed at compelling people to
purchase health coverage they do not want. Insurance markets
are collapsing, and total national health care spending is
projected to more than double during the next three decades.
All these outcomes and more are precisely contrary to what the
law's authors promised.
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\1\The legislation commonly called the Affordable Care Act consists
of the two related measures enacted in March 2010 that constituted the
health care legislation: the ``Patient Protection and Affordable Care
Act'' (Public Law 111-148), and the ``Health Care and Education
Reconciliation Act of 2010'' (Public Law 111-152).
---------------------------------------------------------------------------
For these and numerous other reasons, the ACA, or
Obamacare, must be repealed. Yet a return to the status quo
ante is not acceptable either. Repealing Obamacare merely
begins the process of establishing truly patient-centered
health care in America--and aspects of both are contained in
this legislation, the ``American Health Care Act''. This
measure is just one component of a broader effort to transform
the Nation's troubled health care network. It will be
supplemented by other elements, described below.
The Essential Folly of Obamacare
To fully appreciate the character of this transformation,
it is critical to look deeper than Obamacare's many evident
failures and understand why it failed. Without this
recognition, there can be no real change; policymakers will
simply fall back into the seductive but false beliefs that
spawned Obamacare in the first place.
Health care comprises a vast network of doctors and nurses,
technicians, medical device manufacturers, pharmaceutical
makers, hospitals and in-home services, educational
institutions, financial arrangements, and, above all,
patients--along with numerous others. It is a complex,
sophisticated, and dynamic set of interactions that consumes
more than $3 trillion of the Nation's resources and represents
about one-fifth of the economy.\2\ It is a sector in which the
participants themselves--not experts, academics, or
bureaucrats--are clearly best suited to establishing effective
and efficient means of delivering this uniquely valued service.
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\2\Centers for Medicare and Medicaid Services, National Health
Expenditures 2015 Highlights: https://www.cms.gov/Research-Statistics-
Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/Downloads/highlights.pdf.
---------------------------------------------------------------------------
Nevertheless, for decades, Federal policymakers have
relentlessly sought to systematize health care and impose a
government-controlled model onto the medical sector. The folly
of this approach is easy to see. When the Federal Government
sets the standards of health care, or determines the required
contents of health coverage--and it cannot do one without the
other--this practice necessarily limits the options available
to consumers, suffocates innovation, and drives up costs. Such
an approach must assume that a population of 323 million--
living in a wide range of geographical and climatic settings,
and possessing diverse cultural backgrounds and values--all
require roughly the same set of health care services. States or
regions that want something different must queue up for waivers
from Washington that may or may not be granted; indeed, 18
States have waivers pending with the Federal Government.
Because many people will not voluntarily purchase a product
that fails to meet their needs, exceeds their economic
resources, or violates their moral principles, the government
must coerce them to do so.
The central government approach to health care necessarily
leads to a byzantine system of reimbursements that ultimately
dictates the kinds of treatments patients receive. Because
private insurance companies often follow the politically
determined rates, the result is homogenized services even for
patients in the private health-care sector. In addition, the
government is slow in updating its payment regime to account
for the most recent advances in health care technology or
delivery, which delays the progress of innovation in patient
care. Government price-fixing has become so entrenched that
many cannot imagine letting private plans determine payment
rates through competition.
Obamacare sprang from the faulty premise that health care
delivery and financing could be centrally managed from
Washington. The results were entirely predictable, and today
are all too clear. They prove that a nationalized approach to
health care in America simply cannot work.
For instance, the ACA established a system of four tiers of
insurance coverage--described as bronze, silver, gold, and
platinum--that forces insurers to construct their plans
according to the demands of Washington, not the marketplace.
These tiers mandate the actuarial value of benefits insurers
must cover rather than letting insurers design plans for a
broader variety of patient needs--thus sharply restricting the
available choices.
The resulting limited options are so unsatisfying that
enrollments under Obamacare are about half of what was
projected when the law was enacted, and millions have chosen to
pay its individual ``mandate'' tax penalty rather than buy
coverage they did not want. Approximately 6.5 million taxpayers
paid the penalty for the 2015 plan year. Average payments were
$470, and added up to a total of $3.0 billion. Another 12.7
million individuals applied for an exemption from the tax
penalty.\3\ Thus, 19.2 million individuals have chosen to go
without coverage despite the government's ``mandate.'' This
upends the fatal conceit of Obamacare's redistributionist
financial arrangement: ``The young subsidize the old, singles
subsidize families, men subsidize women, those who go to the
doctor only when sick subsidize those who consume lots of
elective or preventive care.''\4\ The cost-shifting scheme has
not worked; consequently, Obamacare is facing a financial death
spiral.
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\3\Internal Revenue Service Commissioner John A. Koskinen updated
members of Congress regarding 2016 tax filings related to Affordable
Care Act provisions, 9 January 2017: https://www.irs.gov/pub/newsroom/
commissionerletteracafilingseason.pdf.
\4\Holman W. Jenkins Jr., ``Obamacare 2.0,'' The Wall Street
Journal, 8 March 2017.
FIGURE 1
To the extent Obamacare may have expanded health coverage,
it has not enhanced access to affordable health care. Due to
higher premiums and deductibles, many who have obtained ACA
coverage cannot use it because their out-of-pocket medical
expenses are too high. Recent reports showed that 50 percent of
Obamacare customers were cutting back on care to help manage
their health costs. This compares to 33 percent among the
general insured population.\5\ In other words, enrollees cannot
afford their Affordable Care Act coverage. ``[F]or routine
illness or injury, having Obamacare is the equivalent of being
uninsured * * *.''\6\
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\5\GfK, ``To Reduce Health Costs, 50% of ACA Exchange Customers Are
Cutting Back on Care--GfK Study,'' 27 October 2016: http://www.gfk.com/
en-us/insights/press-release/to-reduce-health-costs-50-of-aca-exchange-
customers-are-cutting-back-on-care-gfk-study/.
\6\Jenkins, op. cit.
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The ACA's many broken promises are not mere accidents or
unexpected glitches in an ambitious new government program.
They are the inevitable and predictable results of Obamacare's
attempt to extend the reach of the central government ever
deeper into Americans' health care. It has failed because it
was destined to fail.
Toward Patient-Centered Health Care
The Republican pledge to ``repeal and replace'' the ACA has
served as a shorthand to describe something deeper--a
fundamental transformation of health care policy toward a
better strategy for true reform. The phrase reflects a more
essential and profound change in how Americans should think
about health care. It grows from a different concept more
deeply rooted in the American tradition of freedom and personal
choice, coupled with the cost-saving innovations that creative
markets produce. As Senator Alexander of Tennessee has said:
``[W]e will build better systems providing Americans with more
choices of insurance that costs less. Note I say systems, not
one system * * *. We don't want to replace a failed Obamacare
Federal system with another failed Federal system. So, we will
build better systems providing Americans with more choices of
insurance that costs less. We will do this by moving more
health care decisions out of Washington and into the hands of
States and patients * * *.''\7\
---------------------------------------------------------------------------
\7\Senator A. Lamar Alexander Jr., floor speech in the United
States Senate, 10 January 2017.
FIGURE 2
To put this another way: ``In a nation of over 323 million
people, each with different needs and circumstances, it makes
no sense for one federal agency to dictate the contents of
every American's health insurance plan.''\8\
---------------------------------------------------------------------------
\8\The Speaker's Health Care Reform Task Force, A Better Way: Our
Vision for a Confident America--Health Care, 22 June 2016, p. 12.
---------------------------------------------------------------------------
Four principles guide the formulation of Republicans'
approach to health care:
Lower costs;
Provide more choices;
Put patients in control;
Ensure universal access to health care.
Provisions developed by the authorizing committees
(detailed further in the committee submissions) follow this
guidance. They repeal some of the most paternalistic components
of Obamacare, such as the individual and employer ``mandate''
tax penalties. They expand access and affordability by
providing for portable, monthly tax credits not tied to a job
or a Washington-mandated program. The credit is based on age
and family size, so it evolves with the health care needs of
the individual over time, and phases out as income rises.
Further, the credit will be available for individuals with no
other form of insurance to take with them from job to job, to
take home, to start a business, or to raise a family. Lower
costs, resulting from increased competition and choice, will
provide greater access to care for everyday Americans.
The reforms will make more options available for
individuals and families, who will be free to choose the health
plan that best meets their needs. Protections and access to
care for individuals with pre-existing conditions will
continue. Further, by increasing the amount of money that can
be placed in health savings accounts, coupled with other
reforms, the policies will allow individuals and families to
save and spend their health care dollars the way they want.
These provisions will be implemented in a way that ensures
a stable transition, one that does not disrupt people's current
coverage, or the insurance market.
A key component of this strategy involves the restoration
of federalism in health care--giving States more flexibility to
handle health care arrangements for their distinctive
populations. There is ample evidence that States are capable of
doing so. A prime example is Massachusetts, a leader in health
care market reform for more than a decade. Yet even
Massachusetts, not a conservative State, seeks greater autonomy
in determining factors such as a State-specific actuarial value
calculator and a State-specific risk adjustment system.\9\ The
State also prefers greater administrative control over rules
and regulations to address compliance more directly than the
Federal Government can. ``States have been in the business of
regulating health insurance for decades. They should be
empowered to make the right tradeoffs between consumer
protections and individual choice, not regulators in
Washington.''\10\
---------------------------------------------------------------------------
\9\``Read the letter Governor Baker sent to Congress,'' The Boston
Globe, 12 January 2017: https://www.bostonglobe.com/metro/2017/01/12/
read-letter-governor-baker-sent-congress/h9m7B1HrkewyRjxNiNgJnK/
story.html.
\10\A Better Way op. cit., p. 12.
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Some touted the Massachusetts approach as a model for
national health care reform. It is not. It is a good model for
Massachusetts. Other States have different kinds of populations
and, hence, different approaches to health care; what works for
a family farmer in Iowa might not work for a metropolitan New
Yorker employed by a large financial firm--or vice versa.
The Healthy Indiana Plan provided the State's residents who
did not qualify for Medicaid with access to health benefits
such as physician services, prescription drugs, inpatient and
outpatient hospital care, and disease management, all without
additional funding. In Utah, health insurers are exchanging
data and analytics between coverage and care providers. This
approach enables doctors and hospitals to improve the quality
of care while simultaneously tracking its costs. Physician
groups participating in the program reduced hospital
readmission rates by 28 percent relative to the rates of non-
participating doctors. Completion of key cancer screenings for
women improved by more than 10 percent, and participating
providers reported average member satisfaction scores of 87
percent.\11\
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\11\Utah Business, ``Regence, Utah Physician Groups Report Positive
Results from New Care Management Model,'' Press Release, 20 February
2017: https://www.utahbusiness.com/regence-utah-physicians-group-
report-positive-results-for-care-management-model/.
---------------------------------------------------------------------------
In another example of State initiatives, before the ACA, 34
States had high-risk pools for their vulnerable populations.
Among the most successful was Minnesota's, which enrolled about
30,000 State residents. The program mainly provided
comprehensive major medical coverage for people with pre-
existing conditions.\12\ In neighboring Wisconsin, officials
had to modify their high-risk pool several times, but by 2012
the plan covered a record 21,770 enrollees and offered a
variety of coverage options from low-deductible, high-premium
to high-deductible, low-premium.\13\ Utah and Washington State
also had their own high-risk pools. All these were supplanted
by the costly, Washington-centered control of Obamacare. Under
the ``American Health Care Act'', States will have the
opportunity to assist high-risk individuals or fund innovation
programs to care for their unique patient populations.
---------------------------------------------------------------------------
\12\Courtney Burke and Lynn Blewett, ``All High-Risk Pools Are Not
Equal: Examining The Minnesota Model,'' Health Affairs Blog, 19 March
2010: http://healthaffairs.org/blog/2010/03/19/all-high-risk-pools-are-
not-equal-examining-the-minnesota-model/.
\13\Steven Walters, ``Walters: Wisconsin insurance plan may enter
health-care debate,'' The Janesville Gazette, 16 January 2017: http://
www.gazettextra.com/20170116/walters--wisconsin--insurance--plan--may--
enter--health--care--debate
---------------------------------------------------------------------------
Greater State flexibility also will come through
modernizing Medicaid for the 21st Century. Significant reforms
will ensure the program is available for the populations it was
intended to serve: children, pregnant women, the aged, and the
disabled. A reformed payment structure will give States greater
flexibility and control to meet their varied needs.
A recent account in The Wall Street Journal illustrated how
some of the Nation's governors, not waiting for Washington,
already have begun seeking cost-saving reforms to their
respective Medicaid programs. ``Maine, for example, may limit
most people on Medicaid to five years of benefits. Kentucky
could require many recipients to work. Wisconsin wants to drug-
test enrollees.''\14\ These modifications do not, however,
``provide a window into how an overhaul of Medicaid at the
national level by Congress could reshape the program for low-
income Americans across the country,'' as the article
suggests.\15\ To the contrary, they demonstrate how greater
State flexibility can lead to faster and better-tailored reform
of Medicaid--and of health care generally. Under current law,
these States had to appeal to a domineering Federal bureaucracy
to receive permission, in the form of Medicaid waivers, to
pursue these reforms. The process is lengthy, slowing reform,
and sometimes the waivers are never granted. The Federal
Government has denied State requests to waive certain Medicaid
benefits; has denied most attempts to impose cost-sharing in
amounts greater than those allowed under Federal law; and never
approved Pennsylvania's attempt to include a work requirement
for all able-bodied adults, 21 to 64 years old, as a condition
of eligibility.\16\
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\14\``States Push to Revise Medicaid Programs,'' The Wall Street
Journal, 24 February 2017.
\15\Ibid.
\16\Centers for Medicare and Medicaid Services, letter from
Administrator Marilyn Tavenner to Pennsylvania Department of Public
Welfare Secretary Mackereth regarding Healthy Pennsylvania Section 1115
demonstration, 28 April 2014: https://www.medicaid.gov/Medicaid-CHIP-
Program-Information/By-Topics/Waivers/1115/downloads/pa/Healthy-
Pennsylvania-Private-Coverage-Option-Demonstration/pa-healthy-ca.pdf.
---------------------------------------------------------------------------
That is fundamentally what the Republican approach to
health care aims to overturn. It rejects the tired and
discredited notion that Washington knows best, that health care
delivery and financing can be centrally planned and
systematized.
All of this, however, is just the beginning of what might
be possible by breaking out of the government-centered model
for health care. Talk of medical innovation often provokes
thoughts of new technologies or pharmaceutical products. Yet
innovation can occur in health care delivery as well, and many
concepts--such as skilled nursing facilities and outpatient
surgery--started small, in the private sector, and eventually
became mainstream.
The path toward true health care reform begins with this
legislation. The ``American Health Care Act'' sheds the notion
that health care can or should be managed by regulation and
mandate, by academics and Washington bureacrats. It plants the
seed for a new vision of health care, one rooted where it
should be--in the decisions and choices of patients and their
doctors. Patient-centered health care is the true reform for
the 21st Century.
Advancing Patient-Centered Care on Three Fronts
The provisions of this legislation are being pursued
through the process of budget ``reconciliation.'' It is a
powerful instrument for policy reform, provided for under
Section 310 of the Congressional Budget and Impoundment Control
Act of 1974 [Budget Act]. A principal advantage of
reconciliation is that it cannot be filibustered in the Senate.
On the other hand, a reconciliation bill in the Senate is
limited to budget-related matters; its provisions must affect
spending or revenue. Consequently, many of the onerous mandates
and regulations of the Affordable Care Act will have to be
addressed through subsequent legislation or administrative
action. The current measure represents one of three fronts for
advancing patient-centered health care reform.
A second front will be administrative action. The Obamacare
legislation contains 1,442 instances in which it grants the
Department of Health and Human Services [HHS] broad discretion
in determining Federal health care policy. Apart from
subjecting individuals' medical care to the dictates of
government bureaucrats, this constitutes a dangerous expansion
of the administrative state.
President Trump has already started rolling back regulation
with his Executive Order 13765, which includes the following
provisions:
It allows the Secretary of HHS, and the heads of
all other executive departments and agencies ``to waive, defer,
grant exemptions from, or delay the implementation'' of
provisions or requirements of Obamacare that would fiscally
burden any State or impose a cost, fee, tax, penalty, or
regulatory burden on individuals, families, health care
providers, health insurers, patients, recipients of health care
services, purchasers of health insurance, or makers of medical
devices, products, or medications.
It allows the HHS Secretary and other agency
heads to provide greater flexibility to States and cooperate
with them in implementing health care programs.
It authorizes agency heads to promote an open
market in interstate commerce for offering health care services
or health insurance, ``with the goal of achieving and
preserving maximum options for patients and consumers.''
Another element of this second front will be the HHS
Secretary's exercise of his own authority to modify or rescind
previous administrative provisions under the Affordable Care
Act. On 15 February 2017, Secretary Price took the first step
by issuing new proposed regulations to stabilize individual and
small group markets damaged by Obamacare. Specifically, these
regulations reduce the number of special enrollment periods;
require 100-percent enrollment verification with documentation
for special enrollment periods; and shorten the open enrollment
period deadline from 31 January to 15 December, encouraging
full-year coverage.
The third front will be additional legislative provisions
that cannot be included in reconciliation. These might include
selling insurance across State lines, or implementing the tort
reform provisions of H.R. 1215, the ``Protecting Access to Care
Act of 2017''. Other options could include allowing small
businesses to pool their employees together to purchase
association health plans, and eliminating the Independent
Payment Advisory Board, a group of unelected bureaucrats
authorized under the ACA to recommend cuts in Medicare provider
payments if the program's spending exceeds certain targets.
Setting the Stage for Entitlement Reform
Another benefit of this legislation is that it can start
the long-needed effort toward reforming the government's
unsustainable entitlement programs. Federal entitlements, many
of them launched or expanded in President Johnson's Great
Society, are failing many of the people they were intended to
serve. Income assistance programs often trap their
beneficiaries in a lifetime of dependency. Medical programs
such as Medicaid subject enrollees to second-rate care--if they
can get care at all. Programs such as the ACA actually
discourage work and self-sufficiency.
These are the recognizable moral failings of these
programs. Equally immoral is how the uncontrolled costs of
these programs are loading future generations with debt.
The latest projections show entitlements will constitute
the only growth in spending as a share of the economy over the
next 10 years and beyond. By 2028, entitlement spending plus
net interest is expected to consume all Federal revenue,
meaning all other government activities--such as national
defense, education, infrastructure, and research, and myriad
others--will have to be financed on borrowed money. Ten years
later, by 2038, the situation will worsen, as a mere handful of
programs--Social Security and health care entitlement
spending--plus net interest are expected to consume all Federal
revenue; at that point, all discretionary spending and all
other direct spending will be debt-financed. These trends
result not from temporary surges in spending or economic
downturns, but from permanent government spending programs.
This is an entrenched, structural excess of spending over
revenues.
This spending is driving the government's mounting deficits
and debt. The most recent long-term estimates from the
Congressional Budget Office [CBO] project Federal debt held by
the public--which stands at roughly 75 percent of GDP today--
will surge to 110 percent of GDP in the next 20 years, and will
exceed 141 percent of GDP by 2046.\17\ That figure is well
beyond the 60-percent ratio adopted in the European Union's
Maastricht Treaty, the maximum level most economists consider
sustainable.
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\17\Congressional Budget Office, The 2016 Long-Term Budget Outlook,
July 2016.
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CBO notes it is impossible to predict how long the Nation
could sustain such growth in Federal debt, but at some point
investors would begin to doubt the government's willingness or
ability to pay its debt obligations. This would require the
government to pay much higher interest costs to borrow money,
resulting in significant negative consequences for the economy
and the Federal budget. This growing and unsustainable debt
would restrict policymakers' ability to use tax and spending
policies to respond to unexpected challenges, such as economic
downturns, financial crises, or national security emergencies,
and would pose substantial risks to the Nation.
Clearly, entitlement reform is indispensable for taking
control of the Federal Government's fiscal condition. It begins
with the ``American Health Care Act''.
Cost Estimate of the Legislation
The three-front strategy for health care reform has
significant implications with regard to the cost estimate of
this legislation. The analysis by CBO and the Joint Committee
on Taxation [JCT], released on 13 March 2017, reflects only the
provisions of this measure; it does not account for further
planned actions that cannot be included in a reconciliation
bill. For instance, it cannot show how deregulatory initiatives
by the Executive Branch would allow insurers to develop a
greater variety of coverage options, some at lower costs, and
compete for a broader range of customers. Nor can it evaluate
the effects of interstate purchasing--should such a policy be
enacted--which might also enhance competition and lead to more
choices of policies. This is because the two agencies can only
estimate the legislation at hand.
With those considerations in mind, the CBO/JCT estimate of
the ``American Health Care Act'' offers important projections
of the potential effects of the legislation.
Reduced Spending and Lower Deficits. The bill as reported
by the Budget Committee would reduce projected spending by $1.2
trillion over the period of 2017 through 2026, mainly due to
reforms to the Medicaid Program and the elimination of the
ACA's insurance subsidies for non-group coverage. The measure
also would return $883 billion to taxpayers by eliminating some
of Obamacare's burdensome tax hikes. The net effect is a
reduction in projected deficits of $336.6 billion.\18\
---------------------------------------------------------------------------
\18\Congressional Budget Office Cost Estimate for the ``American
Health Care Act'', 13 March 2017: https: / / www.cbo.gov / sites /
default / files / 115th-congress-2017-2018 / costestimate /
americanhealthcareact_0.pdf.
Stability of the Insurance Market. Confirming Republican
expectations, the analysis projects stability in the nogroup
health insurance market. ``[K]ey factors bringing about market
stability include subsidies to purchase insurance, which would
maintain sufficient demand for insurance by people with low
health care expenditures, and grants to states from the Patient
and State Stability Fund, which would reduce the costs to
insurers of people with high health care expenditures.''
Although the new tax credits would be structured differently
from current subsidies, the analysis notes, the other changes
would ``lower average premiums enough to attract a sufficient
number of relatively healthy people to stabilize the
market.''\19\
---------------------------------------------------------------------------
\19\Ibid.
FIGURE 3
Lower Insurance Premiums. The estimate projects a near-term
(through 2019) bump during transition, but by 2026 average
health insurance premiums would be about 10 percent less than
under current law. This is partly because premium rates would
be determined more by actual risk and market effects rather
than by government dictate. The Patient and State Stability
Fund would help as well. CBO and JCT also expect a younger mix
of enrollees under the legislation.\20\ In this area, though,
the estimate is unable to account for other potential actions
that cannot be included here--such as deregulation and other
potential changes in law outside the reconciliation process--
which would likely contribute to even lower premiums.
---------------------------------------------------------------------------
\20\Ibid.
Effects on Insurance Coverage. This is where context is
especially important. CBO and JCT estimate a significant
decline in insurance coverage resulting from the legislation,
relative to current law.\21\ The agencies, however, have tended
to overestimate the extent to which the individual ``mandate''
tax encourages a significant boost in insurance purchases. As
noted earlier, nearly 20 million people have chosen to remain
without coverage by either paying the tax or seeking an
exemption from it. Further, CBO counts only ``comprehensive
major medical policies,'' while excluding health savings
accounts and plans bought with portable tax credits that give
patients choices as opposed to Washington-defined coverage. In
addition, the limited breadth of the cost estimate--analyzing
in isolation only one of three fronts in the overall health
care strategy--limits a full understanding of the health care
plan. It cannot project how many more people would buy coverage
if there were a greater variety of affordable options as a
result of forthcoming legislative or administrative actions.
Hence the full effects on insurance coverage cannot be
evaluated until the other components are in place.
---------------------------------------------------------------------------
\21\Ibid.
No Macroeconomic Feedback Analysis. House rules require a
macroeconomic feedback analysis of major legislation to the
extent practicable.\22\ For the ``American Health Care Act'',
such an evaluation would reflect how the measure's tax
reductions and shrinking deficits might boost economic
performance, thereby potentially yielding tax revenues higher
than estimated. CBO said, however, that ``because of the very
short time available to prepare this cost estimate, quantifying
and incorporating these macroeconomic effects have not been
practicable.''\23\
---------------------------------------------------------------------------
\22\Clause 8 of Rule XIII of H.Res. 5, the ``Rules of the House of
Representatives'' for the 115th Congress.
\23\Congressional Budget Office Cost Estimate for the ``American
Health Care Act'', 13 March 2017.
---------------------------------------------------------------------------
The Budget Committee's Role in Obamacare Legislation
The major steps in the reconciliation process, as provided
for under Section 310 of the Budget Act, and how they apply in
this instance, are the following:
The Budget Resolution. Reconciliation can be triggered only
by the adoption of a budget resolution. Therefore, the fiscal
year 2017 budget resolution, passed in January, carried
reconciliation instructions for the Committees on Energy and
Commerce and Ways and Means, which have jurisdiction over major
health care and tax policies. The directives were written to
give the committees maximum flexibility in writing their
legislative provisions.
Authorizing Committees. The two authorizing committees
marked up legislative provisions pursuant to their instructions
and transmitted them to the Committee on the Budget. Detailed
descriptions of the provisions are presented in the committees'
submissions.
The Budget Committee. Having received the submissions, the
Committee on the Budget, as provided for under Section 310 of
the Budget Act, has bound the provisions together, without
substantive change, into a single measure--a reconciliation
bill--and conducted a markup. The Committee then reported the
measure to the House for floor consideration.
Following House passage, the bill will be sent to the
Senate, which will consider the measure under that Chamber's
reconciliation process.
House of Representatives,
Committee on Energy and Commerce,
Washington, DC, March 13, 2017.
Hon. Diane Black,
Chairman, Committee on the Budget,
House of Representatives, Washington, DC.
Dear Chairman Black: Pursuant to section 2002 of S. Con.
Res. 3, the Fiscal Year 2017 Concurrent Resolution on the
Budget, as well as section 310 of the Congressional Budget and
Impoundment Control Act of 1974, I hereby transmit these
recommendations, which have been approved by vote of the
Committee on Energy and Commerce, and the appropriate
accompanying material including additional, supplemental or
dissenting views, to the House Committee on the Budget.
Sincerely,
Greg Walden,
Chairman.
Committee Print: Budget Reconciliation Legislative Recommendations
Relating to Repeal and Replace of the Patient Protection and Affordable
Care Act; Title I--Energy and Commerce
CONTENTS
Page
Purpose and Summary.............................................. 16
Background and Need for Legislation.............................. 16
Committee Action................................................. 18
Committee Votes.................................................. 18
Oversight Findings and Recommendations........................... 38
New Budget Authority, Entitlement Authority, and Tax Expenditures 38
Congressional Budget Office Estimate............................. 38
Federal Mandates Statement....................................... 73
Statement of General Performance Goals and Objectives............ 73
Duplication of Federal Programs.................................. 73
Committee Cost Estimate.......................................... 73
Earmark, Limited Tax Benefits, and Limited Tariff Benefits....... 73
Disclosure of Directed Rule Makings.............................. 73
Advisory Committee Statement..................................... 73
Applicability to Legislative Branch.............................. 73
Section-by-Section Analysis of the Legislation................... 73
Changes in Existing Law Made by the Bill, as Reported............ 79
Minority, Additional, or Dissenting Views........................ 324
Purpose and Summary
The Patient Protection and Affordable Care Act (PPACA) has
failed to live up to the promise of lowering health care costs
for individuals and families. The purpose of the Committee on
Energy and Commerce's budget reconciliation legislative
recommendations is to advance the repeal and replacement of
this failed law.
Background and Need for Legislation
The PPACA has led to a deterioration of the health
insurance market where most individuals and families have
limited choices. Patients have seen premium increases paired
with high cost sharing. Nearly one-third of counties have only
one insurer offering an exchange plan. The average increase in
premiums this year on the healthcare.gov exchange is 25 percent
according to data from the Department of Health and Human
Services. As a result, 19.2 million taxpayers have chosen to
pay the individual mandate penalty or claim an exemption from
the mandate.
The PPACA has also dramatically overburdened the Medicaid
program. Medicaid is a critical safety net for some of our
nation's most vulnerable patients, as the program provides
health care for children, pregnant mothers, elderly
individuals, blind individuals, and individuals with
disabilities. Created in 1965 to finance health care coverage
to serve low-income Americans, Medicaid is now the world's
largest health insurance program. Medicaid currently covers
approximately 72 million Americans--more than Medicare--and up
to 98 million may be covered at any one point in a given
year.\1\
---------------------------------------------------------------------------
\1\See the Congressional Budget Office's Medicaid baseline,
available online here: https://www.cbo.gov/sites/default/files/
recurringdata/51301-2016-03-medicaid.pdf.
---------------------------------------------------------------------------
Medicaid is jointly funded by Federal and State
governments. According to the Congressional Budget Office,
Federal Medicaid outlays are expected to increase dramatically
over the coming decade, from $368 billion in 2016 to $650
billion in 2027.\2\ According to National Health Expenditure
projections, total Medicaid outlays will climb to approximately
$1 trillion each year by the end of a decade.\3\
---------------------------------------------------------------------------
\2\See the Congressional Budget Office's Medicaid baseline,
available online here: https://www.cbo.gov/sites/default/files/
recurringdata/51301-2016-03-medicaid.pdf.
\3\See the Centers for Medicare & Medicaid Service National Health
Expenditures Data, available online here: https://www.cms.gov/Research-
Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/NationalHealthAccountsProjected.html.
---------------------------------------------------------------------------
Today, Medicaid is one of the fastest growing spending
items for States, and accounted for more than 28 percent of
State spending in fiscal year 2015, according to the National
Association of State Budget Officers.\4\ This portion of State
budgets devoted to Medicaid has grown over time, and has
accelerated in recent years. Notably, irrespective of whether
or not a State chose to expand Medicaid under PPACA, all States
are experiencing greater Medicaid program outlays due to the
effects of the individual mandate and penalties. A recent
estimate by the Congressional Budget Office (CBO) attributed
$281 billion in Federal Medicaid outlays over a decade to the
effect of the individual mandate tax penalty in PPACA, because
the mandate has effectively forced many individuals who were
previously eligible (but not previously enrolled) to enroll in
Medicaid.\5\
---------------------------------------------------------------------------
\4\See the National Association of State Budget Officers, State
Expenditure Report, available online here: https://
higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-
0fca152d64c2/UploadedImages/SER%20Archive/
State%20Expenditure%20Report%20(Fiscal%202014-2016)%20-%20S.pdf.
\5\See the Congressional Budget Office's Budget Option, Repeal the
Individual Health Insurance Mandate, available online here: https://
www.cbo.gov/budget-options/2016/52232.
---------------------------------------------------------------------------
As these numbers suggest, the Medicaid safety net is under
strain and unfortunately is not serving patients as well as it
should. Many State Medicaid programs suffer from significant
waste, fraud, and abuse, due to failures in State and Federal
oversight. In fact, the Government Accountability Office (GAO)
has designated Medicaid as a high-risk program since 2003 due
to their concerns about conducting proper oversight of the
program.\6\ Medicaid's incentives often lead States to offer
more benefits but cut payments to health care providers, which
means low-income patients have less and less access to quality
care. The result is nationally, only a portion of primary
health care providers accept Medicaid beneficiaries--often with
even fewer specialists accepting such patients.\7\ On its
current path, the Medicaid program is on unsustainable
financial footing. This is not merely a fiscal issue, but an
issue that jeopardizes the ability of the Federal and State
government to take care of the most vulnerable who actually
rely on the program.
---------------------------------------------------------------------------
\6\See the Government Accountability Office's, 2017 High Risk
Report, available online here: http://www.gao.gov/assets/690/
682765.pdf.
\7\See Avik Roy's Testimony before the Energy & Commerce Health
Subcommittee, available online here: http://docs.house.gov/meetings/IF/
IF14/20170201/105498/HHRG-115-IF14-Wstate-RoyA-20170201.pdf pages 4 and
5.
---------------------------------------------------------------------------
Unfortunately, PPACA has made this dynamic of not being
able to care for the most vulnerable worse. Under PPACA, States
may expand Medicaid eligibility to people under the age of 65
with income up to 138 percent of the Federal poverty level
(FPL). The law provided enhanced Federal funding for coverage
of this new expansion population, in the form of a higher
Federal Medical Assistance Percentage (FMAP). Specifically, the
Federal government covered 100 percent of the costs for the
expansion population through 2016--a 100 percent FMAP. In 2017,
the FMAP for this population is 95 percent, and the FMAP
gradually diminishes to 90 percent by 2020. Thus, under PPACA,
the Federal government covers a higher percentage of the cost
of care for able-bodied adults above poverty compared to the
disabled, elderly, or children below poverty. In some cases,
this may create an incentive for States that face budgetary
pressures to use policy tools to reduce benefits, services, or
eligibility for the traditional, vulnerable Medicaid
populations served by their programs. According to the most
recent estimate from the Congressional Budget Office, the
provisions of PPACA will cost Federal taxpayers nearly $1
trillion over the next decade.
For Medicaid to be strengthened and sustained as a vital
safety net to provide needed care for our nation's most
vulnerable patients for coming decades, Congress and the
Centers for Medicare and Medicaid Services (CMS) will be forced
to make changes to the program. As GAO has noted, ``the effects
of unprecedented changes recently made to the Medicaid program
will continue to emerge in the coming years and are likely to
exacerbate the challenges and shortcomings that already exist
in federal oversight and management of the program.''\8\
---------------------------------------------------------------------------
\8\See the Government Accountability Office's, 2017 High Risk
Report, available online here: http://www.gao.gov/assets/690/
682765.pdf.
---------------------------------------------------------------------------
Committee Action
The Committee on Energy and Commerce has convened 31
oversight hearings on the Affordable Care Act through the
Subcommittees on Health, the Subcommittee on Oversight and
Investigations, and the Full Committee. One-hundred and seven
witnesses testified before the Committee, included 38
Administration officials. These hearings focused on a variety
of provisions within the law and their implementation. Topics
discussed at these hearings include the Cost-Sharing reduction
program, the Basic Health Program, the mismanagement of
healthcare.gov and information technology systems by HHS and
its component agencies, state-based exchanges, the Consumer
Operated and Oriented Plan, premium increases resulting from
provisions of the law, and the ACA Medicaid expansion.
On March 8, 2017, the full Committee on Energy and Commerce
met in open markup session and ordered the Committee Print, as
amended, favorably reported to the House by a record vote of 31
yeas and 23 nays.
Committee Votes
Clause 3(b) of rule XIII requires the Committee to list the
record votes on the motion to report legislation and amendments
thereto. The following reflects the record votes taken during
the Committee consideration:
Oversight Findings and Recommendations
Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII, has not held hearings on the Committee Print: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of the Patient Protection and Affordable Care Act;
Title I--Energy and Commerce.
New Budget Authority, Entitlement Authority, and Tax Expenditures
Pursuant to clause 3(c)(2) of rule XIII, the Committee
finds that the Committee Print would result in no new or
increased budget authority, entitlement authority, or tax
expenditures or revenues.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII, the following is
the cost estimate provided by the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974:
CONGRESSIONAL BUDGET OFFICE
COST ESTIMATE
----------
March 13, 2017.
American Health Care Act
Budget Reconciliation Recommendations of the House Committees on Ways
and Means and Energy and Commerce, March 9, 2017
SUMMARY
The Concurrent Resolution on the Budget for Fiscal Year
2017 directed the House Committees on Ways and Means and Energy
and Commerce to develop legislation to reduce the deficit. The
Congressional Budget Office and the staff of the Joint
Committee on Taxation (JCT) have produced an estimate of the
budgetary effects of the American Health Care Act, which
combines the pieces of legislation approved by the two
committees pursuant to that resolution. In consultation with
the budget committees, CBO used its March 2016 baseline with
adjustments for subsequently enacted legislation, which
underlies the resolution, as the benchmark to measure the cost
of the legislation.
Effects on the Federal Budget
CBO and JCT estimate that enacting the legislation would
reduce federal deficits by $337 billion over the 2017-2026
period. That total consists of $323 billion in on-budget
savings and $13 billion in off-budget savings. Outlays would be
reduced by $1.2 trillion over the period, and revenues would be
reduced by $0.9 trillion.
The largest savings would come from reductions in outlays
for Medicaid and from the elimination of the Affordable Care
Act's (ACA's) subsidies for nongroup health insurance. The
largest costs would come from repealing many of the changes the
ACA made to the Internal Revenue Code--including an increase in
the Hospital Insurance payroll tax rate for high-income
taxpayers, a surtax on those taxpayers' net investment income,
and annual fees imposed on health insurers--and from the
establishment of a new tax credit for health insurance.
Pay-as-you-go procedures apply because enacting the
legislation would affect direct spending and revenues. CBO and
JCT estimate that enacting the legislation would not increase
net direct spending or on-budget deficits by more than $5
billion in any of the four consecutive 10-year periods
beginning in 2027.
Effects on Health Insurance Coverage
To estimate the budgetary effects, CBO and JCT projected
how the legislation would change the number of people who
obtain federally subsidized health insurance through Medicaid,
the nongroup market, and the employment-based market, as well
as many other factors.
CBO and JCT estimate that, in 2018, 14 million more people
would be uninsured under the legislation than under current
law. Most of that increase would stem from repealing the
penalties associated with the individual mandate. Some of those
people would choose not to have insurance because they chose to
be covered by insurance under current law only to avoid paying
the penalties, and some people would forgo insurance in
response to higher premiums.
Later, following additional changes to subsidies for
insurance purchased in the nongroup market and to the Medicaid
program, the increase in the number of uninsured people
relative to the number under current law would rise to 21
million in 2020 and then to 24 million in 2026. The reductions
in insurance coverage between 2018 and 2026 would stem in large
part from changes in Medicaid enrollment--because some states
would discontinue their expansion of eligibility, some states
that would have expanded eligibility in the future would choose
not to do so, and per-enrollee spending in the program would be
capped. In 2026, an estimated 52 million people would be
uninsured, compared with 28 million who would lack insurance
that year under current law.
Stability of the Health Insurance Market
Decisions about offering and purchasing health insurance
depend on the stability of the health insurance market--that
is, on having insurers participating in most areas of the
country and on the likelihood of premiums' not rising in an
unsustainable spiral. The market for insurance purchased
individually (that is, nongroup coverage) would be unstable,
for example, if the people who wanted to buy coverage at any
offered price would have average health care expenditures so
high that offering the insurance would be unprofitable. In CBO
and JCT's assessment, however, the nongroup market would
probably be stable in most areas under either current law or
the legislation.
Under current law, most subsidized enrollees purchasing
health insurance coverage in the nongroup market are largely
insulated from increases in premiums because their out-of-
pocket payments for premiums are based on a percentage of their
income; the government pays the difference. The subsidies to
purchase coverage combined with the penalties paid by uninsured
people stemming from the individual mandate are anticipated to
cause sufficient demand for insurance by people with low health
care expenditures for the market to be stable.
Under the legislation, in the agencies' view, key factors
bringing about market stability include subsidies to purchase
insurance, which would maintain sufficient demand for insurance
by people with low health care expenditures, and grants to
states from the Patient and State Stability Fund, which would
reduce the costs to insurers of people with high health care
expenditures. Even though the new tax credits would be
structured differently from the current subsidies and would
generally be less generous for those receiving subsidies under
current law, the other changes would, in the agencies' view,
lower average premiums enough to attract a sufficient number of
relatively healthy people to stabilize the market.
Effects on Premiums
The legislation would tend to increase average premiums in
the nongroup market prior to 2020 and lower average premiums
thereafter, relative to projections under current law. In 2018
and 2019, according to CBO and JCT's estimates, average
premiums for single policyholders in the nongroup market would
be 15 percent to 20 percent higher than under current law,
mainly because the individual mandate penalties would be
eliminated, inducing fewer comparatively healthy people to sign
up.
Starting in 2020, the increase in average premiums from
repealing the individual mandate penalties would be more than
offset by the combination of several factors that would
decrease those premiums: grants to states from the Patient and
State Stability Fund (which CBO and JCT expect to largely be
used by states to limit the costs to insurers of enrollees with
very high claims); the elimination of the requirement for
insurers to offer plans covering certain percentages of the
cost of covered benefits; and a younger mix of enrollees. By
2026, average premiums for single policyholders in the nongroup
market under the legislation would be roughly 10 percent lower
than under current law, CBO and JCT estimate.
Although average premiums would increase prior to 2020 and
decrease starting in 2020, CBO and JCT estimate that changes in
premiums relative to those under current law would differ
significantly for people of different ages because of a change
in age-rating rules. Under the legislation, insurers would be
allowed to generally charge five times more for older enrollees
than younger ones rather than three times more as under current
law, substantially reducing premiums for young adults and
substantially raising premiums for older people.
Uncertainty Surrounding the Estimates
The ways in which federal agencies, states, insurers,
employers, individuals, doctors, hospitals, and other affected
parties would respond to the changes made by the legislation
are all difficult to predict, so the estimates in this report
are uncertain. But CBO and JCT have endeavored to develop
estimates that are in the middle of the distribution of
potential outcomes.
Macroeconomic Effects
Because of the magnitude of its budgetary effects, this
legislation is ``major legislation,'' as defined in the rules
of the House of Representatives.\1\ Hence, it triggers the
requirement that the cost estimate, to the greatest extent
practicable, include the budgetary impact of its macroeconomic
effects. However, because of the very short time available to
prepare this cost estimate, quantifying and incorporating those
macroeconomic effects have not been practicable.
---------------------------------------------------------------------------
\1\Cl. 8 of Rule XIII of the Rules of the House of Representatives,
H.R. Res. 5, 115th Congress (2017).
---------------------------------------------------------------------------
Intergovernmental and Private-Sector Mandates
JCT and CBO have reviewed the provisions of the legislation
and determined that they would impose no intergovernmental
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
JCT and CBO have determined that the legislation would
impose private-sector mandates as defined in UMRA. On the basis
of information from JCT, CBO estimates the aggregate cost of
the mandates would exceed the annual threshold established in
UMRA for private-sector mandates ($156 million in 2017,
adjusted annually for inflation).
MAJOR PROVISIONS OF THE LEGISLATION
Budgetary effects related to health insurance coverage
would stem primarily from the following provisions:
LEliminating penalties associated with the
requirements that most people obtain health insurance coverage
and that large employers offer their employees coverage that
meets specified standards.
LReducing the federal matching rate for adults
made eligible for Medicaid by the ACA to equal the rate for
other enrollees in the state, beginning in 2020.
LCapping the growth in per-enrollee payments for
most Medicaid beneficiaries to no more than the medical care
component of the consumer price index starting in 2020.
LRepealing current-law subsidies for health
insurance coverage obtained through the nongroup market--which
include refundable tax credits for premium assistance and
subsidies to reduce cost-sharing payments--as well as the Basic
Health Program, beginning in 2020.
LCreating a new refundable tax credit for health
insurance coverage purchased through the nongroup market
beginning in 2020.
LAppropriating funding for grants to states
through the Patient and State Stability Fund beginning in 2018.
LRelaxing the current-law requirement that
prevents insurers from charging older people premiums that are
more than three times larger than the premiums charged to
younger people in the nongroup and small-group markets. Unless
a state sets a different limit, the legislation would allow
insurers to charge older people five times more than younger
ones, beginning in 2018.
LRemoving the requirement, beginning in 2020, that
insurers who offer plans in the nongroup and small-group
markets generally must offer plans that cover at least 60
percent of the cost of covered benefits.
LRequiring insurers to apply a 30 percent
surcharge on premiums for people who enroll in insurance in the
nongroup or small-group markets if they have been uninsured for
more than 63 days within the past year.
Other parts of the legislation would repeal or delay many
of the changes the ACA made to the Internal Revenue Code that
were not directly related to the law's insurance coverage
provisions. Those with the largest budgetary effects include:
LRepealing the surtax on certain high-income
taxpayers' net investment income;
LRepealing the increase in the Hospital Insurance
payroll tax rate for certain high-income taxpayers;
LRepealing the annual fee on health insurance
providers; and
LDelaying when the excise tax imposed on some
health insurance plans with high premiums would go into effect.
In addition, the legislation would make several changes to
other health-related programs that would have smaller budgetary
effects.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
CBO and JCT estimate that, on net, enacting the legislation
would decrease federal deficits by $337 billion over the 2017-
2026 period (see Table 1). That change would result from a $1.2
trillion decrease in direct spending, partially offset by an
$883 billion reduction in revenues.
BASIS OF ESTIMATE
For this estimate, CBO and JCT assume that the legislation
will be enacted by May 2017. Costs and savings are measured
relative to CBO's March 2016 baseline projections, with
adjustments for legislation that was enacted after that
baseline was produced.
The largest budgetary effects would stem from provisions in
the recommendations from both committees that would affect
insurance coverage. Those provisions, taken together, would
reduce projected deficits by $935 billion over the 2017-2026
period. Other provisions would increase deficits by $599
billion, mostly by reducing tax revenues. All told, deficits
would be reduced by $337 billion over that period, CBO and JCT
estimate. (See Table 2 for the estimated budgetary effects of
each major provision.)
Budgetary Effects of Health Insurance Coverage Provisions
The $935 billion in estimated deficit reduction over the
2017-2026 period that would stem from the insurance coverage
provisions includes the following amounts (shown in Table 3):
LA reduction of $880 billion in federal outlays
for Medicaid;
LSavings of $673 billion, mostly stemming from the
elimination of the ACA's subsidies for nongroup health
insurance--which include refundable tax credits for premium
assistance and subsidies to reduce cost-sharing payments--in
2020;
LSavings of $70 billion mostly associated with
shifts in the mix of taxable and nontaxable compensation
resulting from net decreases in the number of people estimated
to enroll in employment-based health insurance coverage; and
LSavings of $6 billion from the repeal of a tax
credit for certain small employers that provide health
insurance to their employees.
Those decreases would be partially offset by:
LA cost of $361 billion for the new tax credit for
health insurance established by the legislation in 2020;
LA reduction in revenues of $210 billion from
eliminating the penalties paid by uninsured people and
employers;
LAn increase in spending of $80 billion for the
new Patient and State Stability Fund grant program; and
LA net increase in spending of $43 billion under
the Medicare program stemming from changes in payments to
hospitals that serve a disproportionate share of low-income
patients.
Methodology. The legislation would change the pricing of
nongroup insurance and the eligibility for and the amount of
subsidies to purchase that insurance. It would also lead to
changes in Medicaid eligibility and per capita spending. The
legislation's effects on health insurance coverage would depend
in part on how responsive individuals are to changes in the
prices, after subsidies, they would have to pay for nongroup
insurance; on changes in their eligibility for public coverage;
and on their underlying desire for such insurance. Effects on
coverage would also stem from how responsive firms are to
changes in those post subsidy prices and in the attractiveness
of other aspects of nongroup alternatives to employment-based
insurance.
To capture those complex interactions, CBO uses a
microsimulation model to estimate how rates of coverage and
sources of insurance would change as a result of alterations in
eligibility and subsidies for--and thus the net cost of--
various insurance options. Based on survey data, that model
incorporates a wide range of information about a representative
sample of individuals and families, including their income,
employment, health status, and health insurance coverage. The
model also incorporates information from the research
literature about the responsiveness of individuals and
employers to price changes and the responsiveness of
individuals to changes in eligibility for public coverage. CBO
regularly updates the model so that it incorporates information
from the most recent administrative data on insurance coverage
and premiums. CBO and JCT use that model--in combination with
models of tax revenues, models of Medicaid spending and actions
by states, projections of trends in early retirees' health
insurance coverage, and other available information--to inform
their estimates of the numbers of people with certain types of
coverage and the associated federal budgetary costs.\2\
---------------------------------------------------------------------------
\2\For additional information, see Congressional Budget Office,
``Methods for Analyzing Health Insurance Coverage'' (accessed March 13,
2017), www.cbo.gov/topics/health-care/methods-analyzing-health-
insurance-coverage.
Effects of Repealing Mandate Penalties. Eliminating the
penalties associated with two requirements, while keeping the
requirements themselves in place, would affect insurance
coverage in various ways. Those two requirements are that most
people obtain health insurance coverage (also called the
individual mandate) and that large employers offer their
employees health insurance coverage that meets specified
standards (also called the employer mandate). Eliminating their
associated penalties would reduce federal revenues starting in
2017, but CBO and JCT estimate that doing so would also
substantially reduce the number of people with health insurance
coverage and, accordingly, would reduce the costs incurred by
the federal government in subsidizing some health insurance
coverage. The estimated savings stemming from fewer people
enrolling in Medicaid, in health insurance obtained through the
nongroup market, and in employment-based health insurance
coverage would exceed the estimated loss of revenues from
eliminating mandate penalties.
CBO and JCT estimate that repealing the individual mandate
penalties would also result in higher health insurance premiums
in the nongroup market after 2017.\3\ Insurers would still be
required to provide coverage to any applicant, would not be
able to vary premiums to reflect enrollees' health status or to
limit coverage of preexisting medical conditions, and would be
limited in how premiums could vary by age. Those features are
most attractive to applicants with relatively high expected
costs for health care, so CBO and JCT expect that repealing the
individual mandate penalties would tend to reduce insurance
coverage less among older and less healthy people than among
younger and healthier people. Thus, the agencies estimate that
repealing those penalties, taken by itself, would increase
premiums. Nevertheless, CBO and JCT anticipate that a
significant number of relatively healthy people would still
purchase insurance in the nongroup market because of the
availability of government subsidies.
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\3\CBO and JCT expect that insurers would not be able to change
their 2017 premiums because those premiums have already been set.
Major Changes to Medicaid. CBO estimates that several major
provisions affecting Medicaid would decrease direct spending by
$880 billion over the 2017-2026 period. That reduction would
stem primarily from lower enrollment throughout the period,
culminating in 14 million fewer Medicaid enrollees by 2026, a
reduction of about 17 percent relative to the number under
current law. Some of that decline would be among people who are
currently eligible for Medicaid benefits, and some would be
among people who CBO projects would be made eligible as a
result of state actions in the future under current law (that
is, from additional states adopting the optional expansion of
eligibility authorized by the ACA). Some decline in spending
and enrollment would begin immediately, but most of the changes
would begin in 2020, when the legislation would terminate the
enhanced federal matching rate for new enrollees under the
ACA's expansion of Medicaid and would place a per capita-based
cap on the federal government's payments to states for medical
assistance provided through Medicaid. By 2026, Medicaid
spending would be about 25 percent less than what CBO projects
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under current law.
Changes Before 2020. Under current law, the penalties
associated with the individual mandate apply to some Medicaid-
eligible adults and children. (For example, the penalties apply
to single individuals with income above about 90 percent of the
federal poverty guidelines, also known as the federal poverty
level, or FPL). CBO estimates that, without those penalties,
fewer people would enroll in Medicaid, including some who are
not subject to the penalties but might think they are. Some
people might be uncertain about what circumstances trigger the
penalty and others might be uncertain about their annual
income. The estimated lower enrollment would result in less
spending for the program. Those effects on enrollment and
spending would continue throughout the 2017-2026 period.
Termination of Enhanced Federal Matching Funds for New
Enrollees From Expanding Eligibility for Medicaid. Under
current law, states are permitted, but not required, to expand
eligibility for Medicaid to adults under 65 whose income is
equal to or less than 138 percent of the FPL (referred to here
as ``newly eligible''). The federal government pays a larger
share of the medical costs for those people than it pays for
those who were previously eligible. Beginning in 2020, the
legislation would reduce the federal matching rate for newly
eligible adults from 90 percent of medical costs to the rate
for other enrollees in the state. (The federal matching rate
for other enrollees ranges from 50 percent to 75 percent,
depending on the state, with an average of about 57 percent.)
The lower federal matching rate would apply only to those newly
enrolled after December 31, 2019.
The 31 states and the District of Columbia that have
already expanded Medicaid to the newly eligible cover roughly
half of that population nationwide. CBO projects that under
current law, additional states will expand their Medicaid
programs and that, by 2026, roughly 80 percent of newly
eligible people will reside in states that have done so. Under
the legislation, largely because states would pay for a greater
share of enrollees' costs, CBO expects that no additional
states would expand eligibility, thereby reducing both
enrollment in and spending for Medicaid. According to CBO's
estimates, that effect would be modest in the near term, but by
2026, on an average annual basis, 5 million fewer people would
be enrolled in Medicaid than would have been enrolled under
current law (see Figure 1).
CBO also anticipates some states that have already expanded
their Medicaid programs would no longer offer that coverage,
reducing the share of the newly eligible population residing in
a state with expanded eligibility to about 30 percent in 2026.
That estimate reflects different possible outcomes without any
explicit prediction about which states would make which
choices. In considering the possible outcomes, CBO took into
account several factors: the extent of optional coverage
provided to the newly eligible population and other groups
before the ACA's enactment (as a measure of a state's
willingness to provide coverage above statutory minimums),
states' ability to bear costs under the legislation, and
potential methods to mitigate those costs (such as changes to
benefit packages and payment rates). Some states might also
begin to take action prior to 2020 in anticipation of future
changes that would result from the legislation to avoid abrupt
changes to eligibility and other program features. How
individual states would ultimately respond is highly uncertain.
Because the lower federal matching rate would apply only to
those newly enrolled after December 31, 2019 (or who experience
a break in eligibility after that date), CBO estimates that
reductions in spending for the newly eligible would increase
over several years, as ``grandfathered'' enrollees would cycle
off the program and be replaced by new enrollees. On the basis
of historical data (and taking into account the increased
frequency of eligibility redeterminations required by the
legislation), CBO projects that fewer than one-third of those
enrolled as of December 31, 2019, would have maintained
continuous eligibility two years later. Under the legislation,
the higher federal matching rate would apply for fewer than 5
percent of newly eligible enrollees by the end of 2024, CBO
estimates.
Per Capita-Based Cap on Medicaid Payments for Medical
Assistance. Under current law, the federal government and state
governments share in the financing and administration of
Medicaid. In general, states pay health care providers for
services to enrollees, and the federal government reimburses
states for a percentage of their expenditures. All federal
reimbursement for medical services is open-ended, meaning that
if a state spends more because enrollment increases or costs
per enrollee rise, additional federal payments are
automatically generated.
Under the legislation, beginning in 2020, the federal
government would establish a limit on the amount of
reimbursement it provides to states. That limit would be set by
calculating the average per-enrollee cost of medical services
for most enrollees who received full Medicaid benefits in 2016
for each state. The Secretary of Health and Human Services
would then inflate the average per-enrollee costs for each
state by the growth in the consumer price index for medical
care services (CPI-M). The final limit on federal reimbursement
for each state for 2020 and after would be the average cost per
enrollee for five specified groups of enrollees (the elderly,
disabled people, children, newly eligible adults, and all other
adults), reflecting growth in the CPI-M from 2016 multiplied by
the number of enrollees in each category in that year. If a
state spent more than the limit on federal reimbursement, the
federal government would provide no additional funding to match
that spending.
The limit on federal reimbursement would reduce outlays
because (after the changes to the Medicaid expansion population
have been accounted for) Medicaid spending would grow on a per-
enrollee basis at a faster rate than the CPI-M, according to
CBO's projections: at an average annual rate of 4.4 percent for
Medicaid and 3.7 percent for the CPI-M over the 2017-2026
period. With less federal reimbursement for Medicaid, states
would need to decide whether to commit more of their own
resources to finance the program at current-law levels or
whether to reduce spending by cutting payments to health care
providers and health plans, eliminating optional services,
restricting eligibility for enrollment, or (to the extent
feasible) arriving at more efficient methods for delivering
services. CBO anticipates that states would adopt a mix of
those approaches, which would result in additional savings to
the federal government. (Other provisions affecting Medicaid
are discussed below.)
Changes to Subsidies and Market Rules for Nongroup Health
Insurance Before 2020. Under the legislation, existing
subsidies for health insurance coverage purchased in the
nongroup market would largely remain in effect until 2020--but
the premium tax credits would differ by the age of the
individual in 2019. Aside from the changes in enrollment and
premiums as a result of eliminating the individual mandate
penalties (mentioned earlier), the other changes discussed in
this section would have small effects on coverage and federal
subsidies in the nongroup market.
Nongroup Market Subsidies. Subsidies under current law fall
into two categories: subsidies to cover a portion of
participants' health insurance premiums (which take the form of
refundable tax credits) and subsidies to reduce their cost-
sharing amounts (out-of-pocket payments required under
insurance policies). The first category of subsidies, also
called premium tax credits, is generally available to people
with income between 100 percent and 400 percent of the FPL,
with certain exceptions. The second category, also called cost-
sharing subsidies, is available to those who are eligible for
premium tax credits, generally have a household income between
100 percent and 250 percent of the FPL, and enroll in an
eligible plan.
Under current law, those subsidies can be obtained only by
purchasing nongroup coverage through a health insurance
marketplace. Under the legislation, premium tax credits--but
not cost-sharing subsidies--would also be available for most
plans purchased in the nongroup market outside of marketplaces
beginning in 2018. However, the tax credits for those plans
could not be advanced and could only be claimed on a person's
tax return. CBO and JCT estimate that roughly 2 million people
who are expected to enroll in plans purchased in the nongroup
market outside of marketplaces in 2018 and 2019 under current
law would newly receive premium tax credits for that coverage
under the legislation.
The premium tax credits would differ by the age of the
individual for one year in 2019, while cost-sharing subsidies
would remain unchanged prior to 2020. For those with household
income exceeding 150 percent of the FPL, the legislation would
generally reduce the percentage of income that younger people
had to pay toward their premiums and increase that percentage
for older people.\4\ CBO and JCT expect that roughly 1 million
more people would enroll in coverage obtained through the
nongroup market as a result of the change in the structure of
premium tax credits. That increase would be the net result of
higher enrollment among younger people and lower enrollment
among older people.
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\4\For families, the age of the oldest taxpayer would be used to
determine the age-adjusted percentage of income that must be paid
toward the premiums. As under current law, the premium tax credits
would cover the amount by which the reference premium--that is, the
premium for the second-lowest-cost ``silver'' plan that covers the
eligible people in the household in the area in which they reside--
exceeds that percentage of income. A silver plan covers about 70
percent of the costs of covered benefits.
Patient and State Stability Fund Grants. Beginning in 2018
and ending after 2026, the federal government would make a
total of $100 billion in allotments to states that they could
use for a variety of purposes, including reducing premiums for
insurance in the nongroup market. CBO and JCT estimate that
federal outlays for grants from the Patient and State Stability
Fund would total $80 billion over the 2018-2026 period.
By the agencies' estimates, the grants would reduce
premiums for insurance in the nongroup market in many states.
CBO and JCT expect that states would use those grants mostly to
reimburse insurers for some of the costs of enrollees with
claims above a threshold. For states that did not develop plans
to spend the funds, the federal government would make payments
to insurers in the individual market who have enrollees with
relatively high claims. Before 2020, CBO expects, the Secretary
of Health and Human Services would make payments to insurers on
the behalf of most states because most would not have enough
time to set up their own programs before insurers had to set
premiums for 2018. As a result, CBO estimates that most states
would rely on the federal default program for one or more years
until they had more time to establish their own programs.
Continuous Coverage Provisions. Insurers would be required
to impose a penalty on people who enrolled in insurance in the
nongroup or small-group markets if they had been uninsured for
more than 63 days within the past year. When they purchased
insurance in the nongroup or small-group market, they would be
subject to a surcharge equal to 30 percent of their monthly
premium for up to 12 months. The requirement would apply to
people enrolling during a special enrollment period in 2018
and, beginning in 2019, to people enrolling at any time during
the year.
CBO and JCT expect that increasing the future price of
insurance through the surcharge for people who do not have
continuous coverage would increase the number of people with
insurance in 2018 and reduce that number in 2019 and later
years. By the agencies' estimates, roughly 1 million people
would be induced to purchase insurance in 2018 to avoid
possibly having to pay the surcharge in the future. In most
years after 2018, however, roughly 2 million fewer people would
purchase insurance because they would either have to pay the
surcharge or provide documentation about previous health
insurance coverage. The people deterred from purchasing
coverage would tend to be healthier than those who would not be
deterred and would be willing to pay the surcharge.
Age Rating Rules. Beginning in 2018, the legislation would
expand the limits on how much insurers in the nongroup and
small-group markets can vary premiums on the basis of age.
However, CBO and JCT expect that the provision could not be
implemented until 2019 because there would be insufficient time
for the federal government, states, and insurers to incorporate
the changes and then set premiums for 2018. Under current law,
a 64-year-old can generally be charged premiums that cost up to
three times as much as those offered to a 21-year-old. Under
the legislation, that allowable difference would shift to five
times as much unless a state chose otherwise. That change would
tend to reduce premiums for younger people and increase
premiums for older people.
However, CBO and JCT estimate that the structure of the
premium tax credits before 2020 would limit how changes in age
rating rules affected the number of people who would enroll in
health insurance coverage in the nongroup market. People
eligible for subsidies in the nongroup market are now largely
insulated from changes in premiums: A person receiving a
premium tax credit pays a certain percentage of his or her
income toward the reference premium, and the tax credit covers
the difference between the premium and that percentage of
income. Consequently, despite the changes in premiums for
younger and older people, the person's out-of-pocket payments
would not be affected much. Therefore, CBO and JCT estimate
that the increase in the number of people enrolled in coverage
through the nongroup market as a result of changes in age
rating rules would be less than 500,000 in 2019 and would be
the net result of higher enrollment among younger people and
lower enrollment among older people. The small increase would
mostly stem from net changes in enrollment among people who had
income high enough to be ineligible for subsidies and who would
face substantial changes in out-of-pocket payments for
premiums.
Changes to Subsidies and Market Rules for Nongroup Health
Insurance Beginning in 2020. Beginning in 2020, the current
premium tax credits and cost-sharing subsidies would both be
repealed. That same year, the legislation would create new
refundable tax credits for insurance purchased in the nongroup
market. In addition to making the market changes discussed thus
far (eliminating mandate penalties, providing grants to states
to help stabilize the nongroup market, establishing a
requirement for continuous coverage, and changing the age
rating rules), the legislation would relax the current
requirements about the share of benefits that must be covered
by a health insurance plan.
Many rules governing the nongroup market would remain in
effect as under current law. For example, insurers would be
required to accept all applicants during specified open-
enrollment periods, could not vary people's premiums on the
basis of their health, and could not restrict coverage of
enrollees' preexisting health conditions. Insurers would also
still be required to cover specified categories of health care
services, and the amount of costs for covered services that
enrollees have to pay out of pocket would remain limited to a
specified threshold. Prohibitions on annual and lifetime
maximum benefits would still apply. Also, the risk adjustment
program--which transfers funds from plans that attract a
relatively small proportion of high-risk enrollees (people with
serious chronic conditions, for example) to plans that attract
a relatively large proportion of such people--would remain in
place.
Because the new tax credits are designed primarily to be
paid in advance on behalf of enrollees to insurers, procedures
would need to be in place to enable the Internal Revenue
Service and the Department of Health and Human Services to
verify that the credits were being paid to eligible insurers
who were offering qualified insurance as defined under federal
and state law on behalf of eligible enrollees. CBO and JCT's
estimates reflect an assumption that adequate resources would
be made available through future appropriations to those
executive branch agencies to ensure that such systems were put
in place in a timely manner. To the extent that they were not,
enrollment and compliance could be negatively affected.
Changes to Actuarial Value Requirements. Actuarial value is
the percentage of total costs for covered benefits that the
plan pays when covering a standard population. Under current
law, most plans in the nongroup and small-group markets must
have an actuarial value that is in one of four tiers: about 60
percent, 70 percent, 80 percent, or 90 percent. Beginning in
2020, the legislation would repeal those requirements,
potentially allowing plans to have an actuarial value below 60
percent. However, plans would still be required to cover 10
categories of health benefits that are defined as ``essential''
under current law, and the total annual out-of-pocket costs for
an enrollee would remain capped. In CBO and JCT's estimation,
complying with those two requirements would significantly limit
the ability of insurers to design plans with an actuarial value
much below 60 percent.
Nevertheless, CBO and JCT estimate that repealing the
actuarial value requirements would lower the actuarial value of
plans in the nongroup market on average. The requirement that
insurers offer both a plan with an actuarial value of 70
percent and one with an actuarial value of 80 percent in order
to participate in the marketplace would no longer apply under
the legislation. As a result, an insurer could choose to sell
only plans with lower actuarial values. Many insurers would
find that option attractive because they could offer a plan
priced closer to the amount of the premium tax credit so that a
younger person would have low out-of-pocket costs for premiums
and would be more likely to enroll. Insurers might be less
likely to offer plans with high actuarial values out of a fear
of attracting a greater proportion of less healthy enrollees to
those plans, although the availability of the Patient and State
Stability Fund grants in most states would reduce that risk.
The continuation of the risk adjustment program could also help
limit insurers' costs from high-risk enrollees.
Because of plans' lower average actuarial values, CBO and
JCT expect that individuals' cost-sharing payments, including
deductibles, in the nongroup market would tend to be higher
than those anticipated under current law. In addition, cost-
sharing subsidies would be repealed in 2020, significantly
increasing out-of-pocket costs for nongroup insurance for many
lower-income enrollees. The higher costs would make the plans
less attractive than those available under current law to many
potential enrollees, especially people who are eligible for the
largest subsidies under current law.
Changes in the Ways the Nongroup Market Would Function.
Under the legislation, some of the ways that the nongroup
market functions would change for consumers. The current
actuarial value requirements help people compare different
insurance plans, because all plans in a tier cover the same
share of costs, on average. CBO and JCT expect that, under the
legislation, plans would be harder to compare, making shopping
for a plan on the basis of price more difficult.
Another feature of the nongroup market under current law is
that there is one central website through the state or federal
marketplace where people can shop for all the plans in their
area that are eligible for subsidies. Under the legislation,
insurers participating in the nongroup market would no longer
have to offer plans through the marketplaces in order for
people to receive subsidies toward those plans; therefore, CBO
and JCT estimate that fewer would do so. With more plans that
are eligible for subsidies offered directly from insurers or
directly through agents and brokers and not through the
marketplaces' central websites, shopping for and comparing
plans could be harder, depending on insurers' decisions about
how to market their plans.
Changes in Nongroup Market Subsidies. With the repeal in
2020 of the current premium tax credits and the cost-sharing
subsidies, different refundable tax credits for insurance
purchased in the nongroup market would become available.\5\ The
new tax credits would vary on the basis of age by a factor of 2
to 1: Someone age 60 or older would be eligible for a tax
credit of $4,000, while someone younger than age 30 would be
eligible for a tax credit of $2,000. People would generally be
eligible for the full amount of the tax credit if their
adjusted gross income was below $75,000 for a single tax filer
and below $150,000 for joint filers and if they were not
eligible for certain other types of insurance coverage.\6\ The
credits would phase out for people with income above those
thresholds. The tax credits would be refundable if the size of
the credit exceeded a person's tax liability. They could also
be advanced to insurers on a monthly basis throughout the year
on behalf of an enrollee. Finally, tax credits could be used
for most health insurance plans purchased through a marketplace
or directly from an insurer.
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\5\People would also be able to use the new tax credits toward
unsubsidized of continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA).
\6\The tax credits and the income thresholds would both be indexed
each year by the consumer price index for all urban consumers plus 1
percentage point.
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Under current law, the size of the premium tax credit
depends on household income and the reference premium in an
enrollee's rating area. The enrollee pays a certain percentage
of his or her income toward the reference premium, and the size
of the subsidy varies by geography and age for a given income
level. In that way, the enrollee is insulated from variations
in premiums by geography and is also largely insulated from
increases in the reference premium. An enrollee would pay the
difference between the reference premium and the premium for
the plan he or she chose, providing some incentive to choose
lower-priced insurance. Beginning in 2020, under the
legislation, the size of a premium tax credit would vary with
age, rather than with income (except for people with income in
the phase-out range) or the amount of the premium. The enrollee
would be responsible for any premium above the credit amount.
That structure would provide greater incentives for enrollees
to choose lower-priced insurance and would mean that people
living in high-cost areas would be responsible for a larger
share of the premium.
Under the legislation, some people would be eligible for
smaller subsidies than those under current law, and others
would be eligible for larger ones. As a result, by CBO and
JCT's estimates, the composition of the population purchasing
health insurance in the nongroup market under the legislation
would differ significantly from that under current law,
particularly by income and age.
For many lower-income people, the new tax credits under the
legislation would tend to be smaller than the premium tax
credits under current law.\7\ In an illustrative example, CBO
and JCT estimate that a 21-year-old with income at 175 percent
of the FPL in 2026 would be eligible for a premium tax credit
of about $3,400 under current law; the tax credit would fall to
about $2,450 under the legislation (see Table 4). In addition,
because cost-sharing subsidies would be eliminated under the
legislation, lower-income people's share of medical services
paid in the form of deductibles and other cost sharing would
increase. As a result, CBO and JCT estimate, fewer lower-income
people would obtain coverage through the nongroup market under
the legislation than under current law.
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\7\People with income below 100 percent of the FPL who are
ineligible for Medicaid and meet other eligibility criteria would
become newly eligible for a premium tax credit under the legislation.
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Conversely, the tax credits under the legislation would
tend to be larger than current-law premium tax credits for many
people with higher income--particularly for those with income
above 400 percent of the FPL but below the income cap for a
full credit, which is set by the legislation at $75,000 for a
single tax filer and $150,000 for joint filers in 2020. For
example, CBO and JCT estimate that a 21-year-old with income at
450 percent of the FPL in 2026 would be ineligible for a credit
under current law but newly eligible for a tax credit of about
$2,450 under the legislation. Lower out-of-pocket payments
toward premiums would tend to increase enrollment in the
nongroup market among higher-income people.
Enacting the legislation would also result in significant
changes in the size of subsidies in the nongroup market
according to people's age. For example, CBO and JCT estimate
that a 21-year-old, 40-year-old, and 64-year-old with income at
175 percent of the FPL in 2026 would all pay roughly $1,700
toward their reference premium under current law, even though
the reference premium for a 64-year-old is three times larger
than that for a 21-year-old in most states. Under the
legislation, premiums for older people could be five times
larger than those for younger people in many states, but the
size of the tax credits for older people would only be twice
the size of the credits for younger people. Because of that
difference in how much the tax credits would cover, CBO and JCT
estimate that, under the legislation, a larger share of
enrollees in the nongroup market would be younger people and a
smaller share would be older people.
According to CBO and JCT's estimates, total federal
subsidies for nongroup health insurance would be significantly
smaller under the legislation than under current law for two
reasons. First, by the agencies' projections, fewer people, on
net, would obtain coverage in the nongroup health insurance
market under the legislation. Second, the average subsidy per
subsidized enrollee under the legislation would be
significantly lower than the average subsidy under current law.
In 2020, CBO and JCT estimate, the average subsidy under the
legislation would be about 60 percent of the average subsidy
under current law. In addition, the average subsidy would grow
more slowly under the legislation than under current law. That
difference results from the fact that subsidies under current
law tend to grow with insurance premiums, whereas subsidies
under the legislation would grow more slowly, with the consumer
price index for all urban consumers plus 1 percentage point. By
2026, CBO and JCT estimate that the average subsidy under the
legislation would be about 50 percent of the average subsidy
under current law.
Patient and State Stability Fund Grants. As a condition of
the grants, beginning in 2020, states would be required to
provide matching funds, which would generally increase from 7
percent of the federal funds provided in 2020 to 50 percent of
the federal funds provided in 2026. The agencies expect that
the grants' effects on premiums after 2020 would be limited by
the share of states that took action and decided to pay the
required matching funds in order to receive federal money and
by the extent to which states chose to use the money for
purposes that did not directly help to lower premiums in the
nongroup market. Nevertheless, CBO and JCT estimate that the
grants would exert substantial downward pressure on premiums in
the nongroup market in 2020 and later years and would help
encourage participation in the market by insurers.
Effects of Changes in the Nongroup Market on Employers'
Decisions to Offer Coverage. CBO and JCT estimate that, over
time, fewer employers would offer health insurance because the
legislation would change their incentives to do so. First, the
mandate penalties would be eliminated. Second, the tax credits
under the legislation, for which people would be ineligible if
they had any offer of employment-based insurance, would be
available to people with a broader range of incomes than the
current tax credits are. That change could make nongroup
coverage more attractive to a larger share of employees.
Consequently, in CBO and JCT's estimation, some employers would
choose not to offer coverage and instead increase other forms
of compensation in the belief that nongroup insurance was a
close substitute for employment-based coverage for their
employees.
However, two factors would partially offset employers'
incentives not to offer insurance. First, the average subsidy
for those who are eligible would be smaller under the
legislation than under current law and would grow more slowly
than health care costs over time. Second, CBO and JCT
anticipate, nongroup insurance under the legislation would be
less attractive to many people with employment-based coverage
than under current law because nongroup insurance under the
legislation would cover a smaller share of enrollees' expenses,
on average, and because shopping for and comparing plans would
probably be more difficult. In general, CBO and JCT expect that
businesses that decided not to offer insurance coverage under
the legislation would have, on average, younger and higher-
income workforces than businesses that choose not to offer
insurance under current law.
CBO and JCT expect that employers would adapt slowly to the
legislation. Some employers would probably delay making
decisions because of uncertainty about the viability of and
regulations for the nongroup market and about implementation of
the new law.
Market Stability. CBO and JCT anticipate that, under the
legislation, the combination of subsidies to purchase nongroup
insurance and rules regulating the market would result in a
relatively stable nongroup market. That is, most areas of the
country would have insurers participating in the nongroup
market, and the market would not be subject to an unsustainable
spiral of rising premiums. First and most important, a
substantial number of relatively healthy (mostly young) people
would continue to purchase insurance in the nongroup market
because of the availability of government subsidies. Second,
grants from the Patient and State Stability Fund would help
stabilize premiums and reduce potential losses to insurers from
enrollees with very large claims. Finally, in CBO and JCT's
judgment, the risk adjustment program would help protect
insurers from losses arising from high-risk enrollees. The
agencies expect that all of those factors would encourage
insurers to continue to participate in the nongroup market.
However, significant changes in nongroup subsidies and
market rules would occur each year for the first three years
following enactment, which might cause uncertainty for insurers
in setting premiums. As a result of the elimination of the
individual mandate penalties, CBO and JCT project that nongroup
enrollment in 2018 would be smaller than that in 2017 and that
the average health status of enrollees would worsen. A small
share of that decline in enrollment would be offset by the
onetime effect of the continuous coverage provisions, which
would somewhat increase enrollment in the nongroup market in
2018 as people anticipated potential surcharges in 2019. Grants
from the Patient and State Stability Fund would begin to take
effect in 2018 to help mitigate losses and encourage
participation by insurers.
The mix of enrollees in 2019 would differ from that in
2018, because the change to age-rating rules would allow older
adults to be charged five times as much as younger adults in
many states. In addition, there would be a one-year change to
the premium tax credits, which CBO and JCT expect would
somewhat increase enrollment among younger adults and decrease
enrollment among older adults. Although the combined effect of
those two changes would reduce the average age and improve the
average health of enrollees in the nongroup market, it might be
difficult for insurers to set premiums for 2019 using their
prior experience in the market.
In 2020, CBO estimates, grants to states from the Patient
and State Stability Fund, once fully implemented, would
significantly reduce premiums in the nongroup market and
encourage participation by insurers. The grants would help to
reduce the risk to insurers of offering nongroup insurance. As
a result, CBO expects that those grants would contribute
substantially to the stability of the nongroup market.
That effect would occur despite the fact that more major
changes taking effect in that year would make it difficult for
insurers to predict the mix of enrollees on the basis of their
recent experience. The new age-based tax credits would be
introduced in 2020 and actuarial value requirements would be
eliminated. In response, insurers would have the flexibility to
sell different types of plans than they do under current law.
The nongroup market is expected to be smaller in 2020 than in
2019 but then is expected to grow somewhat over the 2020-2026
period.
Other Budgetary Effects of Health Insurance Coverage
Provisions. Because the insurance coverage provisions of the
legislation would increase the number of uninsured people and
decrease the number of people with Medicaid coverage relative
to the numbers under current law, CBO estimates that Medicare
spending would increase by $43 billion over the 2018-2026
period.
Medicare makes additional ``disproportionate share
hospital'' payments to facilities that serve a higher
percentage of uninsured patients. Those payments have two
components: an increase to the payment rate for each inpatient
case and a lump-sum allocation of a pool of funds based on each
qualifying hospital's share of the days of care provided to
beneficiaries of Supplemental Security Income and Medicaid.
Under the legislation, the decreased enrollment in Medicaid
would slightly reduce the amounts paid to hospitals, CBO
estimates. However, the increase in the number of uninsured
people would substantially boost the amounts distributed on a
lump-sum basis.
Net Effects on Health Insurance Coverage
CBO and JCT expect that under the legislation, the number
of people without health insurance coverage would increase but
that the increase would be limited initially, because insurers
have already set their premiums for the current year and many
people have already made their enrollment decisions for the
year. However, in 2017, the elimination of the individual
mandate penalties would result in about 4 million additional
people becoming uninsured (see Table 5).
In 2018, by CBO and JCT's estimates, about 14 million more
people would be uninsured, relative to the number under current
law. That increase would consist of about 6 million fewer
people with coverage obtained in the nongroup market, roughly 5
million fewer people with coverage under Medicaid, and about 2
million fewer people with employment-based coverage. In 2019,
the number of uninsured would grow to 16 million people because
of further reductions in Medicaid and nongroup coverage. Most
of the reductions in coverage in 2018 and 2019 would stem from
repealing the penalties associated with the individual mandate.
Some of those people would choose not to have insurance because
they choose to be covered by insurance under current law only
to avoid paying the penalties. And some people would forgo
insurance in response to higher premiums. CBO and JCT estimate
that, in total, 41 million people under age 65 would be
uninsured in 2018 and 43 million people under age 65 would be
uninsured in 2019.
In 2020, according to CBO and JCT's estimates, as a result
of the insurance coverage provisions of the legislation, 21
million more nonelderly people in the United States would be
without health insurance than under current law. By 2026, that
number would total 24 million, CBO and JCT estimate.
Specifically:
LRoughly 9 million fewer people would enroll in
Medicaid in 2020; that figure would rise to 14 million in 2026,
as states that expanded eligibility for Medicaid discontinued
doing so, as states projected to expand Medicaid in the future
chose not to do so, and as the cap on per-enrollee spending
took effect.
LRoughly 9 million fewer people, on net, would
obtain coverage through the nongroup market in 2020; that
number would fall to 2 million in 2026. The reduction in
enrollment in the nongroup market would shrink over the 2020-
2026 period because people would gain experience with the new
structure of the tax credits and some employers would respond
to those tax credits by declining to offer insurance to their
employees.
LRoughly 2 million fewer people, on net, would
enroll in employment-based coverage in 2020, and that number
would grow to roughly 7 million in 2026. Part of that net
reduction in employment-based coverage would occur because
fewer employees would take up the offer of such coverage in the
absence of the individual mandate penalties. In addition, CBO
and JCT expect that, over time, fewer employers would offer
health insurance to their workers.
CBO and JCT estimate that 48 million people under age 65,
or roughly 17 percent of the nonelderly population, would be
uninsured in 2020 if the legislation was enacted. That figure
would grow to 52 million, or roughly 19 percent of the
nonelderly population, in 2026. (That figure is currently about
10 percent and is projected to remain at that level in each
year through 2026 under current law.) Although the agencies
expect that the legislation would increase the number of
uninsured broadly, the increase would be disproportionately
larger among older people with lower income; in particular,
people between 50 and 64 years old with income of less than 200
percent of the FPL would make up a larger share of the
uninsured (see Figure 2).
Net Effects on Health Insurance Premiums
The legislation would tend to increase average premiums in
the nongroup market prior to 2020 and lower average premiums
thereafter, relative to the outcomes under current law. (This
discussion is focused on premiums before any applicable tax
credits and before any surcharges for not maintaining
continuous coverage.)
In 2018 and 2019, according to CBO and JCT's estimates,
average premiums for single policyholders in the nongroup
market would be 15 percent to 20 percent higher than under
current law mainly because of the elimination of the individual
mandate penalties. Eliminating those penalties would markedly
reduce enrollment in the nongroup market and increase the share
of enrollees who would be less healthy. CBO and JCT expect that
grants from the Patient and State Stability Fund would largely
be used for reinsurance programs, particularly in 2018 and
2019, when many states would rely on the federal default before
establishing their own programs and, as explained earlier, that
those payments would help lower premiums in the nongroup
market. The agencies estimate that program would have a
relatively small effect on premiums in 2018 because there would
not be much time between enactment of the legislation and
insurers' deadlines for setting premiums for 2018. By 2019,
however, in CBO and JCT's judgment, the Patient and State
Stability Fund would have the effect of somewhat moderating the
increases in average premiums in the nongroup market resulting
from the legislation.
Starting in 2020, the increase in average premiums from
repealing the individual mandate penalties would be more than
offset by the combination of three main factors. First, the mix
of people enrolled in coverage obtained in the nongroup market
is anticipated to be younger, on average, than the mix under
current law. Second, premiums, on average, are estimated to
fall because of the elimination of actuarial value
requirements, which would result in plans that cover a lower
share of health care costs, on average. Third, reinsurance
programs supported by the Patient and State Stability Fund are
estimated to reduce premiums. If those funds were devoted to
other purposes, then premium reductions would be smaller. By
2026, average premiums for single policyholders in the nongroup
market under the legislation would be roughly 10 percent lower
than the estimates under current law.
The changes in premiums would vary for people of different
ages. The change in age-rating rules, effective in 2019, would
directly change the premiums faced by different age groups,
substantially reducing premiums for young adults and raising
premiums for older people. By 2026, CBO and JCT project,
premiums in the nongroup market would be 20 percent to 25
percent lower for a 21-year-old and 8 percent to 10 percent
lower for a 40-year-old--but 20 percent to 25 percent higher
for a 64-year-old.
Revenue Effects of Other Provisions
JCT estimates that the legislation would reduce revenues by
$592 billion over the 2017-2026 period as a result of
provisions that would repeal many of the revenue-related
provisions of the ACA (apart from provisions related to health
insurance coverage discussed above). Those with the most
significant budgetary effects include an increase in the
Hospital Insurance payroll tax rate for high-income taxpayers,
a surtax on those taxpayers' net investment income, and annual
fees imposed on health insurers.\8\
---------------------------------------------------------------------------
\8\JCT published 10 documents (JCX-7-17 through JCX-16-17) on March
7, 2017, relating to the legislation. For more information, see
www.jct.gov/publications.html.
---------------------------------------------------------------------------
Direct Spending Effects of Other Provisions
The legislation would also make changes to spending for
other federal health care programs. CBO and JCT estimate that
those provisions would increase direct spending by about $7
billion over the 2017-2026 period.
Prevention and Public Health Fund. The legislation would,
beginning in fiscal year 2019, repeal the provision that
established the Prevention and Public Health Fund and rescind
all unobligated balances. The Department of Health and Human
Services awards grants through the fund to public and private
entities to carry out prevention, wellness, and public health
activities. Funding under current law is projected to be $1
billion in 2017 and to rise to $2 billion in 2025 and each year
thereafter. CBO estimates that eliminating that funding would
reduce direct spending by $9 billion over the 2017-2026 period.
Community Health Center Program. The legislation would
increase the funds available to the Community Health Center
Program, which provides grant funds to health centers that
offer primary and preventive care to patients regardless of
their ability to pay. Under current law, the program will
receive about $4 billion in fiscal year 2017. The legislation
would increase funding for the program by $422 million in
fiscal year 2017. CBO estimates that implementing the provision
would increase direct spending by $422 million over the 2017-
2026 period.
Provision Affecting Planned Parenthood. For a one-year
period following enactment, the legislation would prevent
federal funds from being made available to an entity (including
its affiliates, subsidiaries, successors, and clinics) if it
is:
LA nonprofit organization described in section
501(c)(3) of the Internal Revenue Code and exempt from tax
under section 501(a) of the code;
LAn essential community provider that is primarily
engaged in providing family planning and reproductive health
services and related medical care;
LAn entity that provides abortions--except in
instances in which the pregnancy is the result of an act of
rape or incest or the woman's life is in danger; and
LAn entity that had expenditures under the
Medicaid program that exceeded $350 million in fiscal year
2014.
CBO expects that, according to those criteria, only Planned
Parenthood Federation of America and its affiliates and clinics
would be affected. Most federal funds received by such entities
come from payments for services provided to enrollees in
states' Medicaid programs. CBO estimates that the prohibition
would reduce direct spending by $178 million in 2017 and by
$234 million over the 2017-2026 period. Those savings would be
partially offset by increased spending for other Medicaid
services, as discussed below.
To the extent that there would be reductions in access to
care under the legislation, they would affect services that
help women avert pregnancies. The people most likely to
experience reduced access to care would probably reside in
areas without other health care clinics or medical
practitioners who serve low-income populations. CBO projects
that about 15 percent of those people would lose access to
care.
The government would incur some costs for Medicaid
beneficiaries currently served by affected entities because the
costs of about 45 percent of all births are paid for by the
Medicaid program. CBO estimates that the additional births
stemming from the reduced access under the legislation would
add to federal spending for Medicaid. In addition, some of
those children would themselves qualify for Medicaid and
possibly for other federal programs. By CBO's estimates, in the
one-year period in which federal funds for Planned Parenthood
would be prohibited under the legislation, the number of births
in the Medicaid program would increase by several thousand,
increasing direct spending for Medicaid by $21 million in 2017
and by $77 million over the 2017-2026 period. Overall, with
those costs netted against the savings estimated above,
implementing the provision would reduce direct spending by $156
million over the 2017-2026 period, CBO estimates.
Repeal of Medicaid Provisions. Under current law, states
can elect the Community First Choice option, allowing them to
receive a 6 percentage-point increase in their federal matching
rate for some services provided by home and community-based
attendants to certain Medicaid recipients. The legislation
would terminate the increase in the federal matching funds
beginning in calendar year 2020, which would decrease direct
spending by about $12 billion over the next 10 years.
Repeal of Reductions to Allotments for Disproportionate
Share Hospitals. Under current law, Medicaid allotments to
states for payments to hospitals that treat a disproportionate
share of uninsured and Medicaid patients are to be cut
significantly in each year from 2018 to 2025. The cuts are
currently scheduled to be $2 billion in 2018 and to increase
each year until they reach $8 billion in 2024 and 2025. The
legislation would eliminate those cuts for states that have not
expanded Medicaid under the ACA starting in 2018 and for the
remaining states starting in 2020, boosting outlays by $31
billion over the next 10 years.
Safety Net Funding for States That Did Not Expand Medicaid.
The legislation would provide $2 billion in funding in each
year from 2018 to 2021 to states that did not expand Medicaid
eligibility under the ACA. Those states could use the funding,
within limits, to supplement payments to providers that treat
Medicaid enrollees. Such payments to providers would not be
subject to the per capita caps also established by the proposed
legislation. Any states that chose to expand Medicaid coverage
as of July 1 of each year from 2017 through 2020 would lose
access to the funding available under this provision in the
following year and thereafter. CBO estimates that this
provision would increase direct spending by $8 billion over the
2017-2026 period.
Reductions to States' Medicaid Costs. The legislation would
make a number of additional changes to the Medicaid program,
including these:
LRequiring states to treat lottery winnings and
certain other income as income for purposes of determining
eligibility;
LDecreasing the period when Medicaid benefits may
be covered retroactively from up to three months before a
recipient's application to the first of the month in which a
recipient makes an application;
LEliminating federal payments to states for
Medicaid services provided to applicants who did not provide
satisfactory evidence of citizenship or nationality during a
reasonable opportunity period; and
LEliminating states' option to increase the amount
of allowable home equity from $500,000 to $750,000 for
individuals applying for Medicaid coverage of long-term
services and supports.
Together, CBO estimates, those changes would decrease
direct spending by about $7 billion over the 2017-2026 period.
Changes in Spending Subject to Appropriation
CBO has not completed an estimate of the potential impact
of the legislation on discretionary spending, which would be
subject to future appropriation action.
UNCERTAINTY SURROUNDING THE ESTIMATES
CBO and JCT considered the potential responses of many
parties that would be affected by the legislation, including
these:
LFederal agencies--which would need to implement
major changes in the regulation of the health care system and
administration of new subsidy structures and eligibility
verification systems in a short time frame;
LStates--which would need to decide how to use
Patient and State Stability Fund grants, whether to pass new
laws affecting the nongroup market, how to respond to the
reduction in the federal matching rate for certain Medicaid
enrollees, how to respond to constraints from the cap on
Medicaid payments, and how to provide information to the
federal government about insurers and enrollees;
LInsurers--who would need to decide about the
extent of their participation in the insurance market and what
types of plans to sell in the face of different market rules
and federal subsidies;
LEmployers--who would need to decide whether to
offer insurance given the different federal subsidies and
insurance products available to their employees;
LIndividuals--who would make decisions about
health insurance in the context of different premiums,
subsidies, and penalties than those under current law; and
LDoctors and hospitals--who would need to
negotiate contracts with insurers in a new regulatory
environment.
Each of those responses is difficult to predict. Moreover,
the responses would depend upon how the provisions in the
legislation were implemented, such as whether advance payments
of the new tax credits were made reliably. And flaws in the
determination of eligibility, for instance, could keep
subsidies from people who were eligible or provide them to
people who were not.
In addition, CBO and JCT's projections under current law
itself are inexact, which could also affect the estimated
effects. For example, enrollment in the marketplaces under
current law could be lower than is projected, which would tend
to decrease the budgetary savings of the legislation.
Alternatively, the average subsidy per enrollee under current
law could be higher than is projected, which would tend to
increase the budgetary savings of the legislation.
CBO and JCT have endeavored to develop estimates that are
in the middle of the distribution of potential outcomes. One
way to assess the range of uncertainty around the estimated
effects of the legislation is to compare previous projections
with actual results. For example, some aspects of CBO and JCT's
projections of health insurance coverage and related spending
made in July 2012 (after the Supreme Court issued a decision
that essentially made the expansion of the Medicaid program
under the ACA an option for states) can be compared with actual
results for 2016. Projected spending on people made eligible
for Medicaid because of the ACA was about 60 percent of the
actual amount. The number of people predicted in 2012 to
purchase insurance through the marketplaces in 2016 was more
than twice the actual number. The decline in the number of
insured people from 2012 to 2016 was projected to be 23
million, and the decline measured in the National Health
Interview Survey turned out to be 20 million. CBO and JCT have
continued to learn from experience with the ACA and have
endeavored to use that experience to improve their modeling.
That comparison of projections with actual results and the
great uncertainties surrounding the actions of the many parties
that would be affected by the legislation suggest that outcomes
of the legislation could differ substantially from some of the
estimates provided here. Nevertheless, CBO and JCT are
confident about the direction of certain effects of the
legislation. For example, spending on Medicaid would almost
surely be lower than under current law. The cost of the new tax
credit would probably be lower than the cost of the subsidies
for coverage through marketplaces under current law. And the
number of uninsured people under the legislation would almost
surely be greater than under current law.
INCREASE IN LONG-TERM DIRECT
SPENDING AND DEFICITS
CBO estimates that enacting the legislation would not
increase net direct spending or on-budget deficits by more than
$5 billion in any of the four consecutive 10-year periods
beginning in 2027.
MANDATES ON STATE, LOCAL,
AND TRIBAL GOVERNMENTS
JCT and CBO reviewed the provisions of the legislation and
determined that they would impose no intergovernmental mandates
as defined in the Unfunded Mandates Reform Act. For large
entitlement programs like Medicaid, UMRA defines an increase in
the stringency of conditions or a cap on federal funding as an
intergovernmental mandate if the affected governments lack
authority to offset those costs while continuing to provide
required services. As discussed earlier in this estimate, the
legislation would eliminate the enhanced federal matching rate
for some future enrollees, establish new per capita caps in the
Medicaid program, and make other changes that would affect
Medicaid spending--some of which would provide additional
assistance to states.
On net, CBO estimates that states would see an overall
decrease in federal assistance, as reflected in estimates of
federal savings in the Medicaid program. In response to the
caps and other changes, CBO anticipates that states could use
existing flexibility allowed in the Medicaid program and
additional authorities provided by the legislation to cut
payments to health care providers and health plans, eliminate
optional services, restrict eligibility for enrollment, or (to
the extent feasible) change the way services are delivered to
save costs. Because flexibility in the program would allow
states to make such changes and still provide statutorily
required services, the per capita caps and other changes in
Medicaid would not impose intergovernmental mandates as defined
in UMRA.
MANDATES ON THE PRIVATE SECTOR
JCT and CBO have determined that the legislation would
impose private-sector mandates as defined in UMRA. On the basis
of information from JCT, CBO estimates that the aggregate
direct cost of the mandates imposed by the legislation would
exceed the annual threshold established in UMRA for private-
sector mandates ($156 million in 2017, adjusted annually for
inflation).
The tax provisions of the legislation contain two mandates.
Specifically, the legislation would recapture excess advance
payments of premium tax credits (so that the full amount of
excess advance payments is treated as an additional tax
liability for the individual) and repeal the small business
(health insurance) tax credit.
The nontax provisions of the legislation would impose a
private-sector mandate as defined in UMRA on insurers that
offer health insurance coverage in the individual or small-
group market. The legislation would require those insurers to
charge a penalty equal to 30 percent of the monthly premium for
a period of 12 months to individuals who enroll in insurance in
a given year after having allowed their health insurance to
lapse for more than 63 days during the previous year. CBO
estimates that the costs of complying with the mandate would be
largely offset by the penalties insurers would collect.
ESTIMATE PREPARED BY:
Federal Spending
Kate Fritzsche, Sarah Masi, Daniel Hoople, Robert Stewart, Lisa
Ramirez-Branum, Andrea Noda, Allison Percy, Sean Lyons,
Alexandra Minicozzi, Eamon Molloy, Ben Hopkins, Susan Yeh
Beyer, Jared Maeda, Christopher Zogby, Romain Parsad, Ezra
Porter, Lori Housman, Kevin McNellis, Jamease Kowalczyk, Noah
Meyerson, T.J. McGrath, Rebecca Verreau, Alissa Ardito, and the
staff of the Joint Committee on Taxation
Federal Revenues
Staff of the Joint Committee on Taxation
Impact on State, Local, and Tribal Governments
Leo Lex, Zachary Byrum, and the staff of the Joint Committee on
Taxation
Impact on the Private Sector
Amy Petz and the staff of the Joint Committee on Taxation
ESTIMATE REVIEWED AND EDITED BY:
Mark Hadley, Theresa Gullo, Jeffrey Kling, Robert Sunshine, David
Weaver, John Skeen, Kate Kelly, Jorge Salazar, and Darren Young
ESTIMATE APPROVED BY:
Holly Harvey, Deputy Assistant Director for Budget Analysis; Jessica
Banthin, Deputy Assistant Director for Health, Retirement, and
Long-Term Analysts; Chad Chirico, Chief, Low-Income Health
Programs and Prescription Drugs Cost Estimates Unit
TABLE 1.--SUMMARY OF THE DIRECT SPENDING AND REVENUE EFFECTS OF THE AHCA, THE BUDGET RECONCILIATION RECOMMENDATIONS OF THE HOUSE COMMITTEES ON WAYS AND
MEANS AND ENERGY AND COMMERCE, MARCH 9, 2017
[Billions of dollars, by fiscal year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING\a\
Coverage Provisions:
Estimated Budget Authority.... -6.6 -12.5 -22.9 -97.6 -139.1 -157.4 -173.8 -186.9 -199.4 -210.5 -278.6 -1,206.7
Estimated Outlays............. -6.6 -27.5 -25.6 -92.5 -138.6 -158.5 -175.2 -188.5 -201.3 -212.0 -290.7 -1,226.2
Non Coverage Provisions:
Estimated Budget Authority.... 0.3 -0.5 -0.7 0.6 1.7 -0.2 1.0 1.1 0.7 0.0 1.3 3.8
Estimated Outlays............. -0.1 0.3 -0.1 0.8 1.8 0.5 0.8 1.5 1.3 0.3 2.7 7.1
Total Changes in Direct
Spending:
Estimated Budget Authority.... -6.3 -13.0 -23.6 -97.1 -137.4 -157.6 -172.8 -185.8 -198.7 -210.5 -277.4 -1,202.8
Estimated Outlays............. -6.7 -27.2 -25.7 -91.7 -136.9 -158.0 -174.3 -187.0 -200.0 -211.7 -288.1 -1,219.1
CHANGES IN REVENUES\b\
Coverage Provisions............. -3.8 -13.7 -16.8 -25.5 -33.6 -36.4 -38.9 -40.4 -41.0 -40.7 -93.5 -290.9
Non Coverage Provisions......... -2.1 -37.5 -41.8 -57.6 -65.1 -70.2 -76.0 -83.1 -79.7 -78.7 -204.2 -591.9
-----------------------------------------------------------------------------------------------------------------------
Total Changes in Revenues. -5.9 -51.2 -58.6 -83.1 -98.7 -106.6 -114.9 -123.5 -120.6 -119.4 -297.6 -882.8
INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING OR REVENUES
Net Increase or Decrease (-) in -0.8 24.0 33.0 -8.6 -38.2 -51.3 -59.4 -63.5 -79.4 -92.4 9.4 -336.5
the Deficit....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Notes: The costs of this legislation fall within budget function 550 (health), 570 (Medicare), 600 (Income Security), and 650 (Social Security).
AHCA = American Health Care Act; numbers may not add up to totals because of rounding.
\a\For outlays, a positive number indicates an increase (adding to the deficit) and a negative number indicates a decrease (reducing the deficit).
\b\For revenues, a negative number indicates a decrease (adding to the deficit).
TABLE 2.--ESTIMATE OF THE DIRECT SPENDING AND REVENUE EFFECTS OF THE AHCA, THE BUDGET RECONCILIATION RECOMMENDATIONS OF THE HOUSE COMMITTEES ON WAYS AND MEANS AND ENERGY AND COMMERCE, MARCH
9, 2017
[Billions of dollars, by fiscal year]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING\a\
Coverage Provisions:
Estimated Budget Authority............................................ -6.6 -12.5 -22.9 -97.6 -139.1 -157.4 -173.8 -186.9 -199.4 -210.5 -278.6 -1,206.7
Estimated Outlays..................................................... -6.6 -27.5 -25.6 -92.5 -138.6 -158.5 -175.2 -188.5 -201.3 -212.0 -290.7 -1,226.2
On-Budget........................................................... -6.6 -27.5 -25.6 -92.5 -138.6 -158.2 -174.7 -187.9 -200.7 -211.4 -290.7 -1,223.6
Off-Budget.......................................................... 0 (*) (*) (*) -0.1 -0.2 -0.4 -0.6 -0.6 -0.6 (*) -2.5
Prevention and Public Health Fund:
Estimated Budget Authority............................................ 0 -0.9 -0.9 -1.0 -1.0 -1.5 -1.0 -1.7 -2.0 -2.0 -3.8 -12.0
Estimated Outlays..................................................... 0 -0.1 -0.4 -0.7 -0.9 -1.0 -1.1 -1.3 -1.4 -1.7 -2.2 -8.8
Community Health Center Program:
Estimated Budget Authority............................................ 0.4 0.0 0 0 0 0 0 0 0 0 0.4 0.4
Estimated Outlays..................................................... 0.1 0.3 0.1 0 0 0 0 0 0 0 0.4 0.4
Provision Affecting Planned Parenthood:
Estimated Budget Authority............................................ -0.2 (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.2 -0.2
Estimated Outlays..................................................... -0.2 (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.2 -0.2
Repeal of Medicaid Provisions:\b\
Estimated Budget Authority............................................ 0 0 0 -0.8 -1.3 -1.6 -1.9 -2.0 -2.1 -2.2 -2.1 -11.7
Estimated Outlays..................................................... 0 0 0 -0.8 -1.3 -1.6 -1.9 -2.0 -2.1 -2.2 -2.1 -11.7
Repeal of Medicaid Expansion:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Repeal of Reductions to Allotments for DSH:
Estimated Budget Authority............................................ 0 0.6 1.0 1.9 2.8 3.7 4.7 5.7 5.7 5.1 6.3 31.2
Estimated Outlays..................................................... 0 0.6 1.0 1.9 2.8 3.7 4.7 5.7 5.7 5.1 6.3 31.2
Reductions to States' Medicaid Costs:\b\
Estimated Budget Authority............................................ 0 -0.3 -0.6 -0.8 -0.8 -0.8 -0.9 -0.9 -0.9 -1.0 -2.5 -7.1
Estimated Outlays..................................................... 0 -0.3 -0.6 -0.8 -0.8 -0.8 -0.9 -0.9 -0.9 -1.0 -2.5 -7.1
Safety Net Funding for Non Expansion States:
Estimated Budget Authority............................................ 0 2.0 2.0 2.0 2.0 0.0 0.0 0.0 0.0 0.0 8.0 8.0
Estimated Outlays..................................................... 0 1.8 2.0 2.0 2.0 0.2 0.0 0.0 0.0 0.0 7.8 8.0
Providing Incentives for Increased Frequency of Eligibility
Redeterminations:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Per Capita Allotment for Medical Assistance:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Repeal of Cost-Sharing Subsidy:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Patient and State Stability Fund:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Continuous Health Insurance Coverage Incentive:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Increasing Levels of Coverage Options:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Change in Permissible Age Variation:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Recapture Excess Advance Payments of Premium Tax Credits:
Estimated Budget Authority............................................ 0 -2.0 -2.2 -0.7 0 0 0 0 0 0 -4.9 -4.9
Estimated Outlays..................................................... 0 -2.0 -2.2 -0.7 0 0 0 0 0 0 -4.9 -4.9
Additional Modifications to Premium Tax Credit:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Premium Tax Credit:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Small Business Tax Credit:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Individual Mandate:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Employer Mandate:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Total Changes in Direct Spending:
Estimated Budget Authority.......................................... -6.3 -13.0 -23.6 -97.1 -137.4 -157.6 -172.8 -185.8 -198.7 -210.5 -277.4 -1,202.8
Estimated Outlays................................................... -6.7 -27.2 -25.7 -91.7 -136.9 -158.0 -174.3 -187.0 -200.0 -211.7 -288.1 -1,219.1
On-Budget......................................................... -6.7 -27.2 -25.7 -91.7 -136.8 -157.7 -173.9 -186.4 -199.4 -211.1 -288.0 -1,216.6
Off-Budget........................................................ 0 (*) (*) (*) -0.1 -0.2 -0.4 -0.6 -0.6 -0.6 (*) -2.5
CHANGES IN REVENUES\c\
Coverage Provisions:
Estimated Revenues.................................................... -3.8 -13.7 -16.8 -25.5 -33.6 -36.4 -38.9 -40.4 -41.0 -40.7 -93.5 -290.9
On-Budget........................................................... -4.5 -17.0 -19.9 -27.6 -35.5 -38.4 -41.7 -44.7 -46.7 -48.0 -104.5 -324.2
Off-Budget.......................................................... 0.7 3.3 3.1 2.0 1.9 2.0 2.8 4.3 5.8 7.3 11.1 33.3
Recapture Excess Advance Payments of Premium Tax Credits................ 0 0.6 0.7 0.5 0 0 0 0 0 0 1.8 1.8
Additional Modifications to Premium Tax Credit........................
[Included in estimate of coverage provisions]
Premium Tax Credit....................................................
[Included in estimate of coverage provisions]
Small Business Tax Credit.............................................
[Included in estimate of coverage provisions]
Individual Mandate....................................................
[Included in estimate of coverage provisions]
Employer Mandate......................................................
[Included in estimate of coverage provisions]
Repeal of the Tax on Employee Health Insurance Premiums and Health Plan 0 0 0 -3.4 -6.9 -8.7 -10.7 -13.6 -5.5 0 -10.3 -48.7
Benefits\d\............................................................
Repeal of Tax on Over-the-Counter Medications........................... 0 -0.4 -0.5 -0.6 -0.6 -0.6 -0.6 -0.7 -0.7 -0.7 -2.1 -5.5
Repeal of Increase of Tax on Health Savings............................. 0 (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.1
Repeal of Limitations on Contributions to Flexible Spending Accounts.... 0 -0.3 -1.2 -1.6 -1.7 -1.8 -2.2 -2.6 -3.3 -4.1 -4.7 -18.6
Repeal of Tax on Prescription Medications............................... 0 -3.1 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -11.2 -24.8
Repeal of Medical Device Excise Tax..................................... 0 -1.4 -1.9 -2.0 -2.1 -2.2 -2.3 -2.4 -2.6 -2.7 -7.4 -19.6
Repeal of Health Insurance Tax.......................................... 0 -12.8 -13.5 -14.3 -15.1 -15.9 -16.8 -17.8 -18.7 -19.7 -55.7 -144.7
Repeal of Elimination of Deduction for Expenses Allocable to Medicare 0 -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.6 -1.7
Part D Subsidy.........................................................
Repeal of Increase in Income Threshold for Determining Medical Care -0.2 -2.0 -3.2 -3.4 -3.6 -3.9 -4.2 -4.5 -4.8 -5.1 -12.4 -34.9
Deduction..............................................................
Repeal of Medicare Tax Increase......................................... -0.4 -6.5 -10.1 -11.4 -12.3 -13.2 -14.1 -15.2 -16.5 -17.6 -40.8 -117.3
Refundable Tax Credit for Health Insurance..............................
[Included in estimate of coverage provisions]
Maximum Contribution Limit to Health Savings............................ 0 -1.0 -1.6 -1.7 -1.9 -2.1 -2.3 -2.5 -2.7 -2.9 -6.2 -18.6
Allow Both Spouses to Make Catch-up Contributions to the Same Health 0 (*) (*) (*) (*) (*) (*) (*) -0.1 -0.1 -0.1 -0.4
Savings Account........................................................
Special Rule for Certain Medical Expenses Incurred Before Establishment 0 (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.1 -0.2
of Health Savings......................................................
Repeal of Tanning Tax................................................... 0 (*) -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.6
Repeal of Net Investment Tax............................................ -1.5 -10.5 -7.5 -16.7 -17.8 -18.7 -19.7 -20.7 -21.7 -22.7 -54.1 -157.6
Remuneration............................................................ 0 (*) (*) (*) -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.4
Total Changes in Revenues............................................. -5.9 -51.2 -58.6 -83.1 -98.7 -106.6 -114.9 -123.5 -120.6 -119.4 -297.6 -882.8
On-Budget........................................................... -6.6 -53.8 -60.8 -83.3 -98.0 -105.5 -114.0 -123.2 -123.3 -124.7 -302.7 -893.5
Off-Budget.......................................................... 0.7 2.6 2.2 0.2 -0.7 -1.2 -1.0 -0.3 2.7 5.3 5.0 10.7
INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING OR REVENUES
Net Increase or Decrease (-) in the Deficit............................. -0.8 24.0 33.0 -8.6 -38.2 -51.3 -59.4 -63.5 -79.4 -92.4 9.4 -336.5
On-Budget............................................................. (*) 26.6 35.1 -8.4 -38.8 -52.3 -59.9 -63.2 -76.0 -86.4 14.5 -323.3
Off-Budget............................................................ -0.7 -2.6 -2.2 -0.2 0.6 0.9 0.5 -0.3 -3.3 -5.9 -5.1 -13.2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Notes: The costs of this legislation fall within budget function 550 (health), 570 (Medicare), 600 (Income Security), and 650 (Social Security).
Numbers may not add up to totals because of rounding; DSH = Disproportionate Share Hospital; AHCA = American Health Care Act;
* = an increase or decrease between zero and $50 million.
\a\For outlays, a positive number indicates an increase (adding to the deficit) and a negative number indicates a decrease (reducing the deficit).
\b\Estimate interacts with the provision related to the Per Capita Allotment for Medical Assistance.
\c\For revenues, a positive number indicates an increase (reducing the deficit) and a negative number indicates a decrease (adding to the deficit).
\d\This estimate does not include effects of interactions with other subsidies; those effects are included in estimates of other relevant provisions.
TABLE 3.--NET BUDGETARY EFFECTS OF THE INSURANCE COVERAGE PROVISIONS OF THE AHCA
[Billions of dollars, by fiscal year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 2017-
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicaid Outlays............................ -3 -18 -26 -68 -94 -111 -124 -135 -146 -155 -880
Subsidies for Coverage Through Marketplaces -5 -11 -16 -62 -87 -91 -95 -99 -102 -106 -673
and Related Spending and Revenues\a,b\.....
Small-Employer Tax Credits\b,c\............. (*) (*) (*) (*) -1 -1 -1 -1 -1 -1 -6
Tax Credits for Nongroup Insurance\b,d\..... 0 0 0 30 44 47 52 58 63 68 361
Penalty Payments by Employers\c\............ 2 16 20 15 16 18 19 20 22 23 171
Penalty Payments by Uninsured People........ 3 3 3 3 4 4 4 4 4 5 38
Patient and State Stability Fund Grants..... 0 0 12 15 10 9 9 8 8 8 80
Medicare\e\................................. 0 1 3 4 6 6 6 6 6 6 43
Other Effects on Revenues and Outlays\d,f\.. -1 -5 -5 -4 -4 -4 -6 -10 -14 -18 -70
-----------------------------------------------------------------------------------------------------------
Total Effect on the Deficit............... -3 -14 -9 -67 -105 -122 -136 -148 -160 -171 -935
Memorandum:
Decreases in Mandatory Spending............. -7 -27 -26 -93 -139 -158 -175 -188 -201 -212 -1,226
Decreases in Revenues....................... -4 -14 -17 -26 -34 -36 -39 -40 -41 -41 -291
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Except in the memorandum lines, positive numbers indicate an increase in the deficit, and negative numbers indicate a decrease in the deficit.
Numbers may not add up to totals because of rounding; AHCA = American Health Care Act; * = between -$500 million and zero.
\a\Related spending and revenues include spending for the Basic Health Program and net spending and revenues for risk adjustment.
\b\Includes effects on outlays and on revenues.
\c\Effects on the deficit include the associated effects of changes in taxable compensation on revenues.
\d\Includes costs for a new tax credit for continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
\e\Effects arise mostly from changes in Disproportionate Share Hospital payments.
\f\Consists mainly of the effects of changes in taxable compensation on revenues. CBO also estimates that outlays for Social Security benefits would
decrease by about $3 billion over the 2017-2026 period.
TABLE 4.--ILLUSTRATIVE EXAMPLE OF SUBSIDIES FOR NONGROUP HEALTH INSURANCE UNDER CURRENT LAW AND THE AHCA, 2026
[Dollars]
----------------------------------------------------------------------------------------------------------------
Actuarial
value of plan
Premium tax Net premium after cost-
Premium\a\ credit\b\ paid sharing
subsidies
(percent)\c\
----------------------------------------------------------------------------------------------------------------
SINGLE INDIVIDUAL WITH ANNUAL INCOME OF $26,500 (175 PERCENT OF FPL)\d\
Current Law:
21 years old.................................. 5,100 3,400 1,700
40 years old.................................. 6,500 4,800 1,700 87
64 years old.................................. 15,300 13,600 1,700
---------------------------------------------------------------
AHCA:
21 years old.................................. 3,900 2,450 1,450
40 years old.................................. 6,050 3,650 2,400 65
64 years old.................................. 19,500 4,900 14,600
----------------------------------------------------------------------------------------------------------------
SINGLE INDIVIDUAL WITH ANNUAL INCOME OF $68,200 (450 PERCENT OF FPL)\d\
Current Law:
21 years old.................................. 5,100 0 5,100
40 years old.................................. 6,500 0 6,500 70
64 years old.................................. 15,300 0 15,300
---------------------------------------------------------------
AHCA:
21 years old.................................. 3,900 2,450 1,450
40 years old.................................. 6,050 3,650 2,400 65
64 years old.................................. 19,500 4,900 14,600
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
All dollar figures have been rounded to the nearest $50; AHCA = American Health Care Act; FPL = federal poverty
level.
\a\For this illustration, CBO projected the average national premiums for a 21-year-old in the nongroup health
insurance market in 2026 both under current law and under the AHCA. On the basis of those amounts, CBO
calculated premiums for a 40-year-old and a 64-year-old, assuming that the person lives in a state that uses
the federal default age-rating methodology, which limits variation of premiums to a ratio of 3 to 1 for adults
under current law and 5 to 1 for adults under the AHCA. CBO projects that, under current law, most states will
use the default 3-to-1 age-rating curve; under the AHCA, CBO projects, most would use an age-rating curve with
a maximum ratio of 5 to 1.
\b\Under current law, premium tax credits are calculated as the difference between the reference premium and a
specified percentage of income for a person with income at a given percentage of the FPL. The reference
premium is the premium for the second-lowest-cost silver plan available in the marketplace in the area in
which the person resides. A silver plan covers about 70 percent of the costs of covered benefits. CBO's
projection of the maximum percentage of income for calculating premium tax credits in 2026 for someone with
income at 175 percent of the FPL takes into account the probability, estimated in CBO's March 2016 baseline,
that additional indexing may apply. Under the AHCA, the premium tax credits offered for nongroup coverage
would be indexed to the consumer price index for all urban consumers plus 1 percentage point. In 2026, CBO
projects, those tax credits would be about 22 percent higher than the amounts specified in 2020.
\c\The actuarial value of a plan is the percentage of costs for covered services that the plan pays. Cost-
sharing subsidies are payments made by the federal government to insurers that reduce the cost-sharing amounts
(out-of-pocket payments required under insurance policies) for covered people whose income is generally
between 100 percent and 250 percent of the FPL. The cost-sharing subsidy amounts in this example would range
from $1,100 for a 21-year-old with income at 175 percent of the FPL to $3,350 for a 64-year-old at the same
income level. Under current law, cost-sharing subsidies have the effect of increasing the actuarial value of
the plan from 70 percent for a typical silver plan to 94 percent for people whose income is between 100
percent and 149 percent of the FPL; 87 percent for people between 150 percent and 199 percent of the FPL; and
73 percent for people between 200 percent and 249 percent of the FPL. People whose income is 250 percent of
the FPL or more would receive a standard 70 percent actuarial value when purchasing a silver plan. CBO
projects that, under the AHCA, the elimination of required actuarial values and the structure of new tax
credits would, by 2026, result in a reduction to about 65 percent in the average actuarial value of plans
purchased in the nongroup market.
\d\Income levels reflect modified adjusted gross income, which equals adjusted gross income plus untaxed Social
Security benefits, foreign earned income that is excluded from adjusted gross income, tax-exempt interest, and
income of dependent filers. CBO projects that in 2026, a modified adjusted gross income of $26,500 would equal
175 percent of the FPL and an income of $68,200 would equal 450 percent of the FPL.
TABLE 5.--EFFECTS OF THE AHCA ON HEALTH INSURANCE COVERAGE FOR PEOPLE UNDER AGE 65
[Millions of people, by calendar year]
----------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
Total Population Under Age 65....... 273 274 275 276 276 277 278 279 279 280
Uninsured Under Current Law......... 26 26 27 27 27 27 27 28 28 28
Change in Coverage Under the AHCA:
Medicaid\a\....................... -1 -5 -6 -9 -12 -13 -13 -14 -14 -14
Nongroup coverage, including -2 -6 -7 -9 -8 -8 -6 -5 -4 -2
marketplaces\b\..................
Employment-based coverage......... -1 -2 -2 -2 -2 -2 -3 -5 -5 -7
Other coverage\c\................. (*) (*) (*) -1 -1 -1 -1 -1 -1 -1
Uninsured......................... 4 14 16 21 23 23 23 24 24 24
Uninsured Under the AHCA............ 31 41 43 48 50 50 51 51 51 52
Percentage of the Population Under
Age 65 With Insurance Under the
AHCA:
Including all U.S. residents...... 89 85 84 83 82 82 82 82 82 81
Excluding unauthorized immigrants. 91 87 87 85 84 84 84 84 84 84
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Estimates are based on CBO's March 2016 baseline, adjusted for subsequent legislation. They reflect average
enrollment over the course of a year among noninstitutionalized civilian residents of the 50 states and the
District of Columbia who are under the age of 65, and they include spouses and dependents covered under family
policies.
AHCA = American Health Care Act; * = a reduction that falls between zero and 500,000 people.
\a\Includes noninstitutionalized enrollees with full Medicaid benefits.
\b\Under current law, many people can purchase subsidized health insurance coverage through the marketplaces
(sometimes called exchanges) operated by the federal government, by state governments, or as partnerships
between federal and state governments. People also can purchase unsubsidized coverage in the nongroup market
outside of those marketplaces. Under the AHCA, people could receive subsidies for coverage purchased either
inside or outside of the marketplaces.
\c\Includes coverage under the Basic Health Program, which allows states to establish a coverage program
primarily for people whose income is between 138 percent and 200 percent of the federal poverty level. To
subsidize that coverage, the federal government provides states with funding that is equal to 95 percent of
the subsidies for which those people would otherwise have been eligible by purchasing health insurance through
a marketplace. Payments for that program would be rescinded by the AHCA in 2020.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Statement of General Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII, the general
performance goal or objective of this legislation is to advance
the repeal and replacement of PPACA and begin the process of
lowering health care costs, increasing plan options for
consumers, and helping to ensure the Medicaid health care
safety is put on sustainable footing.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII, no provision of
the Committee Print is known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of Public Law 111-139
or the most recent Catalog of Federal Domestic Assistance.
Committee Cost Estimate
Pursuant to clause 3(d)(1) of rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of
the Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974.
Earmark, Limited Tax Benefits, and Limited Tariff Benefits
Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the
Committee finds that the Committee Print contains no earmarks,
limited tax benefits, or limited tariff benefits.
Disclosure of Directed Rule Makings
Pursuant to section 3(i) of H. Res. 5, the Committee finds
that the Committee Print contains no directed rule makings.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Subtitle A--Patient Access to Public Health Programs
Section 101. The Prevention and Public Health Fund: This
section repeals Section 4002 of the Patient Protection and
Affordable Care Act. Section 4002 established the Prevention
and Public Health Fund (PPHF) as a permanent advanced
appropriation for prevention, wellness, and public health
initiatives to be administered Department of Health and Human
Services (HHS). This section repeals PPHF appropriations for
fiscal year (FY) 2019 onwards and rescinds unobligated funds at
the end of FY 2018.
Section 102. Community Health Center Program: This section
provides increased funding for the Community Health Center
Fund, which awards grants to Federally Qualified Health Centers
(FQHCs).
Section 103. Federal Payments to States: This section imposes a
one-year freeze on mandatory funding to a class of providers
designated as prohibited entities. A prohibited entity is one
that meets the following criteria: it is designated as a non-
profit by the Internal Revenue Service; it is an essential
community provider primarily engaged in family planning and
reproductive health services; it provides abortions in cases
that do not meet the Hyde amendment exception for federal
payment; and it received over $350 million in federal and state
Medicaid dollars in fiscal year 2014.
Subtitle B--Medicaid Program Enhancement
Section 111. Repeal of Medicaid Provisions: This section
repeals States' expanded authority to make presumptive
eligibility determinations for certain populations and alter
mandatory Medicaid income eligibility level for poverty-related
children back to 100 percent of federal poverty level. In
addition, this section repeals the 6-percentage point bonus in
the federal match rate for community-based attendant services.
Section 112. Repeal of Medicaid Expansion: This section
codifies NFIB v. Sebelius by making Medicaid expansion optional
for States. This section also repeals the State option to
extend coverage to adults above 133 percent of federal poverty
by December 31, 2019, and ends the enhanced match rate for
newly eligible beneficiaries after December 31, 2019. States
can keep the enhanced match for newly eligible expenditures
that occur before January 1, 2020. However, for expenditures
after January 1, 2020, the newly eligible matching rate would
only apply to expenditures for newly eligible individuals who
were enrolled in Medicaid (under the State plan or a waiver) as
of December 31, 2019 and do not have a break in eligibility for
more than one month after that date. After January 1, 2020, the
State could only enroll newly eligible individuals at the
State's traditional FMAP for that individual. This section also
amends the formula for the expansion State matching rate so
that the matching rate stops phasing up after calendar year
(CY) 2017 and the transition percentage would remain at the CY
2017 level for each subsequent year. In addition, for
expenditures after January 1, 2020, the expansion State
matching rate would only apply to expenditures for individuals
who are eligible for the expansion State matching rate and were
enrolled in Medicaid (under the State plan or a waiver) as of
December 31, 2019, and do not have a break in eligibility for
more than one month after that date. After January 1, 2020, the
State would have the option to enroll newly eligible
individuals, but the State would receive the State's
traditional federal medical assistance program (FMAP) for that
individual.
The section also repeals the requirement that State
Medicaid plans must provide the same ``essential health
benefits'' that are required by plans on the exchanges,
returning flexibility to the States on December 31, 2019.
Section 113. Elimination of DSH Cuts: This section repeals the
Medicaid Disproportionate Share Hospital (DSH) cuts for non-
expansion States in 2018. States that expanded Medicaid would
have their DSH cuts repealed in 2020.
Section 114. Reducing State Medicaid Costs: This section would
eliminate an unintended consequence in the current statute and
regulations by requiring States, for purposes of determining
modified adjusted gross income (MAGI) for Medicaid and CHIP
eligibility, to consider monetary winnings from lotteries (and
other lump sum payments) as if they were obtained over multiple
months, even if obtained in a single month.
This section would close the loophole by requiring
individuals to provide documentation of citizenship or lawful
presence before obtaining coverage.
This section would repeal the authority for States to elect
to substitute a higher home equity limit that is above the
statutory minimum in law. It would apply to Medicaid
eligibility determinations that are made more than 180 days
after enactment. In situations where the Secretary of HHS
determines that State legislation would be required to amend
the State plan, then States would have additional time to
comply with these requirements.
Section 115. Safety Net Funding for Non-Expansion States: This
section provides $10 billion over five years to non-expansion
States for safety net funding for CY 2018 through CY 2022.
Section 116. Providing Incentives for Increased Frequency of
Eligibility Redetermination: This section requires States with
Medicaid expansion populations to re-determine expansion
enrollees' eligibility every 6 months. This policy also
provides a temporary five percent FMAP increase to States for
activities directly related to complying with this section.
Subtitle C--Per Capita Allotment for Medical Assistance
Section 121. Per Capita Allotment for Medical Assistance:
Reforms federal Medicaid financing by creating a per capita cap
model (i.e., per enrollee limits on federal payments to States)
starting in FY 2020. Section 121 would use each State's
spending in FY 2016 as the base year to set targeted spending
for each enrollee category (elderly, blind and disabled,
children, non-expansion adults, and expansion adults) in FY
2019 and subsequent years for that State. Each State's targeted
spending amount would increase by the percentage increase in
the medical care component of the consumer price index for all
urban consumers from September 2019 to September of the next
fiscal year. Starting in FY 2020, any State with spending
higher than their specified targeted aggregate amount would
receive reductions to their Medicaid funding for the following
fiscal year.
Section 121 would also modernize Medicaid's data and
reporting systems. The additional reporting requirements would
include data on medical assistance expenditures within
categories of services and categories of all enrollees on
Medicaid.
Certain payments are exempt from the caps. For example, DSH
payments operate outside of the caps since they are already a
capped allotment. Administrative payments are also exempt. In
addition, certain populations would be exempt.
Finally, to ensure that gaming does not take place, the
Secretary of Health and Human Services (HHS) would conduct
audits of each State's enrollment and expenditures reported on
the Form CMS-64 for FY 2016, FY 2019, and subsequent years.
Subtitle D--Patient Relief and Health Insurance Market Stability
Section 131. Repeal of Cost-Sharing Subsidy: This section
repeals the Affordable Care Act (ACA) cost-sharing subsidy
program at the end of 2019. The Obama administration made
payments through this program without an appropriation, leading
to a lawsuit from House Republicans arguing that Congress and
in particular, the House of Representatives alone holds the
constitutional power of the purse. The lawsuit is being held in
abeyance. The next filing date in the case for both parties is
May 22, 2017.
Section 132. Patient and State Stability Fund: This section
establishes the Patient and State Stability Fund, which is
designed to lower patient costs and stabilize State markets.
If a State chooses not to use the funding for their own
program, the resources will be available to the Administrator
of CMS to help stabilize premiums for patients.
This section annually appropriates $15 billion for State
use for 2018 and 2019. For years 2020 through 2026, $10 billion
is appropriated annually. A State match is phased in beginning
in 2020 at a different schedule, depending if a State chooses
to use the money for their own program or utilizes the federal
default program administered through CMS.
Section 133. Continuous Health Insurance Coverage Incentive:
The continuous coverage incentive would limit adverse selection
in health care markets. Beginning in open enrollment for
benefit year 2019, there will be a 12-month lookback period to
determine if the applicant went longer than 63 days without
continuous health insurance coverage. If the applicant had a
lapse in coverage for greater than 63 days, issuers will assess
a flat 30 percent late-enrollment surcharge on top of their
base premium based on their decision to forgo coverage. This
late-enrollment surcharge would be the same for all market
entrants, regardless of health status, and discontinued after
12 months, incentivizing enrollees to remain covered. This
process would begin for special enrollment period applicants in
benefit year 2018.
Section 134. Increasing Coverage Options: Under the ACA, plan
issuers are required to label their offerings by metal tier:
Bronze, Silver, Gold, and Platinum. These metal tiers are
determined by a calculation known as actuarial value (AV). This
section repeals the AV standards.
Section 135. Change in Permissible Age Variation in Health
Insurance Premium Rate: Current law limits the cost of the most
generous plan for older Americans to three times the cost of
the least generous plan for younger Americans. The true cost of
care is 4.8-to-one, according to health economists. This
provision loosens the ratio to five-to-one and gives States the
flexibility to set their own ratio.
Changes in Existing Law Made by Title I of FY2017 Budget
Reconciliation, as Recommended by the Committee on Energy and Commerce
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
PATIENT PROTECTION AND AFFORDABLE CARE ACT
* * * * * * *
TITLE I--QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS
* * * * * * *
Subtitle D--Available Coverage Choices for All Americans
PART 1--ESTABLISHMENT OF QUALIFIED HEALTH PLANS
* * * * * * *
SEC. 1302. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.
(a) Essential Health Benefits Package.--In this title, the
term ``essential health benefits package'' means, with respect
to any health plan, coverage that--
(1) provides for the essential health benefits
defined by the Secretary under subsection (b);
(2) limits cost-sharing for such coverage in
accordance with subsection (c); and
(3) subject to subsection (e) and with respect to a
plan year before plan year 2020, provides either the
bronze, silver, gold, or platinum level of coverage
described in subsection (d).
(b) Essential Health Benefits.--
(1) In general.--Subject to paragraph (2), the
Secretary shall define the essential health benefits,
except that such benefits shall include at least the
following general categories and the items and services
covered within the categories:
(A) Ambulatory patient services.
(B) Emergency services.
(C) Hospitalization.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder
services, including behavioral health
treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services
and devices.
(H) Laboratory services.
(I) Preventive and wellness services and
chronic disease management.
(J) Pediatric services, including oral and
vision care.
(2) Limitation.--
(A) In general.--The Secretary shall ensure
that the scope of the essential health benefits
under paragraph (1) is equal to the scope of
benefits provided under a typical employer
plan, as determined by the Secretary. To inform
this determination, the Secretary of Labor
shall conduct a survey of employer-sponsored
coverage to determine the benefits typically
covered by employers, including multiemployer
plans, and provide a report on such survey to
the Secretary.
(B) Certification.--In defining the essential
health benefits described in paragraph (1), and
in revising the benefits under paragraph
(4)(H), the Secretary shall submit a report to
the appropriate committees of Congress
containing a certification from the Chief
Actuary of the Centers for Medicare & Medicaid
Services that such essential health benefits
meet the limitation described in paragraph (2).
(3) Notice and hearing.--In defining the essential
health benefits described in paragraph (1), and in
revising the benefits under paragraph (4)(H), the
Secretary shall provide notice and an opportunity for
public comment.
(4) Required elements for consideration.--In defining
the essential health benefits under paragraph (1), the
Secretary shall--
(A) ensure that such essential health
benefits reflect an appropriate balance among
the categories described in such subsection, so
that benefits are not unduly weighted toward
any category;
(B) not make coverage decisions, determine
reimbursement rates, establish incentive
programs, or design benefits in ways that
discriminate against individuals because of
their age, disability, or expected length of
life;
(C) take into account the health care needs
of diverse segments of the population,
including women, children, persons with
disabilities, and other groups;
(D) ensure that health benefits established
as essential not be subject to denial to
individuals against their wishes on the basis
of the individuals' age or expected length of
life or of the individuals' present or
predicted disability, degree of medical
dependency, or quality of life;
(E) provide that a qualified health plan
shall not be treated as providing coverage for
the essential health benefits described in
paragraph (1) unless the plan provides that--
(i) coverage for emergency department
services will be provided without
imposing any requirement under the plan
for prior authorization of services or
any limitation on coverage where the
provider of services does not have a
contractual relationship with the plan
for the providing of services that is
more restrictive than the requirements
or limitations that apply to emergency
department services received from
providers who do have such a
contractual relationship with the plan;
and
(ii) if such services are provided
out-of-network, the cost-sharing
requirement (expressed as a copayment
amount or coinsurance rate) is the same
requirement that would apply if such
services were provided in-network;
(F) provide that if a plan described in
section 1311(b)(2)(B)(ii) (relating to stand-
alone dental benefits plans) is offered through
an Exchange, another health plan offered
through such Exchange shall not fail to be
treated as a qualified health plan solely
because the plan does not offer coverage of
benefits offered through the stand-alone plan
that are otherwise required under paragraph
(1)(J); and
(G) periodically review the essential health
benefits under paragraph (1), and provide a
report to Congress and the public that
contains--
(i) an assessment of whether
enrollees are facing any difficulty
accessing needed services for reasons
of coverage or cost;
(ii) an assessment of whether the
essential health benefits needs to be
modified or updated to account for
changes in medical evidence or
scientific advancement;
(iii) information on how the
essential health benefits will be
modified to address any such gaps in
access or changes in the evidence base;
(iv) an assessment of the potential
of additional or expanded benefits to
increase costs and the interactions
between the addition or expansion of
benefits and reductions in existing
benefits to meet actuarial limitations
described in paragraph (2); and
(H) periodically update the essential health
benefits under paragraph (1) to address any
gaps in access to coverage or changes in the
evidence base the Secretary identifies in the
review conducted under subparagraph (G).
(5) Rule of construction.--Nothing in this title
shall be construed to prohibit a health plan from
providing benefits in excess of the essential health
benefits described in this subsection.
(c) Requirements Relating to Cost-Sharing.--
(1) Annual limitation on cost-sharing.--
(A) 2014.--The cost-sharing incurred under a
health plan with respect to self-only coverage
or coverage other than self-only coverage for a
plan year beginning in 2014 shall not exceed
the dollar amounts in effect under section
223(c)(2)(A)(ii) of the Internal Revenue Code
of 1986 for self-only and family coverage,
respectively, for taxable years beginning in
2014.
(B) 2015 and later.--In the case of any plan
year beginning in a calendar year after 2014,
the limitation under this paragraph shall--
(i) in the case of self-only
coverage, be equal to the dollar amount
under subparagraph (A) for self-only
coverage for plan years beginning in
2014, increased by an amount equal to
the product of that amount and the
premium adjustment percentage under
paragraph (4) for the calendar year;
and
(ii) in the case of other coverage,
twice the amount in effect under clause
(i).
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.
(2)
(3) Cost-sharing.--In this title--
(A) In general.--The term ``cost-sharing''
includes--
(i) deductibles, coinsurance,
copayments, or similar charges; and
(ii) any other expenditure required
of an insured individual which is a
qualified medical expense (within the
meaning of section 223(d)(2) of the
Internal Revenue Code of 1986) with
respect to essential health benefits
covered under the plan.
(B) Exceptions.--Such term does not include
premiums, balance billing amounts for non-
network providers, or spending for non-covered
services.
(4) Premium adjustment percentage.--For purposes of
paragraph (1)(B)(i), the premium adjustment percentage
for any calendar year is 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
no later than October 1 of such preceding calendar
year) exceeds such average per capita premium for 2013
(as determined by the Secretary).
(d) Levels of Coverage.--
(1) Levels of coverage defined.--The levels of
coverage described in this subsection are as follows:
(A) Bronze level.--A plan in the bronze level
shall provide a level of coverage that is
designed to provide benefits that are
actuarially equivalent to 60 percent of the
full actuarial value of the benefits provided
under the plan.
(B) Silver level.--A plan in the silver level
shall provide a level of coverage that is
designed to provide benefits that are
actuarially equivalent to 70 percent of the
full actuarial value of the benefits provided
under the plan.
(C) Gold level.--A plan in the gold level
shall provide a level of coverage that is
designed to provide benefits that are
actuarially equivalent to 80 percent of the
full actuarial value of the benefits provided
under the plan.
(D) Platinum level.--A plan in the platinum
level shall provide a level of coverage that is
designed to provide benefits that are
actuarially equivalent to 90 percent of the
full actuarial value of the benefits provided
under the plan.
(2) Actuarial value.--
(A) In general.--Under regulations issued by
the Secretary, the level of coverage of a plan
shall be determined on the basis that the
essential health benefits described in
subsection (b) shall be provided to a standard
population (and without regard to the
population the plan may actually provide
benefits to).
(B) Employer contributions.--The Secretary
shall issue regulations under which employer
contributions to a health savings account
(within the meaning of section 223 of the
Internal Revenue Code of 1986) may be taken
into account in determining the level of
coverage for a plan of the employer.
(C) Application.--In determining under this
title, the Public Health Service Act, or the
Internal Revenue Code of 1986 the percentage of
the total allowed costs of benefits provided
under a group health plan or health insurance
coverage that are provided by such plan or
coverage, the rules contained in the
regulations under this paragraph shall apply.
(3) Allowable variance.--The Secretary shall develop
guidelines to provide for a de minimis variation in the
actuarial valuations used in determining the level of
coverage of a plan to account for differences in
actuarial estimates.
(4) Plan reference.--In this title, any reference to
a bronze, silver, gold, or platinum plan shall be
treated as a reference to a qualified health plan
providing a bronze, silver, gold, or platinum level of
coverage, as the case may be.
(5) Sunset.--The provisions of this subsection shall
not apply after December 31, 2019, and after such date
any reference to this subsection or level of coverage
or plan described in this subsection and any
requirement under law applying such a level of coverage
or plan shall have no force or effect (and such a
requirement shall be applied as if this section had
been repealed).
(e) Catastrophic Plan.--
(1) In general.--A health plan not providing a
bronze, silver, gold, or platinum level of coverage
shall be treated as meeting the requirements of
subsection (d) with respect to any plan year if--
(A) the only individuals who are eligible to
enroll in the plan are individuals described in
paragraph (2); and
(B) the plan provides--
(i) except as provided in clause
(ii), the essential health benefits
determined under subsection (b), except
that the plan provides no benefits for
any plan year until the individual has
incurred cost-sharing expenses in an
amount equal to the annual limitation
in effect under subsection (c)(1) for
the plan year (except as provided for
in section 2713); and
(ii) coverage for at least three
primary care visits.
(2) Individuals eligible for enrollment.--An
individual is described in this paragraph for any plan
year if the individual--
(A) has not attained the age of 30 before the
beginning of the plan year; or
(B) has a certification in effect for any
plan year under this title that the individual
is exempt from the requirement under section
5000A of the Internal Revenue Code of 1986 by
reason of--
(i) section 5000A(e)(1) of such Code
(relating to individuals without
affordable coverage); or
(ii) section 5000A(e)(5) of such Code
(relating to individuals with
hardships).
(3) Restriction to individual market.--If a health
insurance issuer offers a health plan described in this
subsection, the issuer may only offer the plan in the
individual market.
(f) Child-only Plans.--If a qualified health plan is offered
through the Exchange in any level of coverage specified under
subsection (d), the issuer shall also offer that plan through
the Exchange in that level as a plan in which the only
enrollees are individuals who, as of the beginning of a plan
year, have not attained the age of 21, and such plan shall be
treated as a qualified health plan.
(g) Payments to Federally-Qualified Health Centers.--If any
item or service covered by a qualified health plan is provided
by a Federally-qualified health center (as defined in section
1905(l)(2)(B) of the Social Security Act (42 U.S.C.
1396d(l)(2)(B)) to an enrollee of the plan, the offeror of the
plan shall pay to the center for the item or service an amount
that is not less than the amount of payment that would have
been paid to the center under section 1902(bb) of such Act (42
U.S.C. 1396a(bb)) for such item or service.
* * * * * * *
Subtitle E--Affordable Coverage Choices for All Americans
PART I--PREMIUM TAX CREDITS AND COST-SHARING REDUCTIONS
Subpart A--Premium Tax Credits and Cost-Sharing Reductions
* * * * * * *
[SEC. 1402. REDUCED COST-SHARING FOR INDIVIDUALS ENROLLING IN QUALIFIED
HEALTH PLANS.
[(a) In General.--In the case of an eligible insured enrolled
in a qualified health plan--
[(1) the Secretary shall notify the issuer of the
plan of such eligibility; and
[(2) the issuer shall reduce the cost-sharing under
the plan at the level and in the manner specified in
subsection (c).
[(b) Eligible Insured.--In this section, the term ``eligible
insured'' means an individual--
[(1) who enrolls in a qualified health plan in the
silver level of coverage in the individual market
offered through an Exchange; and
[(2) whose household income exceeds 100 percent but
does not exceed 400 percent of the poverty line for a
family of the size involved.
In the case of an individual described in section 36B(c)(1)(B)
of the Internal Revenue Code of 1986, the individual shall be
treated as having household income equal to 100 percent for
purposes of applying this section.
[(c) Determination of Reduction in Cost-Sharing.--
[(1) Reduction in out-of-pocket limit.--
[(A) In general.--The reduction in cost-
sharing under this subsection shall first be
achieved by reducing the applicable out-of
pocket limit under section 1302(c)(1) in the
case of--
[(i) an eligible insured whose
household income is more than 100
percent but not more than 200 percent
of the poverty line for a family of the
size involved, by two-thirds;
[(ii) an eligible insured whose
household income is more than 200
percent but not more than 300 percent
of the poverty line for a family of the
size involved, by one-half; and
[(iii) an eligible insured whose
household income is more than 300
percent but not more than 400 percent
of the poverty line for a family of the
size involved, by one-third.
[(B) Coordination with actuarial value
limits.--
[(i) In general.--The Secretary shall
ensure the reduction under this
paragraph shall not result in an
increase in the plan's share of the
total allowed costs of benefits
provided under the plan above--
[(I) 94 percent in the case
of an eligible insured
described in paragraph (2)(A);
[(II) 87 percent in the case
of an eligible insured
described in paragraph (2)(B);
[(III) 73 percent in the case
of an eligible insured whose
household income is more than
200 percent but not more than
250 percent of the poverty line
for a family of the size
involved; and
[(IV) 70 percent in the case
of an eligible insured whose
household income is more than
250 percent but not more than
400 percent of the poverty line
for a family of the size
involved.
[(ii) Adjustment.--The Secretary
shall adjust the out-of pocket limits
under paragraph (1) if necessary to
ensure that such limits do not cause
the respective actuarial values to
exceed the levels specified in clause
(i).
[(2) Additional reduction for lower income
insureds.--The Secretary shall establish procedures
under which the issuer of a qualified health plan to
which this section applies shall further reduce cost-
sharing under the plan in a manner sufficient to--
[(A) in the case of an eligible insured whose
household income is not less than 100 percent
but not more than 150 percent of the poverty
line for a family of the size involved,
increase the plan's share of the total allowed
costs of benefits provided under the plan to 94
percent of such costs;
[(B) in the case of an eligible insured whose
household income is more than 150 percent but
not more than 200 percent of the poverty line
for a family of the size involved, increase the
plan's share of the total allowed costs of
benefits provided under the plan to 87 percent
of such costs; and
[(C) in the case of an eligible insured whose
household income is more than 200 percent but
not more than 250 percent of the poverty line
for a family of the size involved, increase the
plan's share of the total allowed costs of
benefits provided under the plan to 73 percent
of such costs.
[(3) Methods for reducing cost-sharing.--
[(A) In general.--An issuer of a qualified
health plan making reductions under this
subsection shall notify the Secretary of such
reductions and the Secretary shall make
periodic and timely payments to the issuer
equal to the value of the reductions.
[(B) Capitated payments.--The Secretary may
establish a capitated payment system to carry
out the payment of cost-sharing reductions
under this section. Any such system shall take
into account the value of the reductions and
make appropriate risk adjustments to such
payments.
[(4) Additional benefits.--If a qualified health plan
under section 1302(b)(5) offers benefits in addition to
the essential health benefits required to be provided
by the plan, or a State requires a qualified health
plan under section 1311(d)(3)(B) to cover benefits in
addition to the essential health benefits required to
be provided by the plan, the reductions in cost-sharing
under this section shall not apply to such additional
benefits.
[(5) Special rule for pediatric dental plans.--If an
individual enrolls in both a qualified health plan and
a plan described in section 1311(d)(2)(B)(ii)(I) for
any plan year, subsection (a) shall not apply to that
portion of any reduction in cost-sharing under
subsection (c) 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).
[(d) Special Rules for Indians.--
[(1) Indians under 300 percent of poverty.--If an
individual enrolled in any qualified health plan in the
individual market through an Exchange is an Indian (as
defined in section 4(d) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C.
450b(d))) whose household income is not more than 300
percent of the poverty line for a family of the size
involved, then, for purposes of this section--
[(A) such individual shall be treated as an
eligible insured; and
[(B) the issuer of the plan shall eliminate
any cost-sharing under the plan.
[(2) Items or services furnished through Indian
health providers.--If an Indian (as so defined)
enrolled in a qualified health plan is furnished an
item or service directly by the Indian Health Service,
an Indian Tribe, Tribal Organization, or Urban Indian
Organization or through referral under contract health
services--
[(A) no cost-sharing under the plan shall be
imposed under the plan for such item or
service; and
[(B) the issuer of the plan shall not reduce
the payment to any such entity for such item or
service by the amount of any cost-sharing that
would be due from the Indian but for
subparagraph (A).
[(3) Payment.--The Secretary shall pay to the issuer
of a qualified health plan the amount necessary to
reflect the increase in actuarial value of the plan
required by reason of this subsection.
[(e) Rules for Individuals Not Lawfully Present.--
[(1) In general.--If an individual who is an eligible
insured is not lawfully present--
[(A) no cost-sharing reduction under this
section shall apply with respect to the
individual; 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 cost-
sharing reduction 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, in
consultation with the Secretary of the Treasury, 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) Definitions and Special Rules.--In this section:
[(1) In general.--Any term used in this section which
is also used in section 36B of the Internal Revenue
Code of 1986 shall have the meaning given such term by
such section.
[(2) Limitations on reduction.--No cost-sharing
reduction shall be allowed under this section with
respect to coverage for any month unless the month is a
coverage month with respect to which a credit is
allowed to the insured (or an applicable taxpayer on
behalf of the insured) under section 36B of such Code.
[(3) Data used for eligibility.--Any determination
under this section shall be made on the basis of the
taxable year for which the advance determination is
made under section 1412 and not the taxable year for
which the credit under section 36B of such Code is
allowed.]
* * * * * * *
TITLE IV--PREVENTION OF CHRONIC DISEASE AND IMPROVING PUBLIC HEALTH
Subtitle A--Modernizing Disease Prevention and Public Health Systems
* * * * * * *
SEC. 4002. PREVENTION AND PUBLIC HEALTH FUND.
(a) Purpose.--It is the purpose of this section to establish
a Prevention and Public Health Fund (referred to in this
section as the ``Fund''), to be administered through the
Department of Health and Human Services, Office of the
Secretary, to provide for expanded and sustained national
investment in prevention and public health programs to improve
health and help restrain the rate of growth in private and
public sector health care costs.
(b) Funding.--There are hereby authorized to be appropriated,
and appropriated, to the Fund, out of any monies in the
Treasury not otherwise appropriated--
(1) for fiscal year 2010, $500,000,000;
(2) for each of fiscal years 2012 through 2017,
$1,000,000,000; and
(3) for [each of fiscal years 2018 and 2019] fiscal
year 2018, $900,000,000[;].
[(4) for each of fiscal years 2020 and 2021,
$1,000,000,000; and
[(5) for fiscal year 2022, $1,500,000,000;
[(6) for fiscal year 2023, $1,000,000,000;
[(7) for fiscal year 2024, $1,700,000,000; and
[(8) for fiscal year 2025 and each fiscal year
thereafter, $2,000,000,000.]
(c) Use of Fund.--The Secretary shall transfer amounts in the
Fund to accounts within the Department of Health and Human
Services to increase funding, over the fiscal year 2008 level,
for programs authorized by the Public Health Service Act, for
prevention, wellness, and public health activities including
prevention research, health screenings, and initiatives, such
as the Community Transformation grant program, the Education
and Outreach Campaign Regarding Preventive Benefits, and
immunization programs.
(d) Transfer Authority.--The Committee on Appropriations of
the Senate and the Committee on Appropriations of the House of
Representatives may provide for the transfer of funds in the
Fund to eligible activities under this section, subject to
subsection (c).
* * * * * * *
----------
MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT OF 2015
* * * * * * *
TITLE II--MEDICARE AND OTHER HEALTH EXTENDERS
* * * * * * *
Subtitle B--Other Health Extenders
* * * * * * *
SEC. 221. EXTENSION OF FUNDING FOR COMMUNITY HEALTH CENTERS, THE
NATIONAL HEALTH SERVICE CORPS, AND TEACHING HEALTH
CENTERS.
(a) Funding for Community Health Centers and the National
Health Service Corps.--
(1) Community health centers.--Section 10503(b)(1)(E)
of the Patient Protection and Affordable Care Act (42
U.S.C. 254b-2(b)(1)(E)) is amended by striking ``for
fiscal year 2015'' and inserting ``for each of fiscal
years 2015 through 2017, and an additional $422,000,000
for fiscal year 2017''.
(2) National health service corps.--Section
10503(b)(2)(E) of the Patient Protection and Affordable
Care Act (42 U.S.C. 254b-2(b)(2)(E)) is amended by
striking ``for fiscal year 2015'' and inserting ``for
each of fiscal years 2015 through 2017''.
(b) Extension of Teaching Health Centers Program.--Section
340H(g) of the Public Health Service Act (42 U.S.C. 256h(g)) is
amended by inserting ``and $60,000,000 for each of fiscal years
2016 and 2017'' before the period at the end.
(c) Application.--Amounts appropriated pursuant to this
section for fiscal year 2016 and fiscal year 2017 are subject
to the requirements contained in Public Law 113-235 for funds
for programs authorized under sections 330 through 340 of the
Public Health Service Act (42 U.S.C. 254b-256).
* * * * * * *
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SOCIAL SECURITY ACT
* * * * * * *
TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION
Part A--General Provisions
* * * * * * *
civil monetary penalties
Sec. 1128A. (a) Any person (including an organization,
agency, or other entity, but excluding a beneficiary, as
defined in subsection (i)(5)) that--
(1) knowingly presents or causes to be presented to
an officer, employee, or agent of the United States, or
of any department or agency thereof, or of any State
agency (as defined in subsection (i)(1)), a claim (as
defined in subsection (i)(2)) that the Secretary
determines--
(A) is for a medical or other item or service
that the person knows or should know was not
provided as claimed, including any person who
engages in a pattern or practice of presenting
or causing to be presented a claim for an item
or service that is based on a code that the
person knows or should know will result in a
greater payment to the person than the code the
person knows or should know is applicable to
the item or service actually provided,
(B) is for a medical or other item or service
and the person knows or should know the claim
is false or fraudulent,
(C) is presented for a physician's service
(or an item or service incident to a
physician's service) by a person who knows or
should know that the individual who furnished
(or supervised the furnishing of) the service--
(i) was not licensed as a physician,
(ii) was licensed as a physician, but
such license had been obtained through
a misrepresentation of material fact
(including cheating on an examination
required for licensing), or
(iii) represented to the patient at
the time the service was furnished that
the physician was certified in a
medical specialty by a medical
specialty board when the individual was
not so certified,
(D) is for a medical or other item or service
furnished during a period in which the person
was excluded from the program under which the
claim was made pursuant to a determination by
the Secretary under this section or under
section 1128, 1156, 1160(b) (as in effect on
September 2, 1982), 1862(d) (as in effect on
the date of the enactment of the Medicare and
Medicaid Patient and Program Protection Act of
1987), or 1866(b) or as a result of the
application of the provisions of section
1842(j)(2), or
(E) is for a pattern of medical or other
items or services that a person knows or should
know are not medically necessary;
(2) knowingly presents or causes to be presented to
any person a request for payment which is in violation
of the terms of (A) an assignment under section
1842(b)(3)(B)(ii), or (B) an agreement with a State
agency (or other requirement of a State plan under
title XIX) not to charge a person for an item or
service in excess of the amount permitted to be
charged, or (C) an agreement to be a participating
physician or supplier under section 1842(h)(1), or (D)
an agreement pursuant to section 1866(a)(1)(G);
(3) knowingly gives or causes to be given to any
person, with respect to coverage under title XVIII of
inpatient hospital services subject to the provisions
of section 1886, information that he knows or should
know is false or misleading, and that could reasonably
be expected to influence the decision when to discharge
such person or another individual from the hospital;
(4) in the case of a person who is not an
organization, agency, or other entity, is excluded from
participating in a program under title XVIII or a State
health care program in accordance with this subsection
or under section 1128 and who, at the time of a
violation of this subsection--
(A) retains a direct or indirect ownership or
control interest in an entity that is
participating in a program under title XVIII or
a State health care program, and who knows or
should know of the action constituting the
basis for the exclusion; or
(B) is an officer or managing employee (as
defined in section 1126(b)) of such an entity;
(5) offers to or transfers remuneration to any
individual eligible for benefits under title XVIII of
this Act, or under a State health care program (as
defined in section 1128(h)) that such person knows or
should know is likely to influence such individual to
order or receive from a particular provider,
practitioner, or supplier any item or service for which
payment may be made, in whole or in part, under title
XVIII, or a State health care program (as so defined);
(6) arranges or contracts (by employment or
otherwise) with an individual or entity that the person
knows or should know is excluded from participation in
a Federal health care program (as defined in section
1128B(f)), for the provision of items or services for
which payment may be made under such a program;
(7) commits an act described in paragraph (1) or (2)
of section 1128B(b);
(8) knowingly makes, uses, or causes to be made or
used, a false record or statement material to a false
or fraudulent claim for payment for items and services
furnished under a Federal health care program; or
(9) fails to grant timely access, upon reasonable
request (as defined by the Secretary in regulations),
to the Inspector General of the Department of Health
and Human Services, for the purpose of audits,
investigations, evaluations, or other statutory
functions of the Inspector General of the Department of
Health and Human Services;
(8) orders or prescribes a medical or other item or
service during a period in which the person was
excluded from a Federal health care program (as so
defined), in the case where the person knows or should
know that a claim for such medical or other item or
service will be made under such a program;
(9) knowingly makes or causes to be made any false
statement, omission, or misrepresentation of a material
fact in any application, bid, or contract to
participate or enroll as a provider of services or a
supplier under a Federal health care program (as so
defined), including Medicare Advantage organizations
under part C of title XVIII, prescription drug plan
sponsors under part D of title XVIII, medicaid managed
care organizations under title XIX, and entities that
apply to participate as providers of services or
suppliers in such managed care organizations and such
plans;
(10) knows of an overpayment (as defined in paragraph
(4) of section 1128J(d)) and does not report and return
the overpayment in accordance with such section;
shall be subject, in addition to any other penalties that may
be prescribed by law, to a civil money penalty of not more than
$10,000 for each item or service [(or, in cases under paragraph
(3)] (or, in cases under paragraph (1) in which an individual
was knowingly enrolled on or after October 1, 2017, pursuant to
section 1902(a)(10)(A)(i)(VIII) for medical assistance under
the State plan under title XIX whose income does not meet the
income threshold specified in such section or in which a claim
was presented on or after October 1, 2017, as a claim for an
item or service furnished to an individual described in such
section but whose enrollment under such State plan is not made
on the basis of such individual's meeting the income threshold
specified in such section, $20,000 for each such individual or
claim; in cases under paragraph (3), $15,000 for each
individual with respect to whom false or misleading information
was given; in cases under paragraph (4), $10,000 for each day
the prohibited relationship occurs; in cases under paragraph
(7), $50,000 for each such act; or in cases under paragraph
(9), $50,000 for each false statement or misrepresentation of a
material fact). In addition, such a person shall be subject to
an assessment of not more than 3 times the amount claimed for
each such item or service in lieu of damages sustained by the
United States or a State agency because of such claim (or, in
cases under paragraph (7), damages of not more than 3 times the
total amount of remuneration offered, paid, solicited, or
received, without regard to whether a portion of such
remuneration was offered, paid, solicited, or received for a
lawful purpose; or in cases under paragraph (9), an assessment
of not more than 3 times the total amount claimed for each item
or service for which payment was made based upon the
application containing the false statement or misrepresentation
of a material fact). In addition the Secretary may make a
determination in the same proceeding to exclude the person from
participation in the Federal health care programs (as defined
in section 1128B(f)(1)) and to direct the appropriate State
agency to exclude the person from participation in any State
health care program.
(b)(1) If a hospital or a critical access hospital knowingly
makes a payment, directly or indirectly, to a physician as an
inducement to reduce or limit medically necessary services
provided with respect to individuals who--
(A) are entitled to benefits under part A or part B
of title XVIII or to medical assistance under a State
plan approved under title XIX, and
(B) are under the direct care of the physician,
the hospital or a critical access hospital shall be subject, in
addition to any other penalties that may be prescribed by law,
to a civil money penalty of not more than $2,000 for each such
individual with respect to whom the payment is made.
(2) Any physician who knowingly accepts receipt of a payment
described in paragraph (1) shall be subject, in addition to any
other penalties that may be prescribed by law, to a civil money
penalty of not more than $2,000 for each individual described
in such paragraph with respect to whom the payment is made.
(3)(A) Any physician who executes a document described in
subparagraph (B) with respect to an individual knowing that all
of the requirements referred to in such subparagraph are not
met with respect to the individual shall be subject to a civil
monetary penalty of not more than the greater of--
(i) $5,000, or
(ii) three times the amount of the payments under
title XVIII for home health services which are made
pursuant to such certification.
(B) A document described in this subparagraph is any document
that certifies, for purposes of title XVIII, that an individual
meets the requirements of section 1814(a)(2)(C) or
1835(a)(2)(A) in the case of home health services furnished to
the individual.
(c)(1) The Secretary may initiate a proceeding to determine
whether to impose a civil money penalty, assessment, or
exclusion under subsection (a) or (b) only as authorized by the
Attorney General pursuant to procedures agreed upon by them.
The Secretary may not initiate an action under this section
with respect to any claim, request for payment, or other
occurrence described in this section later than six years after
the date the claim was presented, the request for payment was
made, or the occurrence took place. The Secretary may initiate
an action under this section by serving notice of the action in
any manner authorized by Rule 4 of the Federal Rules of Civil
Procedure.
(2) The Secretary shall not make a determination adverse to
any person under subsection (a) or (b) until the person has
been given written notice and an opportunity for the
determination to be made on the record after a hearing at which
the person is entitled to be represented by counsel, to present
witnesses, and to cross-examine witnesses against the person.
(3) In a proceeding under subsection (a) or (b) which--
(A) is against a person who has been convicted
(whether upon a verdict after trial or upon a plea of
guilty or nolo contendere) of a Federal crime charging
fraud or false statements, and
(B) involves the same transaction as in the criminal
action, the person is estopped from denying the
essential elements of the criminal offense.
(4) The official conducting a hearing under this section may
sanction a person, including any party or attorney, for failing
to comply with an order or procedure, failing to defend an
action, or other misconduct as would interfere with the speedy,
orderly, or fair conduct of the hearing. Such sanction shall
reasonably relate to the severity and nature of the failure or
misconduct. Such sanction may include--
(A) in the case of refusal to provide or permit
discovery, drawing negative factual inferences or
treating such refusal as an admission by deeming the
matter, or certain facts, to be established,
(B) prohibiting a party from introducing certain
evidence or otherwise supporting a particular claim or
defense,
(C) striking pleadings, in whole or in part,
(D) staying the proceedings,
(E) dismissal of the action,
(F) entering a default judgment,
(G) ordering the party or attorney to pay attorneys'
fees and other costs caused by the failure or
misconduct, and
(H) refusing to consider any motion or other action
which is not filed in a timely manner.
(d) In determining the amount or scope of any penalty,
assessment, or exclusion imposed pursuant to subsection (a) or
(b), the Secretary shall take into account--
(1) the nature of claims and the circumstances under
which they were presented,
(2) the degree of culpability, history of prior
offenses, and financial condition of the person
presenting the claims, and
(3) such other matters as justice may require.
(e) Any person adversely affected by a determination of the
Secretary under this section may obtain a review of such
determination in the United States Court of Appeals for the
circuit in which the person resides, or in which the claim or
specified claim was presented, by filing in such court (within
sixty days following the date the person is notified of the
Secretary's determination) a written petition requesting that
the determination be modified or set aside. A copy of the
petition shall be forthwith transmitted by the clerk of the
court to the Secretary, and thereupon the Secretary shall file
in the Court the record in the proceeding as provided in
section 2112 of title 28, United States Code. Upon such filing,
the court shall have jurisdiction of the proceeding and of the
question determined therein, and shall have the power to make
and enter upon the pleadings, testimony, and proceedings set
forth in such record a decree affirming, modifying, remanding
for further consideration, or setting aside, in whole or in
part, the determination of the Secretary and enforcing the same
to the extent that such order is affirmed or modified. No
objection that has not been urged before the Secretary shall be
considered by the court, unless the failure or neglect to urge
such objection shall be excused because of extraordinary
circumstances. The findings of the Secretary with respect to
questions of fact, if supported by substantial evidence on the
record considered as a whole, shall be conclusive. If any party
shall apply to the court for leave to adduce additional
evidence and shall show to the satisfaction of the court that
such additional evidence is material and that there were
reasonable grounds for the failure to adduce such evidence in
the hearing before the Secretary, the court may order such
additional evidence to be taken before the Secretary and to be
made a part of the record. The Secretary may modify his
findings as to the facts, or make new findings, by reason of
additional evidence so taken and filed, and he shall file with
the court such modified or new findings, which findings with
respect to questions of fact, if supported by substantial
evidence on the record considered as a whole, shall be
conclusive, and his recommendations, if any, for the
modification or setting aside of his original order. Upon the
filing of the record with it, the jurisdiction of the court
shall be exclusive and its judgment and decree shall be final,
except that the same shall be subject to review by the Supreme
Court of the United States, as provided in section 1254 of
title 28, United States Code.
(f) Civil money penalties and assessments imposed under this
section may be compromised by the Secretary and may be
recovered in a civil action in the name of the United States
brought in United States district court for the district where
the claim or specified claim (as defined in subsection (r)) was
presented, or where the claimant (or, with respect to a person
described in subsection (o), the person) resides, as determined
by the Secretary. Amounts recovered under this section shall be
paid to the Secretary and disposed of as follows:
(1)(A) In the case of amounts recovered arising out
of a claim under title XIX, there shall be paid to the
State agency an amount bearing the same proportion to
the total amount recovered as the State's share of the
amount paid by the State agency for such claim bears to
the total amount paid for such claim.
(B) In the case of amounts recovered arising out of a
claim under an allotment to a State under title V,
there shall be paid to the State agency an amount equal
to three-sevenths of the amount recovered.
(2) Such portion of the amounts recovered as is
determined to have been paid out of the trust funds
under sections 1817 and 1841 shall be repaid to such
trust funds.
(3) With respect to amounts recovered arising out of
a claim under a Federal health care program (as defined
in section 1128B(f)), the portion of such amounts as is
determined to have been paid by the program shall be
repaid to the program, and the portion of such amounts
attributable to the amounts recovered under this
section by reason of the amendments made by the Health
Insurance Portability and Accountability Act of 1996
(as estimated by the Secretary) shall be deposited into
the Federal Hospital Insurance Trust Fund pursuant to
section 1817(k)(2)(C).
(4) The remainder of the amounts recovered shall be
deposited as miscellaneous receipts of the Treasury of
the United States.
The amount of such penalty or assessment, when finally
determined, or the amount agreed upon in compromise, may be
deducted from any sum then or later owing by the United States
or a State agency (or, in the case of a penalty or assessment
under subsection (o), by a specified State agency (as defined
in subsection (q)(6)), to the person against whom the penalty
or assessment has been assessed.
(g) A determination by the Secretary to impose a penalty,
assessment, or exclusion under subsection (a) or (b) shall be
final upon the expiration of the sixty-day period referred to
in subsection (e). Matters that were raised or that could have
been raised in a hearing before the Secretary or in an appeal
pursuant to subsection (e) may not be raised as a defense to a
civil action by the United States to collect a penalty,
assessment, or exclusion assessed under this section.
(h) Whenever the Secretary's determination to impose a
penalty, assessment, or exclusion under subsection (a) or (b)
becomes final, he shall notify the appropriate State or local
medical or professional organization, the appropriate State
agency or agencies administering or supervising the
administration of State health care programs (as defined in
section 1128(h)), and the appropriate utilization and quality
control peer review organization, and the appropriate State or
local licensing agency or organization (including the agency
specified in section 1864(a) and 1902(a)(33)) that such a
penalty, assessment, or exclusion has become final and the
reasons therefor.
(i) For the purposes of this section:
(1) The term ``State agency'' means the agency
established or designated to administer or supervise
the administration of the State plan under title XIX of
this Act or designated to administer the State's
program under title V or subtitle 1 of title XX of this
Act.
(2) The term ``claim'' means an application for
payments for items and services under a Federal health
care program (as defined in section 1128B(f)).
(3) The term ``item or service'' includes (A) any
particular item, device, medical supply, or service
claimed to have been provided to a patient and listed
in an itemized claim for payment, and (B) in the case
of a claim based on costs, any entry in the cost
report, books of account or other documents sup-
porting such claim.
(4) The term ``agency of the United States'' includes
any contractor acting as a fiscal intermediary,
carrier, or fiscal agent or any other claims processing
agent for a Federal health care program (as so
defined).
(5) The term ``beneficiary'' means an individual who
is eligible to receive items or services for which
payment may be made under a Federal health care program
(as so defined) but does not include a provider,
supplier, or practitioner.
(6) The term ``remuneration'' includes the waiver of
coinsurance and deductible amounts (or any part
thereof), and transfers of items or services for free
or for other than fair market value. The term
``remuneration'' does not include--
(A) the waiver of coinsurance and deductible
amounts by a person, if--
(i) the waiver is not offered as part
of any advertisement or solicitation;
(ii) the person does not routinely
waive coinsurance or deductible
amounts; and
(iii) the person--
(I) waives the coinsurance
and deductible amounts after
determining in good faith that
the individual is in financial
need; or
(II) fails to collect
coinsurance or deductible
amounts after making reasonable
collection efforts;
(B) subject to subsection (n), any
permissible practice described in any
subparagraph of section 1128B(b)(3) or in
regulations issued by the Secretary;
(C) differentials in coinsurance and
deductible amounts as part of a benefit plan
design as long as the differentials have been
disclosed in writing to all beneficiaries,
third party payers, and providers, to whom
claims are presented and as long as the
differentials meet the standards as defined in
regulations promulgated by the Secretary not
later than 180 days after the date of the
enactment of the Health Insurance Portability
and Accountability Act of 1996;
(D) incentives given to individuals to
promote the delivery of preventive care as
determined by the Secretary in regulations so
promulgated;
(E) a reduction in the copayment amount for
covered OPD services under section
1833(t)(5)(B);
(F) any other remuneration which promotes
access to care and poses a low risk of harm to
patients and Federal health care programs (as
defined in section 1128B(f) and designated by
the Secretary under regulations);
(G) the offer or transfer of items or
services for free or less than fair market
value by a person, if--
(i) the items or services consist of
coupons, rebates, or other rewards from
a retailer;
(ii) the items or services are
offered or transferred on equal terms
available to the general public,
regardless of health insurance status;
and
(iii) the offer or transfer of the
items or services is not tied to the
provision of other items or services
reimbursed in whole or in part by the
program under title XVIII or a State
health care program (as defined in
section 1128(h));
(H) the offer or transfer of items or
services for free or less than fair market
value by a person, if--
(i) the items or services are not
offered as part of any advertisement or
solicitation;
(ii) the items or services are not
tied to the provision of other services
reimbursed in whole or in part by the
program under title XVIII or a State
health care program (as so defined);
(iii) there is a reasonable
connection between the items or
services and the medical care of the
individual; and
(iv) the person provides the items or
services after determining in good
faith that the individual is in
financial need; or
(I) effective on a date specified by the
Secretary (but not earlier than January 1,
2011), the waiver by a PDP sponsor of a
prescription drug plan under part D of title
XVIII or an MA organization offering an MA-PD
plan under part C of such title of any
copayment for the first fill of a covered part
D drug (as defined in section 1860D-2(e)) that
is a generic drug for individuals enrolled in
the prescription drug plan or MA-PD plan,
respectively.
(7) The term ``should know'' means that a person,
with respect to information--
(A) acts in deliberate ignorance of the truth
or falsity of the information; or
(B) acts in reckless disregard of the truth
or falsity of the information,
and no proof of specific intent to defraud is required.
(j)(1) The provisions of subsections (d) and (e) of section
205 shall apply with respect to this section to the same extent
as they are applicable with respect to title II. The Secretary
may delegate the authority granted by section 205(d) (as made
applicable to this section) to the Inspector General of the
Department of Health and Human Services for purposes of any
investigation under this section.
(2) The Secretary may delegate authority granted under this
section and under section 1128 to the Inspector General of the
Department of Health and Human Services.
(k) Whenever the Secretary has reason to believe that any
person has engaged, is engaging, or is about to engage in any
activity which makes the person subject to a civil monetary
penalty under this section, the Secretary may bring an action
in an appropriate district court of the United States (or, if
applicable, a United States court of any territory) to enjoin
such activity, or to enjoin the person from concealing,
removing, encumbering, or disposing of assets which may be
required in order to pay a civil monetary penalty if any such
penalty were to be imposed or to seek other appropriate relief.
(l) A principal is liable for penalties, assessments, and an
exclusion under this section for the actions of the principal's
agent acting within the scope of the agency.
(m)(1) For purposes of this section, with respect to a
Federal health care program not contained in this Act,
references to the Secretary in this section shall be deemed to
be references to the Secretary or Administrator of the
department or agency with jurisdiction over such program and
references to the Inspector General of the Department of Health
and Human Services in this section shall be deemed to be
references to the Inspector General of the applicable
department or agency.
(2)(A) The Secretary and Administrator of the departments and
agencies referred to in paragraph (1) may include in any action
pursuant to this section, claims within the jurisdiction of
other Federal departments or agencies as long as the following
conditions are satisfied:
(i) The case involves primarily claims submitted to
the Federal health care programs of the department or
agency initiating the action.
(ii) The Secretary or Administrator of the department
or agency initiating the action gives notice and an
opportunity to participate in the investigation to the
Inspector General of the department or agency with
primary jurisdiction over the Federal health care
programs to which the claims were submitted.
(B) If the conditions specified in subparagraph (A) are
fulfilled, the Inspector General of the department or agency
initiating the action is authorized to exercise all powers
granted under the Inspector General Act of 1978 (5 U.S.C. App.)
with respect to the claims submitted to the other departments
or agencies to the same manner and extent as provided in that
Act with respect to claims submitted to such departments or
agencies.
(n)(1) Subparagraph (B) of subsection (i)(6) shall not apply
to a practice described in paragraph (2) unless--
(A) the Secretary, through the Inspector General of
the Department of Health and Human Services,
promulgates a rule authorizing such a practice as an
exception to remuneration; and
(B) the remuneration is offered or transferred by a
person under such rule during the 2-year period
beginning on the date the rule is first promulgated.
(2) A practice described in this paragraph is a practice
under which a health care provider or facility pays, in whole
or in part, premiums for medicare supplemental policies for
individuals entitled to benefits under part A of title XVIII
pursuant to section 226A.
(o) Any person (including an organization, agency, or other
entity, but excluding a program beneficiary, as defined in
subsection (q)(4)) that, with respect to a grant, contract, or
other agreement for which the Secretary provides funding--
(1) knowingly presents or causes to be presented a
specified claim (as defined in subsection (r)) under
such grant, contract, or other agreement that the
person knows or should know is false or fraudulent;
(2) knowingly makes, uses, or causes to be made or
used any false statement, omission, or
misrepresentation of a material fact in any
application, proposal, bid, progress report, or other
document that is required to be submitted in order to
directly or indirectly receive or retain funds provided
in whole or in part by such Secretary pursuant to such
grant, contract, or other agreement;
(3) knowingly makes, uses, or causes to be made or
used, a false record or statement material to a false
or fraudulent specified claim under such grant,
contract, or other agreement;
(4) knowingly makes, uses, or causes to be made or
used, a false record or statement material to an
obligation (as defined in subsection (s)) to pay or
transmit funds or property to such Secretary with
respect to such grant, contract, or other agreement, or
knowingly conceals or knowingly and improperly avoids
or decreases an obligation to pay or transmit funds or
property to such Secretary with respect to such grant,
contract, or other agreement; or
(5) fails to grant timely access, upon reasonable
request (as defined by such Secretary in regulations),
to the Inspector General of the Department, for the
purpose of audits, investigations, evaluations, or
other statutory functions of such Inspector General in
matters involving such grants, contracts, or other
agreements;
shall be subject, in addition to any other penalties that may
be prescribed by law, to a civil money penalty in cases under
paragraph (1), of not more than $10,000 for each specified
claim; in cases under paragraph (2), not more than $50,000 for
each false statement, omission, or misrepresentation of a
material fact; in cases under paragraph (3), not more than
$50,000 for each false record or statement; in cases under
paragraph (4), not more than $50,000 for each false record or
statement or $10,000 for each day that the person knowingly
conceals or knowingly and improperly avoids or decreases an
obligation to pay; or in cases under paragraph (5), not more
than $15,000 for each day of the failure described in such
paragraph. In addition, in cases under paragraphs (1) and (3),
such a person shall be subject to an assessment of not more
than 3 times the amount claimed in the specified claim
described in such paragraph in lieu of damages sustained by the
United States or a specified State agency because of such
specified claim, and in cases under paragraphs (2) and (4),
such a person shall be subject to an assessment of not more
than 3 times the total amount of the funds described in
paragraph (2) or (4), respectively (or, in the case of an
obligation to transmit property to the Secretary described in
paragraph (4), of the value of the property described in such
paragraph) in lieu of damages sustained by the United States or
a specified State agency because of such case. In addition, the
Secretary may make a determination in the same proceeding to
exclude the person from participation in the Federal health
care programs (as defined in section 1128B(f)(1)) and to direct
the appropriate State agency to exclude the person from
participation in any State health care program.
(p) The provisions of subsections (c), (d), (g), and (h)
shall apply to a civil money penalty or assessment under
subsection (o) in the same manner as such provisions apply to a
penalty, assessment, or proceeding under subsection (a). In
applying subsection (d), each reference to a claim under such
subsection shall be treated as including a reference to a
specified claim (as defined in subsection (r)).
(q) For purposes of this subsection and subsections (o) and
(p):
(1) The term ``Department'' means the Department of
Health and Human Services.
(2) The term ``material'' means having a natural
tendency to influence, or be capable of influencing,
the payment or receipt of money or property.
(3) The term ``other agreement'' includes a
cooperative agreement, scholarship, fellowship, loan,
subsidy, payment for a specified use, donation
agreement, award, or subaward (regardless of whether
one or more of the persons entering into the agreement
is a contractor or subcontractor).
(4) The term ``program beneficiary'' means, in the
case of a grant, contract, or other agreement designed
to accomplish the objective of awarding or otherwise
furnishing benefits or assistance to individuals and
for which the Secretary provides funding, an individual
who applies for, or who receives, such benefits or
assistance from such grant, contract, or other
agreement. Such term does not include, with respect to
such grant, contract, or other agreement, an officer,
employee, or agent of a person or entity that receives
such grant or that enters into such contract or other
agreement.
(5) The term ``recipient'' includes a subrecipient or
subcontractor.
(6) The term ``specified State agency'' means an
agency of a State government established or designated
to administer or supervise the administration of a
grant, contract, or other agreement funded in whole or
in part by the Secretary.
(r) For purposes of this section, the term ``specified
claim'' means any application, request, or demand under a
grant, contract, or other agreement for money or property,
whether or not the United States or a specified State agency
has title to the money or property, that is not a claim (as
defined in subsection (i)(2)) and that--
(1) is presented or caused to be presented to an
officer, employee, or agent of the Department or agency
thereof, or of any specified State agency; or
(2) is made to a contractor, grantee, or any other
recipient if the money or property is to be spent or
used on the Department's behalf or to advance a
Department program or interest, and if the Department--
(A) provides or has provided any portion of
the money or property requested or demanded; or
(B) will reimburse such contractor, grantee,
or other recipient for any portion of the money
or property which is requested or demanded.
(s) For purposes of subsection (o), the term ``obligation''
means an established duty, whether or not fixed, arising from
an express or implied contractual, grantor-grantee, or
licensor-licensee relationship, for a fee-based or similar
relationship, from statute or regulation, or from the retention
of any overpayment.
* * * * * * *
income and eligibility verification system
Sec. 1137. (a) In order to meet the requirements of this
section, a State must have in effect an income and eligibility
verification system which meets the requirements of subsection
(d) and under which--
(1) the State shall require, as a condition of
eligibility for benefits under any program listed in
subsection (b), that each applicant for or recipient of
benefits under that program furnish to the State his
social security account number (or numbers, if he has
more than one such number), and the State shall utilize
such account numbers in the administration of that
program so as to enable the association of the records
pertaining to the applicant or recipient with his
account number;
(2) wage information from agencies administering
State unemployment compensation laws available pursuant
to section 3304(a)(16) of the Internal Revenue Code of
1954, wage information reported pursuant to paragraph
(3) of this subsection, and wage, income, and other
information from the Social Security Administration and
the Internal Revenue Service available pursuant to
section 6103(l)(7) of such Code, shall be requested and
utilized to the extent that such information may be
useful in verifying eligibility for, and the amount of,
benefits available under any program listed in
subsection (b), as determined by the Secretary of
Health and Human Services (or, in the case of the
unemployment compensation program, by the Secretary of
Labor, or, in the case of the supplemental nutrition
assistance program, by the Secretary of Agriculture);
(3) employers (as defined in section 453A(a)(2)(B))
(including State and local governmental entities and
labor organizations (as defined in section
453A(a)(2)(B)(ii))) in such State are required,
effective September 30, 1988, to make quarterly wage
reports to a State agency (which may be the agency
administering the State's unemployment compensation
law) except that the Secretary of Labor (in
consultation with the Secretary of Health and Human
Services and the Secretary of Agriculture) may waive
the provisions of this paragraph if he determines that
the State has in effect an alternative system which is
as effective and timely for purposes of providing
employment related income and eligibility data for the
purposes described in paragraph (2), and except that no
report shall be filed with respect to an employee of a
State or local agency performing intelligence or
counterintelligence functions, if the head of such
agency has determined that filing such a report could
endanger the safety of the employee or compromise an
ongoing investigation or intelligence mission, and
except that in the case of wage reports with respect to
domestic service employment, a State may permit
employers (as so defined) that make returns with
respect to such employment on a calendar year basis
pursuant to section 3510 of the Internal Revenue Code
of 1986 to make such reports on an annual basis;
(4) the State agencies administering the programs
listed in subsection (b) adhere to standardized formats
and procedures established by the Secretary of Health
and Human Services (in consultation with the Secretary
of Agriculture) under which--
(A) the agencies will exchange with each
other information in their possession which may
be of use in establishing or verifying
eligibility or benefit amounts under any other
such program;
(B) such information shall be made available
to assist in the child support program under
part D of title IV of this Act, and to assist
the Secretary of Health and Human Services in
establishing or verifying eligibility or
benefit amounts under titles II and XVI of this
Act, but subject to the safeguards and
restrictions established by the Secretary of
the Treasury with respect to information
released pursuant to section 6103(l) of the
Internal Revenue Code of 1954; and
(C) the use of such information shall be
targeted to those uses which are most likely to
be productive in identifying and preventing
ineligibility and incorrect payments, and no
State shall be required to use such information
to verify the eligibility of all recipients;
(5) adequate safeguards are in effect so as to assure
that--
(A) the information exchanged by the State
agencies is made available only to the extent
necessary to assist in the valid administrative
needs of the program receiving such
information, and the information released
pursuant to section 6103(l) of the Internal
Revenue Code of 1954 is only exchanged with
agencies authorized to receive such information
under such section 6103(l); and
(B) the information is adequately protected
against unauthorized disclosure for other
purposes, as provided in regulations
established by the Secretary of Health and
Human Services, or, in the case of the
unemployment compensation program, the
Secretary of Labor, or, in the case of the
supplemental nutrition assistance program, the
Secretary of Agriculture, or in the case of
information released pursuant to section
6103(l) of the Internal Revenue Code of 1954,
the Secretary of the Treasury;
(6) all applicants for and recipients of benefits
under any such program shall be notified at the time of
application, and periodically thereafter, that
information available through the system will be
requested and utilized; and
(7) accounting systems are utilized which assure that
programs providing data receive appropriate
reimbursement from the programs utilizing the data for
the costs incurred in providing the data.
(b) The programs which must participate in the income and
eligibility verification system are--
(1) any State program funded under part A of title IV
of this Act;
(2) the medicaid program under title XIX of this Act;
(3) the unemployment compensation program under
section 3304 of the Internal Revenue Code of 1954;
(4) the supplemental nutrition assistance program
established under the Food and Nutrition Act of 2008 (7
U.S.C. 2011 et seq.); and
(5) any State program under a plan approved under
title I, X, XIV, or XVI of this Act.
(c)(1) In order to protect applicants for and recipients of
benefits under the programs identified in subsection (b), or
under the supplemental security income program under title XVI,
from the improper use of information obtained from the
Secretary of the Treasury under section 6103(l)(7)(B) of the
Internal Revenue Code of 1954, no Federal, State, or local
agency receiving such information may terminate, deny, suspend,
or reduce any benefits of an individual until such agency has
taken appropriate steps to independently verify information
relating to--
(A) the amount of the asset or income involved,
(B) whether such individual actually has (or had)
access to such asset or income for his own use, and
(C) the period or periods when the individual
actually had such asset or income.
(2) Such individual shall be informed by the agency of the
findings made by the agency on the basis of such verified
information, and shall be given an opportunity to contest such
findings, in the same manner as applies to other information
and findings relating to eligibility factors under the program.
(d) The requirements of this subsection, with respect to an
income and eligibility verification system of a State, are as
follows:
(1)(A) The State shall require, as a condition of an
individual's eligibility for benefits under a program
listed in subsection (b), a declaration in writing,
under penalty of perjury--
(i) by the individual,
(ii) in the case in which eligibility for
program benefits is determined on a family or
household basis, by any adult member of such
individual's family or household (as
applicable), or
(iii) in the case of an individual born into
a family or household receiving benefits under
such program, by any adult member or such
family or household no later than the next
redetermination of eligibility of such family
or household following the birth of such
individual,
stating whether the individual is a citizen or national
of the United States, and, if that individual is not a
citizen or national of the United States, that the
individual is in a satisfactory immigration status.
(B) In this subsection, in the case of the program
described in subsection (b)(4)--
(i) any reference to the State shall be
considered a reference to the State agency, and
(ii) any reference to an individual's
eligibility for benefits under the program
shall be considered a reference to the
individual's eligibility to participate in the
program as a member of a household, and
(iii) the term ``satisfactory immigration
status'' means an immigration status which does
not make the individual ineligible for benefits
under the applicable program.
(2) If such an individual is not a citizen or
national of the United States, there must be presented
either--
(A) alien registration documentation or other
proof of immigration registration from the
Immigration and Naturalization Service that
contains the individual's alien admission
number or alien file number (or numbers if the
individual has more than one number), or
(B) such other documents as the State
determines constitutes reasonable evidence
indicating a satisfactory immigration status.
(3) If the documentation described in paragraph
(2)(A) is presented, the State shall utilize the
individual's alien file or alien admission number to
verify with the Immigration and Naturalization Service
the individual's immigration status through an
automated or other system (designated by the Service
for use with States) that--
(A) utilizes the individual's name, file
number, admission number, or other means
permitting efficient verification, and
(B) protects the individual's privacy to the
maximum degree possible.
(4) In the case of such an individual who is not a
citizen or national of the United States, if, at the
time of application for benefits, the statement
described in paragraph (1) is submitted but the
documentation required under paragraph (2) is not
presented or if the documentation required under
paragraph (2)(A) is presented but such documentation is
not verified under paragraph (3)--
(A) subject to subsection (f)(2), the State--
(i) shall provide a reasonable
opportunity to submit to the State
evidence indicating a satisfactory
immigration status, and
(ii) may not delay, deny, reduce, or
terminate the individual's eligibility
for benefits under the program on the
basis of the individual's immigration
status until such a reasonable
opportunity has been provided; and
(B) if there are submitted documents which
the State determines constitutes reasonable
evidence indicating such status--
(i) the State shall transmit to the
Immigration and Naturalization Service
either photostatic or other similar
copies of such documents, or
information from such documents, as
specified by the Immigration and
Naturalization Service, for official
verification,
(ii) subject to subsection (f)(2),
pending such verification, the State
may not delay, deny, reduce, or
terminate the individual's eligibility
for benefits under the program on the
basis of the individual's immigration
status, and
(iii) the State shall not be liable
for the consequences of any action,
delay, or failure of the Service to
conduct such verification.
(5) If the State determines, after complying with the
requirements of paragraph (4), that such an individual
is not in a satisfactory immigration status under the
applicable program--
(A) the State shall deny or terminate the
individual's eligibility for benefits under the
program, and
(B) the applicable fair hearing process shall
be made available with respect to the
individual.
(e) Each Federal agency responsible for administration of a
program described in subsection (b) shall not take any
compliance, disallowance, penalty, or other regulatory action
against a State with respect to any error in the State's
determination to make an individual eligible for benefits based
on citizenship or immigration status--
(1) if the State has provided such eligibility based
on a verification of satisfactory immigration status by
the Immigration and Naturalization Service,
(2) because the State, under subsection
(d)(4)(A)(ii), was required to provide a reasonable
opportunity to submit documentation,
(3) because the State, under subsection
(d)(4)(B)(ii), was required to wait for the response of
the Immigration and Naturalization Service to the
State's request for official verification of the
immigration status of the individual, or
(4) because of a fair hearing process described in
subsection (d)(5)(B).
(f) [Subsections (a)(1) and (d)] (1) Subsections (a)(1) and
(d) shall not apply with respect to aliens seeking medical
assistance for the treatment of an emergency medical condition
under section 1903(v)(2).
(2)(A) Subparagraphs (A) and (B)(ii) of subsection (d)(4)
shall not apply in the case of an initial determination made on
or after the date that is 6 months after the date of the
enactment of this paragraph with respect to the eligibility of
an alien described in subparagraph (B) for benefits under the
program listed in subsection (b)(2).
(B) An alien described in this subparagraph is an individual
declaring to be a citizen or national of the United States with
respect to whom a State, in accordance with section
1902(a)(46)(B), requires--
(i) pursuant to 1902(ee), the submission of a social
security number; or
(ii) pursuant to 1903(x), the presentation of
satisfactory documentary evidence of citizenship or
nationality.
* * * * * * *
TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS
* * * * * * *
STATE PLANS FOR MEDICAL ASSISTANCE
Sec. 1902. (a) A State plan for medical assistance must--
(1) provide that it shall be in effect in all
political subdivisions of the State, and, if
administered by them, be mandatory upon them;
(2) provide for financial participation by the State
equal to not less than 40 per centum of the non-Federal
share of the expenditures under the plan with respect
to which payments under section 1903 are authorized by
this title; and, effective July 1, 1969, provide for
financial participation by the State equal to all of
such non-Federal share or provide for distribution of
funds from Federal or State sources, for carrying out
the State plan, on an equalization or other basis which
will assure that the lack of adequate funds from local
sources will not result in lowering the amount,
duration, scope, or quality of care and services
available under the plan;
(3) provide for granting an opportunity for a fair
hearing before the State agency to any individual whose
claim for medical assistance under the plan is denied
or is not acted upon with reasonable promptness;
(4) provide (A) such methods of administration
(including methods relating to the establishment and
maintenance of personnel standards on a merit basis,
except that the Secretary shall exercise no authority
with respect to the selection, tenure of office, and
compensation of any individual employed in accordance
with such methods, and including provision for
utilization of professional medical personnel in the
administration and, where administered locally,
supervision of administration of the plan) as are found
by the Secretary to be necessary for the proper and
efficient operation of the plan, (B) for the training
and effective use of paid subprofessional staff, with
particular emphasis on the full-time or part-time
employment of recipients and other persons of low
income, as community service aides, in the
administration of the plan and for the use of nonpaid
or partially paid volunteers in a social service
volunteer program in providing services to applicants
and recipients and in assisting any advisory committees
established by the State agency, (C) that each State or
local officer, employee, or independent contractor who
is responsible for the expenditure of substantial
amounts of funds under the State plan, each individual
who formerly was such an officer, employee, or
contractor, and each partner of such an officer,
employee, or contractor shall be prohibited from
committing any act, in relation to any activity under
the plan, the commission of which, in connection with
any activity concerning the United States Government,
by an officer or employee of the United States
Government, an individual who was such an officer or
employee, or a partner of such an officer or employee
is prohibited by section 207 or 208 of title 18, United
States Code, and (D) that each State or local officer,
employee, or independent contractor who is responsible
for selecting, awarding, or otherwise obtaining items
and services under the State plan shall be subject to
safeguards against conflicts of interest that are at
least as stringent as the safeguards that apply under
section 27 of the Office of Federal Procurement Policy
Act (41 U.S.C. 423) to persons described in subsection
(a)(2) of such section of that Act;
(5) either provide for the establishment or
designation of a single State agency to administer or
to supervise the administration of the plan; or provide
for the establishment or designation of a single State
agency to administer or to supervise the administration
of the plan, except that the determination of
eligibility for medical assistance under the plan shall
be made by the State or local agency administering the
State plan approved under title I or XVI (insofar as it
relates to the aged) if the State is eligible to
participate in the State plan program established under
title XVI, or by the agency or agencies administering
the supplemental security income program established
under title XVI or the State plan approved under part A
of title IV if the State is not eligible to participate
in the State plan program established under title XVI;
(6) provide that the State agency will make such
reports, in such form and containing such information,
as the Secretary may from time to time require, and
comply with such provisions as the Secretary may from
time to time find necessary to assure the correctness
and verification of such reports;
(7) provide--
(A) safeguards which restrict the use or
disclosure of information concerning applicants
and recipients to purposes directly connected
with--
(i) the administration of the plan;
and
(ii) the exchange of information
necessary to certify or verify the
certification of eligibility of
children for free or reduced price
breakfasts under the Child Nutrition
Act of 1966 and free or reduced price
lunches under the Richard B. Russell
National School Lunch Act, in
accordance with section 9(b) of that
Act, using data standards and formats
established by the State agency; and
(B) that, notwithstanding the Express Lane
option under subsection (e)(13), the State may
enter into an agreement with the State agency
administering the school lunch program
established under the Richard B. Russell
National School Lunch Act under which the State
shall establish procedures to ensure that--
(i) a child receiving medical
assistance under the State plan under
this title whose family income does not
exceed 133 percent of the poverty line
(as defined in section 673(2) of the
Community Services Block Grant Act,
including any revision required by such
section), as determined without regard
to any expense, block, or other income
disregard, applicable to a family of
the size involved, may be certified as
eligible for free lunches under the
Richard B. Russell National School
Lunch Act and free breakfasts under the
Child Nutrition Act of 1966 without
further application; and
(ii) the State agencies responsible
for administering the State plan under
this title, and for carrying out the
school lunch program established under
the Richard B. Russell National School
Lunch Act (42 U.S.C. 1751 et seq.) or
the school breakfast program
established by section 4 of the Child
Nutrition Act of 1966 (42 U.S.C. 1773),
cooperate in carrying out paragraphs
(3)(F) and (15) of section 9(b) of that
Act;
(8) provide that all individuals wishing to make
application for medical assistance under the plan shall
have opportunity to do so, and that such assistance
shall be furnished with reasonable promptness to all
eligible individuals;
(9) provide--
(A) that the State health agency, or other
appropriate State medical agency (whichever is
utilized by the Secretary for the purpose
specified in the first sentence of section
1864(a)), shall be responsible for establishing
and maintaining health standards for private or
public institutions in which recipients of
medical assistance under the plan may receive
care or services,
(B) for the establishment or designation of a
State authority or authorities which shall be
responsible for establishing and maintaining
standards, other than those relating to health,
for such institutions,
(C) that any laboratory services paid for
under such plan must be provided by a
laboratory which meets the applicable
requirements of section 1861(e)(9) or
paragraphs (16) and (17) of section 1861(s),
or, in the case of a laboratory which is in a
rural health clinic, of section 1861(aa)(2)(G),
and
(D) that the State maintain a consumer-
oriented website providing useful information
to consumers regarding all skilled nursing
facilities and all nursing facilities in the
State, including for each facility, Form 2567
State inspection reports (or a successor form),
complaint investigation reports, the facility's
plan of correction, and such other information
that the State or the Secretary considers
useful in assisting the public to assess the
quality of long term care options and the
quality of care provided by individual
facilities;
(10) provide--
(A) for making medical assistance available,
including at least the care and services listed
in paragraphs (1) through (5), (17), (21), and
(28) of section 1905(a), to--
(i) all individuals--
(I) who are receiving aid or
assistance under any plan of
the State approved under title
I, X, XIV, or XVI, or part A or
part E of title IV (including
individuals eligible under this
title by reason of section
402(a)(37), 406(h), or 473(b),
or considered by the State to
be receiving such aid as
authorized under section
482(e)(6)),
(II)(aa) with respect to whom
supplemental security income
benefits are being paid under
title XVI (or were being paid
as of the date of the enactment
of section 211(a) of the
Personal Responsibility and
Work Opportunity Reconciliation
Act of 1996 (P.L. 104-193) and
would continue to be paid but
for the enactment of that
section), (bb) who are
qualified severely impaired
individuals (as defined in
section 1905(q)), or (cc) who
are under 21 years of age and
with respect to whom
supplemental security income
benefits would be paid under
title XVI if subparagraphs (A)
and (B) of section 1611(c)(7)
were applied without regard to
the phrase ``the first day of
the month following'',
(III) who are qualified
pregnant women or children as
defined in section 1905(n),
(IV) who are described in
subparagraph (A) or (B) of
subsection (l)(1) and whose
family income does not exceed
the minimum income level the
State is required to establish
under subsection (l)(2)(A) for
such a family;
(V) who are qualified family
members as defined in section
1905(m)(1),
(VI) who are described in
subparagraph (C) of subsection
(l)(1) and whose family income
does not exceed the income
level the State is required to
establish under subsection
(l)(2)(B) for such a family,
(VII) who are described in
subparagraph (D) of subsection
(l)(1) and whose family income
does not exceed the income
level the State is required to
establish under subsection
(l)(2)(C) for such a family;
(VIII) beginning January 1,
2014, at the option of a State,
who are under 65 years of age,
not pregnant, not entitled to,
or enrolled for, benefits under
part A of title XVIII, or
enrolled for benefits under
part B of title XVIII, and are
not described in a previous
subclause of this clause, and
whose income (as determined
under subsection (e)(14)) does
not exceed 133 percent of the
poverty line (as defined in
section 2110(c)(5)) applicable
to a family of the size
involved, subject to subsection
(k); or
(IX) who--
(aa) are under 26
years of age;
(bb) are not
described in or
enrolled under any of
subclauses (I) through
(VII) of this clause or
are described in any of
such subclauses but
have income that
exceeds the level of
income applicable under
the State plan for
eligibility to enroll
for medical assistance
under such subclause;
(cc) were in foster
care under the
responsibility of the
State on the date of
attaining 18 years of
age or such higher age
as the State has
elected under section
475(8)(B)(iii); and
(dd) were enrolled in
the State plan under
this title or under a
waiver of the plan
while in such foster
care;
(ii) at the option of the State, to
any group or groups of individuals
described in section 1905(a) (or, in
the case of individuals described in
section 1905(a)(i), to any reasonable
categories of such individuals) who are
not individuals described in clause (i)
of this subparagraph but--
(I) who meet the income and
resources requirements of the
appropriate State plan
described in clause (i) or the
supplemental security income
program (as the case may be),
(II) who would meet the
income and resources
requirements of the appropriate
State plan described in clause
(i) if their work-related child
care costs were paid from their
earnings rather than by a State
agency as a service
expenditure,
(III) who would be eligible
to receive aid under the
appropriate State plan
described in clause (i) if
coverage under such plan was as
broad as allowed under Federal
law,
(IV) with respect to whom
there is being paid, or who are
eligible, or would be eligible
if they were not in a medical
institution, to have paid with
respect to them, aid or
assistance under the
appropriate State plan
described in clause (i),
supplemental security income
benefits under title XVI, or a
State supplementary payment;
(V) who are in a medical
institution for a period of not
less than 30 consecutive days
(with eligibility by reason of
this subclause beginning on the
first day of such period), who
meet the resource requirements
of the appropriate State plan
described in clause (i) or the
supplemental security income
program, and whose income does
not exceed a separate income
standard established by the
State which is consistent with
the limit established under
section 1903(f)(4)(C),
(VI) who would be eligible
under the State plan under this
title if they were in a medical
institution, with respect to
whom there has been a
determination that but for the
provision of home or community-
based services described in
subsection (c), (d), or (e) of
section 1915 they would require
the level of care provided in a
hospital, nursing facility or
intermediate care facility for
the mentally retarded the cost
of which could be reimbursed
under the State plan, and who
will receive home or community-
based services pursuant to a
waiver granted by the Secretary
under subsection (c), (d), or
(e) of section 1915,
(VII) who would be eligible
under the State plan under this
title if they were in a medical
institution, who are terminally
ill, and who will receive
hospice care pursuant to a
voluntary election described in
section 1905(o);
(VIII) who is a child
described in section
1905(a)(i)--
(aa) for whom there
is in effect an
adoption assistance
agreement (other than
an agreement under part
E of title IV) between
the State and an
adoptive parent or
parents,
(bb) who the State
agency responsible for
adoption assistance has
determined cannot be
placed with adoptive
parents without medical
assistance because such
child has special needs
for medical or
rehabilitative care,
and
(cc) who was eligible
for medical assistance
under the State plan
prior to the adoption
assistance agreement
being entered into, or
who would have been
eligible for medical
assistance at such time
if the eligibility
standards and
methodologies of the
State's foster care
program under part E of
title IV were applied
rather than the
eligibility standards
and methodologies of
the State's aid to
families with dependent
children program under
part A of title IV;
(IX) who are described in
subsection (l)(1) and are not
described in clause (i)(IV),
clause (i)(VI), or clause
(i)(VII);
(X) who are described in
subsection (m)(1);
(XI) who receive only an
optional State supplementary
payment based on need and paid
on a regular basis, equal to
the difference between the
individual's countable income
and the income standard used to
determine eligibility for such
supplementary payment (with
countable income being the
income remaining after
deductions as established by
the State pursuant to standards
that may be more restrictive
than the standards for
supplementary security income
benefits under title XVI),
which are available to all
individuals in the State (but
which may be based on different
income standards by political
subdivision according to cost
of living differences), and
which are paid by a State that
does not have an agreement with
the Commissioner of Social
Security under section 1616 or
1634;
(XII) who are described in
subsection (z)(1) (relating to
certain TB-infected
individuals);
(XIII) who are in families
whose income is less than 250
percent of the income official
poverty line (as defined by the
Office of Management and
Budget, and revised annually in
accordance with section 673(2)
of the Omnibus Budget
Reconciliation Act of 1981)
applicable to a family of the
size involved, and who but for
earnings in excess of the limit
established under section
1905(q)(2)(B), would be
considered to be receiving
supplemental security income
(subject, notwithstanding
section 1916, to payment of
premiums or other cost-sharing
charges (set on a sliding scale
based on income) that the State
may determine);
(XIV) who are optional
targeted low-income children
described in section
1905(u)(2)(B);
(XV) who, but for earnings in
excess of the limit established
under section 1905(q)(2)(B),
would be considered to be
receiving supplemental security
income, who is at least 16, but
less than 65, years of age, and
whose assets, resources, and
earned or unearned income (or
both) do not exceed such
limitations (if any) as the
State may establish;
(XVI) who are employed
individuals with a medically
improved disability described
in section 1905(v)(1) and whose
assets, resources, and earned
or unearned income (or both) do
not exceed such limitations (if
any) as the State may
establish, but only if the
State provides medical
assistance to individuals
described in subclause (XV);
(XVII) who are independent
foster care adolescents (as
defined in section 1905(w)(1)),
or who are within any
reasonable categories of such
adolescents specified by the
State;
(XVIII) who are described in
subsection (aa) (relating to
certain breast or cervical
cancer patients);
(XIX) who are disabled
children described in
subsection (cc)(1);
(XX) beginning January 1,
2014, and ending December 31,
2019, who are under 65 years of
age and are not described in or
enrolled under a previous
subclause of this clause, and
whose income (as determined
under subsection (e)(14))
exceeds 133 percent of the
poverty line (as defined in
section 2110(c)(5)) applicable
to a family of the size
involved but does not exceed
the highest income eligibility
level established under the
State plan or under a waiver of
the plan, subject to subsection
(hh);
(XXI) who are described in
subsection (ii) (relating to
individuals who meet certain
income standards); or
(XXII) who are eligible for
home and community-based
services under needs-based
criteria established under
paragraph (1)(A) of section
1915(i), or who are eligible
for home and community-based
services under paragraph (6) of
such section, and who will
receive home and community-
based services pursuant to a
State plan amendment under such
subsection;
(B) that the medical assistance made
available to any individual described in
subparagraph (A)--
(i) shall not be less in amount,
duration, or scope than the medical
assistance made available to any other
such individual, and
(ii) shall not be less in amount,
duration, or scope than the medical
assistance made available to
individuals not described in
subparagraph (A);
(C) that if medical assistance is included
for any group of individuals described in
section 1905(a) who are not described in
subparagraph (A) or (E), then--
(i) the plan must include a
description of (I) the criteria for
determining eligibility of individuals
in the group for such medical
assistance, (II) the amount, duration,
and scope of medical assistance made
available to individuals in the group,
and (III) the single standard to be
employed in determining income and
resource eligibility for all such
groups, and the methodology to be
employed in determining such
eligibility, which shall be no more
restrictive than the methodology which
would be employed under the
supplemental security income program in
the case of groups consisting of aged,
blind, or disabled individuals in a
State in which such program is in
effect, and which shall be no more
restrictive than the methodology which
would be employed under the appropriate
State plan (described in subparagraph
(A)(i)) to which such group is most
closely categorically related in the
case of other groups;
(ii) the plan must make available
medical assistance--
(I) to individuals under the
age of 18 who (but for income
and resources) would be
eligible for medical assistance
as an individual described in
subparagraph (A)(i), and
(II) to pregnant women,
during the course of their
pregnancy, who (but for income
and resources) would be
eligible for medical assistance
as an individual described in
subparagraph (A);
(iii) such medical assistance must
include (I) with respect to children
under 18 and individuals entitled to
institutional services, ambulatory
services, and (II) with respect to
pregnant women, prenatal care and
delivery services; and
(iv) if such medical assistance
includes services in institutions for
mental diseases or in an intermediate
care facility for the mentally retarded
(or both) for any such group, it also
must include for all groups covered at
least the care and services listed in
paragraphs (1) through (5) and (17) of
section 1905(a) or the care and
services listed in any 7 of the
paragraphs numbered (1) through (24) of
such section;
(D) for the inclusion of home health services
for any individual who, under the State plan,
is entitled to nursing facility services;
(E)(i) for making medical assistance
available for medicare cost-sharing (as defined
in section 1905(p)(3)) for qualified medicare
beneficiaries described in section 1905(p)(1);
(ii) for making medical assistance available
for payment of medicare cost-sharing described
in section 1905(p)(3)(A)(i) for qualified
disabled and working individuals described in
section 1905(s);
(iii) for making medical assistance available
for medicare cost sharing described in section
1905(p)(3)(A)(ii) subject to section
1905(p)(4), for individuals who would be
qualified medicare beneficiaries described in
section 1905(p)(1) but for the fact that their
income exceeds the income level established by
the State under section 1905(p)(2) but is less
than 110 percent in 1993 and 1994, and 120
percent in 1995 and years thereafter of the
official poverty line (referred to in such
section) for a family of the size involved; and
(iv) subject to sections 1933 and 1905(p)(4),
for making medical assistance available for
medicare cost-sharing described in section
1905(p)(3)(A)(ii) for individuals who would be
qualified medicare beneficiaries described in
section 1905(p)(1) but for the fact that their
income exceeds the income level established by
the State under section 1905(p)(2) and is at
least 120 percent, but less than 135 percent,
of the official poverty line (referred to in
such section) for a family of the size involved
and who are not otherwise eligible for medical
assistance under the State plan;
(F) at the option of a State, for making
medical assistance available for COBRA premiums
(as defined in subsection (u)(2)) for qualified
COBRA continuation beneficiaries described in
section 1902(u)(1); and
(G) that, in applying eligibility criteria of
the supplemental security income program under
title XVI for purposes of determining
eligibility for medical assistance under the
State plan of an individual who is not
receiving supplemental security income, the
State will disregard the provisions of
subsections (c) and (e) of section 1613;
except that (I) the making available of the services
described in paragraph (4), (14), or (16) of section
1905(a) to individuals meeting the age requirements
prescribed therein shall not, by reason of this
paragraph (10), require the making available of any
such services, or the making available of such services
of the same amount, duration, and scope, to individuals
of any other ages, (II) the making available of
supplementary medical insurance benefits under part B
of title XVIII to individuals eligible therefor (either
pursuant to an agreement entered into under section
1843 or by reason of the payment of premiums under such
title by the State agency on behalf of such
individuals), or provision for meeting part or all of
the cost of deductibles, cost sharing, or similar
charges under part B of title XVIII for individuals
eligible for benefits under such part, shall not, by
reason of this paragraph (10), require the making
available of any such benefits, or the making available
of services of the same amount, duration, and scope, to
any other individuals, (III) the making available of
medical assistance equal in amount, duration, and scope
to the medical assistance made available to individuals
described in clause (A) to any classification of
individuals approved by the Secretary with respect to
whom there is being paid, or who are eligible, or would
be eligible if they were not in a medical institution,
to have paid with respect to them, a State
supplementary payment shall not, by reason of this
paragraph (10), require the making available of any
such assistance, or the making available of such
assistance of the same amount, duration, and scope, to
any other individuals not described in clause (A), (IV)
the imposition of a deductible, cost sharing, or
similar charge for any item or service furnished to an
individual not eligible for the exemption under section
1916(a)(2) or (b)(2) shall not require the imposition
of a deductible, cost sharing, or similar charge for
the same item or service furnished to an individual who
is eligible for such exemption, (V) the making
available to pregnant women covered under the plan of
services relating to pregnancy (including prenatal,
delivery, and postpartum services) or to any other
condition which may complicate pregnancy shall not, by
reason of this paragraph (10), require the making
available of such services, or the making available of
such services of the same amount, duration, and scope,
to any other individuals, provided such services are
made available (in the same amount, duration, and
scope) to all pregnant women covered under the State
plan, (VI) with respect to the making available of
medical assistance for hospice care to terminally ill
individuals who have made a voluntary election
described in section 1905(o) to receive hospice care
instead of medical assistance for certain other
services, such assistance may not be made available in
an amount, duration, or scope less than that provided
under title XVIII, and the making available of such
assistance shall not, by reason of this paragraph (10),
require the making available of medical assistance for
hospice care to other individuals or the making
available of medical assistance for services waived by
such terminally ill individuals, (VII) the medical
assistance made available to an individual described in
subsection (l)(1)(A) who is eligible for medical
assistance only because of subparagraph (A)(i)(IV) or
(A)(ii)(IX) shall be limited to medical assistance for
services related to pregnancy (including prenatal,
delivery, postpartum, and family planning services) and
to other conditions which may complicate pregnancy,
(VIII) the medical assistance made available to a
qualified medicare beneficiary described in section
1905(p)(1) who is only entitled to medical assistance
because the individual is such a beneficiary shall be
limited to medical assistance for medicare cost-sharing
(described in section 1905(p)(3)), subject to the
provisions of subsection (n) and section 1916(b), (IX)
the making available of respiratory care services in
accordance with subsection (e)(9) shall not, by reason
of this paragraph (10), require the making available of
such services, or the making available of such services
of the same amount, duration, and scope, to any
individuals not included under subsection (e)(9)(A),
provided such services are made available (in the same
amount, duration, and scope) to all individuals
described in such subsection, (X) if the plan provides
for any fixed durational limit on medical assistance
for inpatient hospital services (whether or not such a
limit varies by medical condition or diagnosis), the
plan must establish exceptions to such a limit for
medically necessary inpatient hospital services
furnished with respect to individuals under one year of
age in a hospital defined under the State plan,
pursuant to section 1923(a)(1)(A), as a
disproportionate share hospital and subparagraph (B)
(relating to comparability) shall not be construed as
requiring such an exception for other individuals,
services, or hospitals, (XI) the making available of
medical assistance to cover the costs of premiums,
deductibles, coinsurance, and other cost-sharing
obligations for certain individuals for private health
coverage as described in section 1906 shall not, by
reason of paragraph (10), require the making available
of any such benefits or the making available of
services of the same amount, duration, and scope of
such private coverage to any other individuals, (XII)
the medical assistance made available to an individual
described in subsection (u)(1) who is eligible for
medical assistance only because of subparagraph (F)
shall be limited to medical assistance for COBRA
continuation premiums (as defined in subsection
(u)(2)), (XIII) the medical assistance made available
to an individual described in subsection (z)(1) who is
eligible for medical assistance only because of
subparagraph (A)(ii)(XII) shall be limited to medical
assistance for TB-related services (described in
subsection (z)(2)), (XIV) the medical assistance made
available to an individual described in subsection (aa)
who is eligible for medical assistance only because of
subparagraph (A)(10)(ii)(XVIII) shall be limited to
medical assistance provided during the period in which
such an individual requires treatment for breast or
cervical cancer (XV) the medical assistance made
available to an individual described in subparagraph
(A)(i)(VIII) shall be limited to medical assistance
described in subsection (k)(1), (XVI) the medical
assistance made available to an individual described in
subsection (ii) shall be limited to family planning
services and supplies described in section
1905(a)(4)(C) including medical diagnosis and treatment
services that are provided pursuant to a family
planning service in a family planning setting and
(XVII) if an individual is described in subclause (IX)
of subparagraph (A)(i) and is also described in
subclause (VIII) of that subparagraph, the medical
assistance shall be made available to the individual
through subclause (IX) instead of through subclause
(VIII);
(11)(A) provide for entering into cooperative
arrangements with the State agencies responsible for
administering or supervising the administration of
health services and vocational rehabilitation services
in the State looking toward maximum utilization of such
services in the provision of medical assistance under
the plan, (B) provide, to the extent prescribed by the
Secretary, for entering into agreements, with any
agency, institution, or organization receiving payments
under (or through an allotment under) title V, (i)
providing for utilizing such agency, institution, or
organization in furnishing care and services which are
available under such title or allotment and which are
included in the State plan approved under this section
(ii) making such provision as may be appropriate for
reimbursing such agency, institution, or organization
for the cost of any such care and services furnished
any individual for which payment would otherwise be
made to the State with respect to the individual under
section 1903, and (iii) providing for coordination of
information and education on pediatric vaccinations and
delivery of immunization services, and (C) provide for
coordination of the operations under this title,
including the provision of information and education on
pediatric vaccinations and the delivery of immunization
services, with the State's operations under the special
supplemental nutrition program for women, infants, and
children under section 17 of the Child Nutrition Act of
1966;
(12) provide that, in determining whether an
individual is blind, there shall be an examination by a
physician skilled in the diseases of the eye or by an
optometrist, whichever the individual may select;
(13) provide--
(A) for a public process for determination of
rates of payment under the plan for hospital
services, nursing facility services, and
services of intermediate care facilities for
the mentally retarded under which--
(i) proposed rates, the methodologies
underlying the establishment of such
rates, and justifications for the
proposed rates are published,
(ii) providers, beneficiaries and
their representatives, and other
concerned State residents are given a
reasonable opportunity for review and
comment on the proposed rates,
methodologies, and justifications,
(iii) final rates, the methodologies
underlying the establishment of such
rates, and justifications for such
final rates are published, and
(iv) in the case of hospitals, such
rates take into account (in a manner
consistent with section 1923) the
situation of hospitals which serve a
disproportionate number of low-income
patients with special needs;
(B) for payment for hospice care in amounts
no lower than the amounts, using the same
methodology, used under part A of title XVIII
and for payment of amounts under section
1905(o)(3); except that in the case of hospice
care which is furnished to an individual who is
a resident of a nursing facility or
intermediate care facility for the mentally
retarded, and who would be eligible under the
plan for nursing facility services or services
in an intermediate care facility for the
mentally retarded if he had not elected to
receive hospice care, there shall be paid an
additional amount, to take into account the
room and board furnished by the facility, equal
to at least 95 percent of the rate that would
have been paid by the State under the plan for
facility services in that facility for that
individual; and
(C) payment for primary care services (as
defined in subsection (jj)) furnished in 2013
and 2014 by a physician with a primary
specialty designation of family medicine,
general internal medicine, or pediatric
medicine at a rate not less than 100 percent of
the payment rate that applies to such services
and physician under part B of title XVIII (or,
if greater, the payment rate that would be
applicable under such part if the conversion
factor under section 1848(d) for the year
involved were the conversion factor under such
section for 2009);
(14) provide that enrollment fees, premiums, or
similar charges, and deductions, cost sharing, or
similar charges, may be imposed only as provided in
section 1916;
(15) provide for payment for services described in
clause (B) or (C) of section 1905(a)(2) under the plan
in accordance with subsection (bb);
(16) provide for inclusion, to the extent required by
regulations prescribed by the Secretary, of provisions
(conforming to such regulations) with respect to the
furnishing of medical assistance under the plan to
individuals who are residents of the State but are
absent therefrom;
(17) except as provided in subsections (e)(14),
[(e)(14)] (e)(15), (l)(3), (m)(3), and (m)(4), include
reasonable standards (which shall be comparable for all
groups and may, in accordance with standards prescribed
by the Secretary, differ with respect to income levels,
but only in the case of applicants or recipients of
assistance under the plan who are not receiving aid or
assistance under any plan of the State approved under
title I, X, XIV, or XVI, or part A of title IV, and
with respect to whom supplemental security income
benefits are not being paid under title XVI, based on
the variations between shelter costs in urban areas and
in rural areas) for determining eligibility for and the
extent of medical assistance under the plan which (A)
are consistent with the objectives of this title, (B)
provide for taking into account only such income and
resources as are, as determined in accordance with
standards prescribed by the Secretary, available to the
applicant or recipient and (in the case of any
applicant or recipient who would, except for income and
resources, be eligible for aid or assistance in the
form of money payments under any plan of the State
approved under title I, X, XIV, or XVI, or part A of
title IV, or to have paid with respect to him
supplemental security income benefits under title XVI)
as would not be disregarded (or set aside for future
needs) in determining his eligibility for such aid,
assistance, or benefits, (C) provide for reasonable
evaluation of any such income or resources, and (D) do
not take into account the financial responsibility of
any individual for any applicant or recipient of
assistance under the plan unless such applicant or
recipient is such individual's spouse or such
individual's child who is under age 21 or (with respect
to States eligible to participate in the State program
established under title XVI), is blind or permanently
and totally disabled, or is blind or disabled as
defined in section 1614 (with respect to States which
are not eligible to participate in such program); and
provide for flexibility in the application of such
standards with respect to income by taking into
account, except to the extent prescribed by the
Secretary, the costs (whether in the form of insurance
premiums, payments made to the State under section
1903(f)(2)(B), or otherwise and regardless of whether
such costs are reimbursed under another public program
of the State or political subdivision thereof) incurred
for medical care or for any other type of remedial care
recognized under State law;
(18) comply with the provisions of section 1917 with
respect to liens, adjustments and recoveries of medical
assistance correctly paid, transfers of assets, and
treatment of certain trusts;
(19) provide such safeguards as may be necessary to
assure that eligibility for care and services under the
plan will be determined, and such care and services
will be provided, in a manner consistent with
simplicity of administration and the best interests of
the recipients;
(20) if the State plan includes medical assistance in
behalf of individuals 65 years of age or older who are
patients in institutions for mental diseases--
(A) provide for having in effect such
agreements or other arrangements with State
authorities concerned with mental diseases,
and, where appropriate, with such institutions,
as may be necessary for carrying out the State
plan, including arrangements for joint planning
and for development of alternate methods of
care, arrangements providing assurance of
immediate readmittance to institutions where
needed for individuals under alternate plans of
care, and arrangements providing for access to
patients and facilities, for furnishing
information, and for making reports;
(B) provide for an individual plan for each
such patient to assure that the institutional
care provided to him is in his best interests,
including, to that end, assurances that there
will be initial and periodic review of his
medical and other needs, that he will be given
appropriate medical treatment within the
institution, and that there will be a periodic
determination of his need for continued
treatment in the institution; and
(C) provide for the development of alternate
plans of care, making maximum utilization of
available resources, for recipients 65 years of
age or older who would otherwise need care in
such institutions, including appropriate
medical treatment and other aid or assistance;
for services referred to in section
3(a)(4)(A)(i) and (ii) or section
1603(a)(4)(A)(i) and (ii) which are appropriate
for such recipients and for such patients; and
for methods of administration necessary to
assure that the responsibilities of the State
agency under the State plan with respect to
such recipients and such patients will be
effectively carried out;
(21) if the State plan includes medical assistance in
behalf of individuals 65 years of age or older who are
patients in public institutions for mental diseases,
show that the State is making satisfactory progress
toward developing and implementing a comprehensive
mental health program, including provision for
utilization of community mental health centers, nursing
facilities, and other alternatives to care in public
institutions for mental diseases;
(22) include descriptions of (A) the kinds and
numbers of professional medical personnel and
supporting staff that will be used in the
administration of the plan and of the responsibilities
they will have, (B) the standards, for private or
public institutions in which recipients of medical
assistance under the plan may receive care or services,
that will be utilized by the State authority or
authorities responsible for establishing and
maintaining such standards, (C) the cooperative
arrangements with State health agencies and State
vocational rehabilitation agencies entered into with a
view to maximum utilization of and coordination of the
provision of medical assistance with the services
administered or supervised by such agencies, and (D)
other standards and methods that the State will use to
assure that medical or remedial care and services
provided to recipients of medical assistance are of
high quality;
(23) provide that (A) any individual eligible for
medical assistance (including drugs) may obtain such
assistance from any institution, agency, community
pharmacy, or person, qualified to perform the service
or services required (including an organization which
provides such services, or arranges for their
availability, on a prepayment basis), who undertakes to
provide him such services, and (B) an enrollment of an
individual eligible for medical assistance in a primary
care case-management system (described in section
1915(b)(1)), a medicaid managed care organization, or a
similar entity shall not restrict the choice of the
qualified person from whom the individual may receive
services under section 1905(a)(4)(C), except as
provided in subsection (g) and in section 1915, except
that this paragraph shall not apply in the case of
Puerto Rico, the Virgin Islands, and Guam, and except
that nothing in this paragraph shall be construed as
requiring a State to provide medical assistance for
such services furnished by a person or entity convicted
of a felony under Federal or State law for an offense
which the State agency determines is inconsistent with
the best interests of beneficiaries under the State
plan or by a provider or supplier to which a moratorium
under subsection (kk)(4) is applied during the period
of such moratorium';
(24) effective July 1, 1969, provide for consultative
services by health agencies and other appropriate
agencies of the State to hospitals, nursing facilities,
home health agencies, clinics, laboratories, and such
other institutions as the Secretary may specify in
order to assist them (A) to qualify for payments under
this Act, (B) to establish and maintain such fiscal
records as may be necessary for the proper and
efficient administration of this Act, and (C) to
provide information needed to determine payments due
under this Act on account of care and services
furnished to individuals;
(25) provide--
(A) that the State or local agency
administering such plan will take all
reasonable measures to ascertain the legal
liability of third parties (including health
insurers, self-insured plans, group health
plans (as defined in section 607(1) of the
Employee Retirement Income Security Act of
1974), service benefit plans, managed care
organizations, pharmacy benefit managers, or
other parties that are, by statute, contract,
or agreement, legally responsible for payment
of a claim for a health care item or service)
to pay for care and services available under
the plan, including--
(i) the collection of sufficient
information (as specified by the
Secretary in regulations) to enable the
State to pursue claims against such
third parties, with such information
being collected at the time of any
determination or redetermination of
eligibility for medical assistance, and
(ii) the submission to the Secretary
of a plan (subject to approval by the
Secretary) for pursuing claims against
such third parties, which plan shall be
integrated with, and be monitored as a
part of the Secretary's review of, the
State's mechanized claims processing
and information retrieval systems
required under section 1903(r);
(B) that in any case where such a legal
liability is found to exist after medical
assistance has been made available on behalf of
the individual and where the amount of
reimbursement the State can reasonably expect
to recover exceeds the costs of such recovery,
the State or local agency will seek
reimbursement for such assistance;
(C) that in the case of an individual who is
entitled to medical assistance under the State
plan with respect to a service for which a
third party is liable for payment, the person
furnishing the service may not seek to collect
from the individual (or any financially
responsible relative or representative of that
individual) payment of an amount for that
service (i) if the total of the amount of the
liabilities of third parties for that service
is at least equal to the amount payable for
that service under the plan (disregarding
section 1916), or (ii) in an amount which
exceeds the lesser of (I) the amount which may
be collected under section 1916, or (II) the
amount by which the amount payable for that
service under the plan (disregarding section
1916) exceeds the total of the amount of the
liabilities of third parties for that service;
(D) that a person who furnishes services and
is participating under the plan may not refuse
to furnish services to an individual (who is
entitled to have payment made under the plan
for the services the person furnishes) because
of a third party's potential liability for
payment for the service;
(E) that in the case of prenatal or
preventive pediatric care (including early and
periodic screening and diagnosis services under
section 1905(a)(4)(B)) covered under the State
plan, the State shall--
(i) make payment for such service in
accordance with the usual payment
schedule under such plan for such
services without regard to the
liability of a third party for payment
for such services, except that the
State may, if the State determines
doing so is cost-effective and will not
adversely affect access to care, only
make such payment if a third party so
liable has not made payment within 90
days after the date the provider of
such services has initially submitted a
claim to such third party for payment
for such services; and
(ii) seek reimbursement from such
third party in accordance with
subparagraph (B);
(F) that in the case of any services covered
under such plan which are provided to an
individual on whose behalf child support
enforcement is being carried out by the State
agency under part D of title IV of this Act,
the State shall--
(i) make payment for such service in
accordance with the usual payment
schedule under such plan for such
services without regard to any third-
party liability for payment for such
services, if such third-party liability
is derived (through insurance or
otherwise) from the parent whose
obligation to pay support is being
enforced by such agency, if payment has
not been made by such third party
within 90 days after the date the
provider of such services has initially
submitted a claim to such third party
for payment for such services, except
that the State may make such payment
within 30 days after such date if the
State determines doing so is cost-
effective and necessary to ensure
access to care.;
(ii) seek reimbursement from such
third party in accordance with
subparagraph (B);
(G) that the State prohibits any health
insurer (including a group health plan, as
defined in section 607(1) of the Employee
Retirement Income Security Act of 1974, a self-
insured plan, a service benefit plan, a managed
care organization, a pharmacy benefit manager,
or other party that is, by statute, contract,
or agreement, legally responsible for payment
of a claim for a health care item or service),
in enrolling an individual or in making any
payments for benefits to the individual or on
the individual's behalf, from taking into
account that the individual is eligible for or
is provided medical assistance under a plan
under this title for such State, or any other
State;
(H) that to the extent that payment has been
made under the State plan for medical
assistance in any case where a third party has
a legal liability to make payment for such
assistance, the State has in effect laws under
which, to the extent that payment has been made
under the State plan for medical assistance for
health care items or services furnished to an
individual, the State is considered to have
acquired the rights of such individual to any
payments by such third party; and
(I) that the State shall provide assurances
satisfactory to the Secretary that the State
has in effect laws requiring health insurers,
including self-insured plans, group health
plans (as defined in section 607(1) of the
Employee Retirement Income Security Act of
1974), service benefit plans, managed care
organizations, pharmacy benefit managers, or
other parties that are, by statute, contract,
or agreement, legally responsible for payment
of a claim for a health care item or service,
as a condition of doing business in the State,
to--
(i) provide, with respect to
individuals who are eligible (and, at
State option, individuals who apply or
whose eligibility for medical
assistance is being evaluated in
accordance with section 1902(e)(13)(D))
for, or are provided, medical
assistance under the State plan under
this title (and, at State option, child
health assistance under title XXI),
upon the request of the State,
information to determine during what
period the individual or their spouses
or their dependents may be (or may have
been) covered by a health insurer and
the nature of the coverage that is or
was provided by the health insurer
(including the name, address, and
identifying number of the plan) in a
manner prescribed by the Secretary;
(ii) accept the State's right of
recovery and the assignment to the
State of any right of an individual or
other entity to payment from the party
for an item or service for which
payment has been made under the State
plan;
(iii) respond to any inquiry by the
State regarding a claim for payment for
any health care item or service that is
submitted not later than 3 years after
the date of the provision of such
health care item or service; and
(iv) agree not to deny a claim
submitted by the State solely on the
basis of the date of submission of the
claim, the type or format of the claim
form, or a failure to present proper
documentation at the point-of-sale that
is the basis of the claim, if--
(I) the claim is submitted by
the State within the 3-year
period beginning on the date on
which the item or service was
furnished; and
(II) any action by the State
to enforce its rights with
respect to such claim is
commenced within 6 years of the
State's submission of such
claim;
(26) if the State plan includes medical assistance
for inpatient mental hospital services, provide, with
respect to each patient receiving such services, for a
regular program of medical review (including medical
evaluation) of his need for such services, and for a
written plan of care;
(27) provide for agreements with every person or
institution providing services under the State plan
under which such person or institution agrees (A) to
keep such records as are necessary fully to disclose
the extent of the services provided to individuals
receiving assistance under the State plan, and (B) to
furnish the State agency or the Secretary with such
information, regarding any payments claimed by such
person or institution for providing services under the
State plan, as the State agency or the Secretary may
from time to time request;
(28) provide--
(A) that any nursing facility receiving
payments under such plan must satisfy all the
requirements of subsections (b) through (d) of
section 1919 as they apply to such facilities;
(B) for including in ``nursing facility
services'' at least the items and services
specified (or deemed to be specified) by the
Secretary under section 1919(f)(7) and making
available upon request a description of the
items and services so included;
(C) for procedures to make available to the
public the data and methodology used in
establishing payment rates for nursing
facilities under this title; and
(D) for compliance (by the date specified in
the respective sections) with the requirements
of--
(i) section 1919(e);
(ii) section 1919(g) (relating to
responsibility for survey and
certification of nursing facilities);
and
(iii) sections 1919(h)(2)(B) and
1919(h)(2)(D) (relating to
establishment and application of
remedies);
(29) include a State program which meets the
requirements set forth in section 1908, for the
licensing of administrators of nursing homes;
(30)(A) provide such methods and procedures relating
to the utilization of, and the payment for, care and
services available under the plan (including but not
limited to utilization review plans as provided for in
section 1903(i)(4)) as may be necessary to safeguard
against unnecessary utilization of such care and
services and to assure that payments are consistent
with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and
services are available under the plan at least to the
extent that such care and services are available to the
general population in the geographic area; and
(B) provide, under the program described in
subparagraph (A), that--
(i) each admission to a hospital,
intermediate care facility for the mentally
retarded, or hospital for mental diseases is
reviewed or screened in accordance with
criteria established by medical and other
professional personnel who are not themselves
directly responsible for the care of the
patient involved, and who do not have a
significant financial interest in any such
institution and are not, except in the case of
a hospital, employed by the institution
providing the care involved, and
(ii) the information developed from such
review or screening, along with the data
obtained from prior reviews of the necessity
for admission and continued stay of patients by
such professional personnel, shall be used as
the basis for establishing the size and
composition of the sample of admissions to be
subject to review and evaluation by such
personnel, and any such sample may be of any
size up to 100 percent of all admissions and
must be of sufficient size to serve the purpose
of (I) identifying the patterns of care being
provided and the changes occurring over time in
such patterns so that the need for modification
may be ascertained, and (II) subjecting
admissions to early or more extensive review
where information indicates that such
consideration is warranted to a hospital,
intermediate care facility for the mentally
retarded, or hospital for mental diseases;
(31) with respect to services in an intermediate care
facility for the mentally retarded (where the State
plan includes medical assistance for such services)
provide, with respect to each patient receiving such
services, for a written plan of care, prior to
admission to or authorization of benefits in such
facility, in accordance with regulations of the
Secretary, and for a regular program of independent
professional review (including medical evaluation)
which shall periodically review his need for such
services;
(32) provide that no payment under the plan for any
care or service provided to an individual shall be made
to anyone other than such individual or the person or
institution providing such care or service, under an
assignment or power of attorney or otherwise; except
that--
(A) in the case of any care or service
provided by a physician, dentist, or other
individual practitioner, such payment may be
made (i) to the employer of such physician,
dentist, or other practitioner if such
physician, dentist, or practitioner is required
as a condition of his employment to turn over
his fee for such care or service to his
employer, or (ii) (where the care or service
was provided in a hospital, clinic, or other
facility) to the facility in which the care or
service was provided if there is a contractual
arrangement between such physician, dentist, or
practitioner and such facility under which such
facility submits the bill for such care or
service;
(B) nothing in this paragraph shall be
construed (i) to prevent the making of such a
payment in accordance with an assignment from
the person or institution providing the care or
service involved if such assignment is made to
a governmental agency or entity or is
established by or pursuant to the order of a
court of competent jurisdiction, or (ii) to
preclude an agent of such person or institution
from receiving any such payment if (but only
if) such agent does so pursuant to an agency
agreement under which the compensation to be
paid to the agent for his services for or in
connection with the billing or collection of
payments due such person or institution under
the plan is unrelated (directly or indirectly)
to the amount of such payments or the billings
therefor, and is not dependent upon the actual
collection of any such payment;
(C) in the case of services furnished (during
a period that does not exceed 14 continuous
days in the case of an informal reciprocal
arrangement or 90 continuous days (or such
longer period as the Secretary may provide) in
the case of an arrangement involving per diem
or other fee-for-time compensation) by, or
incident to the services of, one physician to
the patients of another physician who submits
the claim for such services, payment shall be
made to the physician submitting the claim (as
if the services were furnished by, or incident
to, the physician's services), but only if the
claim identifies (in a manner specified by the
Secretary) the physician who furnished the
services; and
(D) in the case of payment for a childhood
vaccine administered before October 1, 1994, to
individuals entitled to medical assistance
under the State plan, the State plan may make
payment directly to the manufacturer of the
vaccine under a voluntary replacement program
agreed to by the State pursuant to which the
manufacturer (i) supplies doses of the vaccine
to providers administering the vaccine, (ii)
periodically replaces the supply of the
vaccine, and (iii) charges the State the
manufacturer's price to the Centers for Disease
Control and Prevention for the vaccine so
administered (which price includes a reasonable
amount to cover shipping and the handling of
returns);
(33) provide--
(A) that the State health agency, or other
appropriate State medical agency, shall be
responsible for establishing a plan, consistent
with regulations prescribed by the Secretary,
for the review by appropriate professional
health personnel of the appropriateness and
quality of care and services furnished to
recipients of medical assistance under the plan
in order to provide guidance with respect
thereto in the administration of the plan to
the State agency established or designated
pursuant to paragraph (5) and, where
applicable, to the State agency described in
the second sentence of this subsection; and
(B) that, except as provided in section
1919(g), the State or local agency utilized by
the Secretary for the purpose specified in the
first sentence of section 1864(a), or, if such
agency is not the State agency which is
responsible for licensing health institutions,
the State agency responsible for such
licensing, will perform for the State agency
administering or supervising the administration
of the plan approved under this title the
function of determining whether institutions
and agencies meet the requirements for
participation in the program under such plan,
except that, if the Secretary has cause to
question the adequacy of such determinations,
the Secretary is authorized to validate State
determinations and, on that basis, make
independent and binding determinations
concerning the extent to which individual
institutions and agencies meet the requirements
for participation;
(34) provide that in the case of any individual who
has been determined to be eligible for medical
assistance under the plan, such assistance will be made
available to him for care and services included under
the plan and furnished [in or after the third month
before the month in which he made application] in or
after the month in which the individual made
application (or application was made on his behalf in
the case of a deceased individual) for such assistance
if such individual was (or upon application would have
been) eligible for such assistance at the time such
care and services were furnished;
(35) provide that any disclosing entity (as defined
in section 1124(a)(2)) receiving payments under such
plan complies with the requirements of section 1124;
(36) provide that within 90 days following the
completion of each survey of any health care facility,
laboratory, agency, clinic, or organization, by the
appropriate State agency described in paragraph (9),
such agency shall (in accordance with regulations of
the Secretary) make public in readily available form
and place the pertinent findings of each such survey
relating to the compliance of each such health care
facility, laboratory, clinic, agency, or organization
with (A) the statutory conditions of participation
imposed under this title, and (B) the major additional
conditions which the Secretary finds necessary in the
interest of health and safety of individuals who are
furnished care or services by any such facility,
laboratory, clinic, agency, or organization;
(37) provide for claims payment procedures which (A)
ensure that 90 per centum of claims for payment (for
which no further written information or substantiation
is required in order to make payment) made for services
covered under the plan and furnished by health care
practitioners through individual or group practices or
through shared health facilities are paid within 30
days of the date of receipt of such claims and that 99
per centum of such claims are paid within 90 days of
the date of receipt of such claims, and (B) provide for
procedures of prepayment and postpayment claims review,
including review of appropriate data with respect to
the recipient and provider of a service and the nature
of the service for which payment is claimed, to ensure
the proper and efficient payment of claims and
management of the program;
(38) require that an entity (other than an individual
practitioner or a group of practitioners) that
furnishes, or arranges for the furnishing of, items or
services under the plan, shall supply (within such
period as may be specified in regulations by the
Secretary or by the single State agency which
administers or supervises the administration of the
plan) upon request specifically addressed to such
entity by the Secretary or such State agency, the
information described in section 1128(b)(9);
(39) provide that the State agency shall exclude any
specified individual or entity from participation in
the program under the State plan for the period
specified by the Secretary, when required by him to do
so pursuant to section 1128 or section 1128A, terminate
the participation of any individual or entity in such
program if (subject to such exceptions as are permitted
with respect to exclusion under sections 1128(c)(3)(B)
and 1128(d)(3)(B)) participation of such individual or
entity is terminated under title XVIII, any other State
plan under this title (or waiver of the plan), or any
State child health plan under title XXI (or waiver of
the plan) and such termination is included by the
Secretary in any database or similar system developed
pursuant to section 6401(b)(2) of the Patient
Protection and Affordable Care Act, and provide that no
payment may be made under the plan with respect to any
item or service furnished by such individual or entity
during such period;
(40) require each health services facility or
organization which receives payments under the plan and
of a type for which a uniform reporting system has been
established under section 1121(a) to make reports to
the Secretary of information described in such section
in accordance with the uniform reporting system
(established under such section) for that type of
facility or organization;
(41) provide, in accordance with subsection (kk)(8)
(as applicable), that whenever a provider of services
or any other person is terminated, suspended, or
otherwise sanctioned or prohibited from participating
under the State plan, the State agency shall promptly
notify the Secretary and, in the case of a physician
and notwithstanding paragraph (7), the State medical
licensing board of such action;
(42) provide that--
(A) the records of any entity participating
in the plan and providing services reimbursable
on a cost-related basis will be audited as the
Secretary determines to be necessary to insure
that proper payments are made under the plan;
and
(B) not later than December 31, 2010, the
State shall--
(i) establish a program under which
the State contracts (consistent with
State law and in the same manner as the
Secretary enters into contracts with
recovery audit contractors under
section 1893(h), subject to such
exceptions or requirements as the
Secretary may require for purposes of
this title or a particular State) with
1 or more recovery audit contractors
for the purpose of identifying
underpayments and overpayments and
recouping overpayments under the State
plan and under any waiver of the State
plan with respect to all services for
which payment is made to any entity
under such plan or waiver; and
(ii) provide assurances satisfactory
to the Secretary that--
(I) under such contracts,
payment shall be made to such a
contractor only from amounts
recovered;
(II) from such amounts
recovered, payment--
(aa) shall be made on
a contingent basis for
collecting
overpayments; and
(bb) may be made in
such amounts as the
State may specify for
identifying
underpayments;
(III) the State has an
adequate process for entities
to appeal any adverse
determination made by such
contractors; and
(IV) such program is carried
out in accordance with such
requirements as the Secretary
shall specify, including--
(aa) for purposes of
section 1903(a)(7),
that amounts expended
by the State to carry
out the program shall
be considered amounts
expended as necessary
for the proper and
efficient
administration of the
State plan or a waiver
of the plan;
(bb) that section
1903(d) shall apply to
amounts recovered under
the program; and
(cc) that the State
and any such
contractors under
contract with the State
shall coordinate such
recovery audit efforts
with other contractors
or entities performing
audits of entities
receiving payments
under the State plan or
waiver in the State,
including efforts with
Federal and State law
enforcement with
respect to the
Department of Justice,
including the Federal
Bureau of
Investigations, the
Inspector General of
the Department of
Health and Human
Services, and the State
medicaid fraud control
unit; and
(43) provide for--
(A) informing all persons in the State who
are under the age of 21 and who have been
determined to be eligible for medical
assistance including services described in
section 1905(a)(4)(B), of the availability of
early and periodic screening, diagnostic, and
treatment services as described in section
1905(r) and the need for age-appropriate
immunizations against vaccine-preventable
diseases,
(B) providing or arranging for the provision
of such screening services in all cases where
they are requested,
(C) arranging for (directly or through
referral to appropriate agencies,
organizations, or individuals) corrective
treatment the need for which is disclosed by
such child health screening services, and
(D) reporting to the Secretary (in a uniform
form and manner established by the Secretary,
by age group and by basis of eligibility for
medical assistance, and by not later than April
1 after the end of each fiscal year, beginning
with fiscal year 1990) the following
information relating to early and periodic
screening, diagnostic, and treatment services
provided under the plan during each fiscal
year:
(i) the number of children provided
child health screening services,
(ii) the number of children referred
for corrective treatment (the need for
which is disclosed by such child health
screening services),
(iii) the number of children
receiving dental services, and other
information relating to the provision
of dental services to such children
described in section 2108(e) and
(iv) the State's results in attaining
the participation goals set for the
State under section 1905(r);
(44) in each case for which payment for inpatient
hospital services, services in an intermediate care
facility for the mentally retarded, or inpatient mental
hospital services is made under the State plan--
(A) a physician (or, in the case of skilled
nursing facility services or intermediate care
facility services, a physician, or a nurse
practitioner or clinical nurse specialist who
is not an employee of the facility but is
working in collaboration with a physician)
certifies at the time of admission, or, if
later, the time the individual applies for
medical assistance under the State plan (and a
physician, a physician assistant under the
supervision of a physician, or, in the case of
skilled nursing facility services or
intermediate care facility services, a
physician, or a nurse practitioner or clinical
nurse specialist who is not an employee of the
facility but is working in collaboration with a
physician, recertifies, where such services are
furnished over a period of time, in such cases,
at least as often as required under section
1903(g)(6) (or, in the case of services that
are services provided in an intermediate care
facility for the mentally retarded, every
year), and accompanied by such supporting
material, appropriate to the case involved, as
may be provided in regulations of the
Secretary), that such services are or were
required to be given on an inpatient basis
because the individual needs or needed such
services, and
(B) such services were furnished under a plan
established and periodically reviewed and
evaluated by a physician, or, in the case of
skilled nursing facility services or
intermediate care facility services, a
physician, or a nurse practitioner or clinical
nurse specialist who is not an employee of the
facility but is working in collaboration with a
physician;
(45) provide for mandatory assignment of rights of
payment for medical support and other medical care owed
to recipients, in accordance with section 1912;
(46)(A) provide that information is requested and
exchanged for purposes of income and eligibility
verification in accordance with a State system which
meets the requirements of section 1137 of this Act; and
(B) provide, with respect to an individual declaring
to be a citizen or national of the United States for
purposes of establishing eligibility under this title,
that the State shall satisfy the requirements of--
(i) section 1903(x); or
(ii) subsection (ee);
(47) provide--
(A) at the option of the State, for making
ambulatory prenatal care available to pregnant
women during a presumptive eligibility period
in accordance with section 1920 and provide for
making medical assistance for items and
services described in subsection (a) of section
1920A available to children during a
presumptive eligibility period in accordance
with such section and provide for making
medical assistance available to individuals
described in subsection (a) of section 1920B
during a presumptive eligibility period in
accordance with such section and provide for
making medical assistance available to
individuals described in subsection (a) of
section 1920C during a presumptive eligibility
period in accordance with such section; and
(B) that any hospital that is a participating
provider under the State plan may elect to be a
qualified entity for purposes of determining,
on the basis of preliminary information,
whether any individual is eligible for medical
assistance under the State plan or under a
waiver of the plan for purposes of providing
the individual with medical assistance during a
presumptive eligibility period, in the same
manner, and subject to the same requirements,
as apply to the State options with respect to
populations described in section 1920, 1920A,
1920B, or 1920C (but without regard to whether
the State has elected to provide for a
presumptive eligibility period under any such
sections), subject to such guidance as the
Secretary shall establish and provided that any
such election shall cease to be effective on
January 1, 2020, and no such election shall be
made after that date;
(48) provide a method of making cards evidencing
eligibility for medical assistance available to an
eligible individual who does not reside in a permanent
dwelling or does not have a fixed home or mailing
address;
(49) provide that the State will provide information
and access to certain information respecting sanctions
taken against health care practitioners and providers
by State licensing authorities in accordance with
section 1921;
(50) provide, in accordance with subsection (q), for
a monthly personal needs allowance for certain
institutionalized individuals and couples;
(51) meet the requirements of section 1924 (relating
to protection of community spouses);
(52) meet the requirements of section 1925 (relating
to extension of eligibility for medical assistance);
(53) provide--
(A) for notifying in a timely manner all
individuals in the State who are determined to
be eligible for medical assistance and who are
pregnant women, breastfeeding or postpartum
women (as defined in section 17 of the Child
Nutrition Act of 1966), or children below the
age of 5, of the availability of benefits
furnished by the special supplemental nutrition
program under such section, and
(B) for referring any such individual to the
State agency responsible for administering such
program;
(54) in the case of a State plan that provides
medical assistance for covered outpatient drugs (as
defined in section 1927(k)), comply with the applicable
requirements of section 1927;
(55) provide for receipt and initial processing of
applications of individuals for medical assistance
under subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI),
(a)(10)(A)(i)(VII), or (a)(10)(A)(ii)(IX)--
(A) at locations which are other than those
used for the receipt and processing of
applications for aid under part A of title IV
and which include facilities defined as
disproportionate share hospitals under section
1923(a)(1)(A) and Federally-qualified health
centers described in section 1905(1)(2)(B), and
(B) using applications which are other than
those used for applications for aid under such
part;
(56) provide, in accordance with subsection (s), for
adjusted payments for certain inpatient hospital
services;
(57) provide that each hospital, nursing facility,
provider of home health care or personal care services,
hospice program, or medicaid managed care organization
(as defined in section 1903(m)(1)(A)) receiving funds
under the plan shall comply with the requirements of
subsection (w);
(58) provide that the State, acting through a State
agency, association, or other private nonprofit entity,
develop a written description of the law of the State
(whether statutory or as recognized by the courts of
the State) concerning advance directives that would be
distributed by providers or organizations under the
requirements of subsection (w);
(59) maintain a list (updated not less often than
monthly, and containing each physician's unique
identifier provided under the system established under
subsection (x)) of all physicians who are certified to
participate under the State plan;
(60) provide that the State agency shall provide
assurances satisfactory to the Secretary that the State
has in effect the laws relating to medical child
support required under section 1908A;
(61) provide that the State must demonstrate that it
operates a medicaid fraud and abuse control unit
described in section 1903(q) that effectively carries
out the functions and requirements described in such
section, as determined in accordance with standards
established by the Secretary, unless the State
demonstrates to the satisfaction of the Secretary that
the effective operation of such a unit in the State
would not be cost-effective because minimal fraud
exists in connection with the provision of covered
services to eligible individuals under the State plan,
and that beneficiaries under the plan will be protected
from abuse and neglect in connection with the provision
of medical assistance under the plan without the
existence of such a unit;
(62) provide for a program for the distribution of
pediatric vaccines to program-registered providers for
the immunization of vaccine-eligible children in
accordance with section 1928;
(63) provide for administration and determinations of
eligibility with respect to individuals who are (or
seek to be) eligible for medical assistance based on
the application of section 1931;
(64) provide, not later than 1 year after the date of
the enactment of this paragraph, a mechanism to receive
reports from beneficiaries and others and compile data
concerning alleged instances of waste, fraud, and abuse
relating to the operation of this title;
(65) provide that the State shall issue provider
numbers for all suppliers of medical assistance
consisting of durable medical equipment, as defined in
section 1861(n), and the State shall not issue or renew
such a supplier number for any such supplier unless--
(A)(i) full and complete information as to
the identity of each person with an ownership
or control interest (as defined in section
1124(a)(3)) in the supplier or in any
subcontractor (as defined by the Secretary in
regulations) in which the supplier directly or
indirectly has a 5 percent or more ownership
interest; and
(ii) to the extent determined to be feasible
under regulations of the Secretary, the name of
any disclosing entity (as defined in section
1124(a)(2)) with respect to which a person with
such an ownership or control interest in the
supplier is a person with such an ownership or
control interest in the disclosing entity; and
(B) a surety bond in a form specified by the
Secretary under section 1834(a)(16)(B) and in
an amount that is not less than $50,000 or such
comparable surety bond as the Secretary may
permit under the second sentence of such
section;
(66) provide for making eligibility determinations
under section 1935(a);
(67) provide, with respect to services covered under
the State plan (but not under title XVIII) that are
furnished to a PACE program eligible individual
enrolled with a PACE provider by a provider
participating under the State plan that does not have a
contract or other agreement with the PACE provider that
establishes payment amounts for such services, that
such participating provider may not require the PACE
provider to pay the participating provider an amount
greater than the amount that would otherwise be payable
for the service to the participating provider under the
State plan for the State where the PACE provider is
located (in accordance with regulations issued by the
Secretary);
(68) provide that any entity that receives or makes
annual payments under the State plan of at least
$5,000,000, as a condition of receiving such payments,
shall--
(A) establish written policies for all
employees of the entity (including management),
and of any contractor or agent of the entity,
that provide detailed information about the
False Claims Act established under sections
3729 through 3733 of title 31, United States
Code, administrative remedies for false claims
and statements established under chapter 38 of
title 31, United States Code, any State laws
pertaining to civil or criminal penalties for
false claims and statements, and whistleblower
protections under such laws, with respect to
the role of such laws in preventing and
detecting fraud, waste, and abuse in Federal
health care programs (as defined in section
1128B(f));
(B) include as part of such written policies,
detailed provisions regarding the entity's
policies and procedures for detecting and
preventing fraud, waste, and abuse; and
(C) include in any employee handbook for the
entity, a specific discussion of the laws
described in subparagraph (A), the rights of
employees to be protected as whistleblowers,
and the entity's policies and procedures for
detecting and preventing fraud, waste, and
abuse;
(69) provide that the State must comply with any
requirements determined by the Secretary to be
necessary for carrying out the Medicaid Integrity
Program established under section 1936;
(70) at the option of the State and notwithstanding
paragraphs (1), (10)(B), and (23), provide for the
establishment of a non-emergency medical transportation
brokerage program in order to more cost-effectively
provide transportation for individuals eligible for
medical assistance under the State plan who need access
to medical care or services and have no other means of
transportation which--
(A) may include a wheelchair van, taxi,
stretcher car, bus passes and tickets, secured
transportation, and such other transportation
as the Secretary determines appropriate; and
(B) may be conducted under contract with a
broker who--
(i) is selected through a competitive
bidding process based on the State's
evaluation of the broker's experience,
performance, references, resources,
qualifications, and costs;
(ii) has oversight procedures to
monitor beneficiary access and
complaints and ensure that transport
personnel are licensed, qualified,
competent, and courteous;
(iii) is subject to regular auditing
and oversight by the State in order to
ensure the quality of the
transportation services provided and
the adequacy of beneficiary access to
medical care and services; and
(iv) complies with such requirements
related to prohibitions on referrals
and conflict of interest as the
Secretary shall establish (based on the
prohibitions on physician referrals
under section 1877 and such other
prohibitions and requirements as the
Secretary determines to be
appropriate);
(71) provide that the State will implement an asset
verification program as required under section 1940;
(72) provide that the State will not prevent a
Federally-qualified health center from entering into
contractual relationships with private practice dental
providers in the provision of Federally-qualified
health center services;
(73) in the case of any State in which 1 or more
Indian Health Programs or Urban Indian Organizations
furnishes health care services, provide for a process
under which the State seeks advice on a regular,
ongoing basis from designees of such Indian Health
Programs and Urban Indian Organizations on matters
relating to the application of this title that are
likely to have a direct effect on such Indian Health
Programs and Urban Indian Organizations and that--
(A) shall include solicitation of advice
prior to submission of any plan amendments,
waiver requests, and proposals for
demonstration projects likely to have a direct
effect on Indians, Indian Health Programs, or
Urban Indian Organizations; and
(B) may include appointment of an advisory
committee and of a designee of such Indian
Health Programs and Urban Indian Organizations
to the medical care advisory committee advising
the State on its State plan under this title;
(74) provide for maintenance of effort under the
State plan or under any waiver of the plan in
accordance with subsection (gg); and
(75) provide that, beginning January 2015, and
annually thereafter, the State shall submit a report to
the Secretary that contains--
(A) the total number of enrolled and newly
enrolled individuals in the State plan or under
a waiver of the plan for the fiscal year ending
on September 30 of the preceding calendar year,
disaggregated by population, including
children, parents, nonpregnant childless
adults, disabled individuals, elderly
individuals, and such other categories or sub-
categories of individuals eligible for medical
assistance under the State plan or under a
waiver of the plan as the Secretary may
require;
(B) a description, which may be specified by
population, of the outreach and enrollment
processes used by the State during such fiscal
year; and
(C) any other data reporting determined
necessary by the Secretary to monitor
enrollment and retention of individuals
eligible for medical assistance under the State
plan or under a waiver of the plan;
(76) provide that any data collected under the State
plan meets the requirements of section 3101 of the
Public Health Service Act;
(77) provide that the State shall comply with
provider and supplier screening, oversight, and
reporting requirements in accordance with subsection
(kk);
(78) provide that, not later than January 1, 2017, in
the case of a State that pursuant to its State plan or
waiver of the plan for medical assistance pays for
medical assistance on a fee-for-service basis, the
State shall require each provider furnishing items and
services to, or ordering, prescribing, referring, or
certifying eligibility for, services for individuals
eligible to receive medical assistance under such plan
to enroll with the State agency and provide to the
State agency the provider's identifying information,
including the name, specialty, date of birth, Social
Security number, national provider identifier (if
applicable), Federal taxpayer identification number,
and the State license or certification number of the
provider (if applicable);
(79) provide that any agent, clearinghouse, or other
alternate payee (as defined by the Secretary) that
submits claims on behalf of a health care provider must
register with the State and the Secretary in a form and
manner specified by the Secretary;
(80) provide that the State shall not provide any
payments for items or services provided under the State
plan or under a waiver to any financial institution or
entity located outside of the United States;
(81) provide for implementation of the payment models
specified by the Secretary under section 1115A(c) for
implementation on a nationwide basis unless the State
demonstrates to the satisfaction of the Secretary that
implementation would not be administratively feasible
or appropriate to the health care delivery system of
the State;
(82) provide that the State agency responsible for
administering the State plan under this title provides
assurances to the Secretary that the State agency is in
compliance with subparagraphs (A), (B), and (C) of
section 1128K(b)(2); and
(83) provide that, not later than January 1, 2017, in
the case of a State plan (or waiver of the plan) that
provides medical assistance on a fee-for-service basis
or through a primary care case-management system
described in section 1915(b)(1) (other than a primary
care case management entity (as defined by the
Secretary)), the State shall publish (and update on at
least an annual basis) on the public website of the
State agency administering the State plan, a directory
of the physicians described in subsection (mm) and, at
State option, other providers described in such
subsection that--
(A) includes--
(i) with respect to each such
physician or provider--
(I) the name of the physician
or provider;
(II) the specialty of the
physician or provider;
(III) the address at which
the physician or provider
provides services; and
(IV) the telephone number of
the physician or provider; and
(ii) with respect to any such
physician or provider participating in
such a primary care case-management
system, information regarding--
(I) whether the physician or
provider is accepting as new
patients individuals who
receive medical assistance
under this title; and
(II) the physician's or
provider's cultural and
linguistic capabilities,
including the languages spoken
by the physician or provider or
by the skilled medical
interpreter providing
interpretation services at the
physician's or provider's
office; and
(B) may include, at State option, with
respect to each such physician or provider--
(i) the Internet website of such
physician or provider; or
(ii) whether the physician or
provider is accepting as new patients
individuals who receive medical
assistance under this title.
Notwithstanding paragraph (5), if on January 1, 1965, and on
the date on which a State submits its plan for approval under
this title, the State agency which administered or supervised
the administration of the plan of such State approved under
title X (or title XVI, insofar as it relates to the blind) was
different from the State agency which administered or
supervised the administration of the State plan approved under
title I (or title XVI, insofar as it relates to the aged), the
State agency which administered or supervised the
administration of such plan approved under title X (or title
XVI, insofar as it relates to the blind) may be designated to
administer or supervise the administration of the portion of
the State plan for medical assistance which relates to blind
individuals and a different State agency may be established or
designated to administer or supervise the administration of the
rest of the State plan for medical assistance; and in such case
the part of the plan which each such agency administers, or the
administration of which each such agency supervises, shall be
regarded as a separate plan for purposes of this title (except
for purposes of paragraph (10)). The provisions of paragraphs
(9)(A), (31), and (33) and of section 1903(i)(4) shall not
apply to a religious nonmedical health care institution (as
defined in section 1861(ss)(1)).
For purposes of paragraph (10) any individual who, for the
month of August 1972, was eligible for or receiving aid or
assistance under a State plan approved under title I, X, XIV,
or XVI, or part A of title IV and who for such month was
entitled to monthly insurance benefits under title II shall for
purposes of this title only be deemed to be eligible for
financial aid or assistance for any month thereafter if such
individual would have been eligible for financial aid or
assistance for such month had the increase in monthly insurance
benefits under title II resulting from enactment of Public Law
92-336 not been applicable to such individual.
The requirement of clause (A) of paragraph (37) with respect to
a State plan may be waived by the Secretary if he finds that
the State has exercised good faith in trying to meet such
requirement. For purposes of this title, any child who meets
the requirements of paragraph (1) or (2) of section 473(b)
shall be deemed to be a dependent child as defined in section
406 and shall be deemed to be a recipient of aid to families
with dependent children under part A of title IV in the State
where such child resides. Notwithstanding paragraph (10)(B) or
any other provision of this subsection, a State plan shall
provide medical assistance with respect to an alien who is not
lawfully admitted for permanent residence or otherwise
permanently residing in the United States under color of law
only in accordance with section 1903(v).
(b) The Secretary shall approve any plan which fulfills the
conditions specified in subsection (a) of this section, except
that he shall not approve any plan which imposes, as a
condition of eligibility for medical assistance under the
plan--
(1) an age requirement of more than 65 years; or
(2) any residence requirement which excludes any
individual who resides in the State, regardless of
whether or not the residence is maintained permanently
or at a fixed address; or
(3) any citizenship requirement which excludes any
citizen of the United States.
(c) Notwithstanding subsection (b), the Secretary shall not
approve any State plan for medical assistance if the State
requires individuals described in subsection (l)(1) to apply
for assistance under the State program funded under part A of
title IV as a condition of applying for or receiving medical
assistance under this title.
(d) If a State contracts with an entity which meets the
requirements of section 1152, as determined by the Secretary,
or a utilization and quality control peer review organization
having a contract with the Secretary under part B of title XI
for the performance of medical or utilization review functions
(including quality review functions described in subsection
(a)(30)(C)) required under this title of a State plan with
respect to specific services or providers (or services or
providers in a geographic area of the State), such requirements
shall be deemed to be met for those services or providers (or
services or providers in that area) by delegation to such an
entity or organization under the contract of the State's
authority to conduct such review activities if the contract
provides for the performance of activities not inconsistent
with part B of title XI and provides for such assurances of
satisfactory performance by such an entity or organization as
the Secretary may prescribe.
(e)(1) Beginning April 1, 1990, for provisions relating to
the extension of eligibility for medical assistance for certain
families who have received aid pursuant to a State plan
approved under part A of title IV and have earned income, see
section 1925.
(2)(A) In the case of an individual who is enrolled with a
medicaid managed care organization (as defined in section
1903(m)(1)(A)), with a primary care case manager (as defined in
section 1905(t)), or with an eligible organization with a
contract under section 1876 and who would (but for this
paragraph) lose eligibility for benefits under this title
before the end of the minimum enrollment period (defined in
subparagraph (B)), the State plan may provide, notwithstanding
any other provision of this title, that the individual shall be
deemed to continue to be eligible for such benefits until the
end of such minimum period, but, except for benefits furnished
under section 1905(a)(4)(C), only with respect to such benefits
provided to the individual as an enrollee of such organization
or entity or by or through the case manager.
(B) For purposes of subparagraph (A), the term ``minimum
enrollment period'' means, with respect to an individual's
enrollment with an organization or entity under a State plan, a
period, established by the State, of not more than six months
beginning on the date the individual's enrollment with the
organization or entity becomes effective.
(3) At the option of the State, any individual who--
(A) is 18 years of age or younger and qualifies as a
disabled individual under section 1614(a);
(B) with respect to whom there has been a
determination by the State that--
(i) the individual requires a level of care
provided in a hospital, nursing facility, or
intermediate care facility for the mentally
retarded,
(ii) it is appropriate to provide such care
for the individual outside such an institution,
and
(iii) the estimated amount which would be
expended for medical assistance for the
individual for such care outside an institution
is not greater than the estimated amount which
would otherwise be expended for medical
assistance for the individual within an
appropriate institution; and
(C) if the individual were in a medical institution,
would be eligible for medical assistance under the
State plan under this title,
shall be deemed, for purposes of this title only, to be
an individual with respect to whom a supplemental
security income payment, or State supplemental payment,
respectively, is being paid under title XVI.
(4) A child born to a woman eligible for and receiving
medical assistance under a State plan on the date of the
child's birth shall be deemed to have applied for medical
assistance and to have been found eligible for such assistance
under such plan on the date of such birth and to remain
eligible for such assistance for a period of one year. During
the period in which a child is deemed under the preceding
sentence to be eligible for medical assistance, the medical
assistance eligibility identification number of the mother
shall also serve as the identification number of the child, and
all claims shall be submitted and paid under such number
(unless the State issues a separate identification number for
the child before such period expires). Notwithstanding the
preceding sentence, in the case of a child who is born in the
United States to an alien mother for whom medical assistance
for the delivery of the child is made available pursuant to
section 1903(v), the State immediately shall issue a separate
identification number for the child upon notification by the
facility at which such delivery occurred of the child's birth.
(5) A woman who, while pregnant, is eligible for, has applied
for, and has received medical assistance under the State plan,
shall continue to be eligible under the plan, as though she
were pregnant, for all pregnancy-related and postpartum medical
assistance under the plan, through the end of the month in
which the 60-day period (beginning on the last day of her
pregnancy) ends.
(6) In the case of a pregnant woman described in subsection
(a)(10) who, because of a change in income of the family of
which she is a member, would not otherwise continue to be
described in such subsection, the woman shall be deemed to
continue to be an individual described in subsection
(a)(10)(A)(i)(IV) and subsection (l)(1)(A) without regard to
such change of income through the end of the month in which the
60-day period (beginning on the last day of her pregnancy)
ends. The preceding sentence shall not apply in the case of a
woman who has been provided ambulatory prenatal care pursuant
to section 1920 during a presumptive eligibility period and is
then, in accordance with such section, determined to be
ineligible for medical assistance under the State plan.
(7) In the case of an infant or child described in
subparagraph (B), (C), or (D) of subsection (l)(1) or paragraph
(2) of section 1905(n)--
(A) who is receiving inpatient services for which
medical assistance is provided on the date the infant
or child attains the maximum age with respect to which
coverage is provided under the State plan for such
individuals, and
(B) who, but for attaining such age, would remain
eligible for medical assistance under such subsection,
the infant or child shall continue to be treated as an
individual described in such respective provision until the end
of the stay for which the inpatient services are furnished.
(8) If an individual is determined to be a qualified medicare
beneficiary (as defined in section 1905(p)(1)), such
determination shall apply to services furnished after the end
of the month in which the determination first occurs. For
purposes of payment to a State under section 1903(a), such
determination shall be considered to be valid for an individual
for a period of 12 months, except that a State may provide for
such determinations more frequently, but not more frequently
than once every 6 months for an individual.
(9)(A) At the option of the State, the plan may include as
medical assistance respiratory care services for any individual
who--
(i) is medically dependent on a ventilator for life
support at least six hours per day;
(ii) has been so dependent for at least 30
consecutive days (or the maximum number of days
authorized under the State plan, whichever is less) as
an inpatient;
(iii) but for the availability of respiratory care
services, would require respiratory care as an
inpatient in a hospital, nursing facility, or
intermediate care facility for the mentally retarded
and would be eligible to have payment made for such
inpatient care under the State plan;
(iv) has adequate social support services to be cared
for at home; and
(v) wishes to be cared for at home.
(B) The requirements of subparagraph (A)(ii) may be satisfied
by a continuous stay in one or more hospitals, nursing
facilities, or intermediate care facilities for the mentally
retarded.
(C) For purposes of this paragraph, respiratory care services
means services provided on a part-time basis in the home of the
individual by a respiratory therapist or other health care
professional trained in respiratory therapy (as determined by
the State), payment for which is not otherwise included within
other items and services furnished to such individual as
medical assistance under the plan.
(10)(A) The fact that an individual, child, or pregnant woman
may be denied aid under part A of title IV pursuant to section
402(a)(43) shall not be construed as denying (or permitting a
State to deny) medical assistance under this title to such
individual, child, or woman who is eligible for assistance
under this title on a basis other than the receipt of aid under
such part.
(B) If an individual, child, or pregnant woman is receiving
aid under part A of title IV and such aid is terminated
pursuant to section 402(a)(43), the State may not discontinue
medical assistance under this title for the individual, child,
or woman until the State has determined that the individual,
child, or woman is not eligible for assistance under this title
on a basis other than the receipt of aid under such part.
(11)(A) In the case of an individual who is enrolled with a
group health plan under section 1906 and who would (but for
this paragraph) lose eligibility for benefits under this title
before the end of the minimum enrollment period (defined in
subparagraph (B)), the State plan may provide, notwithstanding
any other provision of this title, that the individual shall be
deemed to continue to be eligible for such benefits until the
end of such minimum period, but only with respect to such
benefits provided to the individual as an enrollee of such
plan.
(B) For purposes of subparagraph (A), the term ``minimum
enrollment period'' means, with respect to an individual's
enrollment with a group health plan, a period established by
the State, of not more than 6 months beginning on the date the
individual's enrollment under the plan becomes effective.
(12) At the option of the State, the plan may provide that an
individual who is under an age specified by the State (not to
exceed 19 years of age) and who is determined to be eligible
for benefits under a State plan approved under this title under
subsection (a)(10)(A) shall remain eligible for those benefits
until the earlier of--
(A) the end of a period (not to exceed 12 months)
following the determination; or
(B) the time that the individual exceeds that age.
(13) Express Lane Option.--
(A) In general.--
(i) Option to use a finding from an express
lane agency.--At the option of the State, the
State plan may provide that in determining
eligibility under this title for a child (as
defined in subparagraph (G)), the State may
rely on a finding made within a reasonable
period (as determined by the State) from an
Express Lane agency (as defined in subparagraph
(F)) when it determines whether a child
satisfies one or more components of eligibility
for medical assistance under this title. The
State may rely on a finding from an Express
Lane agency notwithstanding sections
1902(a)(46)(B) and 1137(d) or any differences
in budget unit, disregard, deeming or other
methodology, if the following requirements are
met:
(I) Prohibition on determining
children ineligible for coverage.--If a
finding from an Express Lane agency
would result in a determination that a
child does not satisfy an eligibility
requirement for medical assistance
under this title and for child health
assistance under title XXI, the State
shall determine eligibility for
assistance using its regular
procedures.
(II) Notice requirement.--For any
child who is found eligible for medical
assistance under the State plan under
this title or child health assistance
under title XXI and who is subject to
premiums based on an Express Lane
agency's finding of such child's income
level, the State shall provide notice
that the child may qualify for lower
premium payments if evaluated by the
State using its regular policies and of
the procedures for requesting such an
evaluation.
(III) Compliance with screen and
enroll requirement.--The State shall
satisfy the requirements under
subparagraphs (A) and (B) of section
2102(b)(3) (relating to screen and
enroll) before enrolling a child in
child health assistance under title
XXI. At its option, the State may
fulfill such requirements in accordance
with either option provided under
subparagraph (C) of this paragraph.
(IV) Verification of citizenship or
nationality status.--The State shall
satisfy the requirements of section
1902(a)(46)(B) or 2105(c)(9), as
applicable for verifications of
citizenship or nationality status.
(V) Coding.--The State meets the
requirements of subparagraph (E).
(ii) Option to apply to renewals and
redeterminations.--The State may apply the
provisions of this paragraph when conducting
initial determinations of eligibility,
redeterminations of eligibility, or both, as
described in the State plan.
(B) Rules of construction.--Nothing in this paragraph
shall be construed--
(i) to limit or prohibit a State from taking
any actions otherwise permitted under this
title or title XXI in determining eligibility
for or enrolling children into medical
assistance under this title or child health
assistance under title XXI; or
(ii) to modify the limitations in section
1902(a)(5) concerning the agencies that may
make a determination of eligibility for medical
assistance under this title.
(C) Options for satisfying the screen and enroll
requirement.--
(i) In general.--With respect to a child
whose eligibility for medical assistance under
this title or for child health assistance under
title XXI has been evaluated by a State agency
using an income finding from an Express Lane
agency, a State may carry out its duties under
subparagraphs (A) and (B) of section 2102(b)(3)
(relating to screen and enroll) in accordance
with either clause (ii) or clause (iii).
(ii) Establishing a screening threshold.--
(I) In general.--Under this clause,
the State establishes a screening
threshold set as a percentage of the
Federal poverty level that exceeds the
highest income threshold applicable
under this title to the child by a
minimum of 30 percentage points or, at
State option, a higher number of
percentage points that reflects the
value (as determined by the State and
described in the State plan) of any
differences between income
methodologies used by the program
administered by the Express Lane agency
and the methodologies used by the State
in determining eligibility for medical
assistance under this title.
(II) Children with income not above
threshold.--If the income of a child
does not exceed the screening
threshold, the child is deemed to
satisfy the income eligibility criteria
for medical assistance under this title
regardless of whether such child would
otherwise satisfy such criteria.
(III) Children with income above
threshold.--If the income of a child
exceeds the screening threshold, the
child shall be considered to have an
income above the Medicaid applicable
income level described in section
2110(b)(4) and to satisfy the
requirement under section 2110(b)(1)(C)
(relating to the requirement that CHIP
matching funds be used only for
children not eligible for Medicaid). If
such a child is enrolled in child
health assistance under title XXI, the
State shall provide the parent,
guardian, or custodial relative with
the following:
(aa) Notice that the child
may be eligible to receive
medical assistance under the
State plan under this title if
evaluated for such assistance
under the State's regular
procedures and notice of the
process through which a parent,
guardian, or custodial relative
can request that the State
evaluate the child's
eligibility for medical
assistance under this title
using such regular procedures.
(bb) A description of
differences between the medical
assistance provided under this
title and child health
assistance under title XXI,
including differences in cost-
sharing requirements and
covered benefits.
(iii) Temporary enrollment in chip pending
screen and enroll.--
(I) In general.--Under this clause, a
State enrolls a child in child health
assistance under title XXI for a
temporary period if the child appears
eligible for such assistance based on
an income finding by an Express Lane
agency.
(II) Determination of eligibility.--
During such temporary enrollment
period, the State shall determine the
child's eligibility for child health
assistance under title XXI or for
medical assistance under this title in
accordance with this clause.
(III) Prompt follow up.--In making
such a determination, the State shall
take prompt action to determine whether
the child should be enrolled in medical
assistance under this title or child
health assistance under title XXI
pursuant to subparagraphs (A) and (B)
of section 2102(b)(3) (relating to
screen and enroll).
(IV) Requirement for simplified
determination.--In making such a
determination, the State shall use
procedures that, to the maximum
feasible extent, reduce the burden
imposed on the individual of such
determination. Such procedures may not
require the child's parent, guardian,
or custodial relative to provide or
verify information that already has
been provided to the State agency by an
Express Lane agency or another source
of information unless the State agency
has reason to believe the information
is erroneous.
(V) Availability of chip matching
funds during temporary enrollment
period.--Medical assistance for items
and services that are provided to a
child enrolled in title XXI during a
temporary enrollment period under this
clause shall be treated as child health
assistance under such title.
(D) Option for automatic enrollment.--
(i) In general.--The State may initiate and
determine eligibility for medical assistance
under the State Medicaid plan or for child
health assistance under the State CHIP plan
without a program application from, or on
behalf of, the child based on data obtained
from sources other than the child (or the
child's family), but a child can only be
automatically enrolled in the State Medicaid
plan or the State CHIP plan if the child or the
family affirmatively consents to being enrolled
through affirmation in writing, by telephone,
orally, through electronic signature, or
through any other means specified by the
Secretary or by signature on an Express Lane
agency application, if the requirement of
clause (ii) is met.
(ii) Information requirement.--The
requirement of this clause is that the State
informs the parent, guardian, or custodial
relative of the child of the services that will
be covered, appropriate methods for using such
services, premium or other cost sharing charges
(if any) that apply, medical support
obligations (under section 1912(a)) created by
enrollment (if applicable), and the actions the
parent, guardian, or relative must take to
maintain enrollment and renew coverage.
(E) Coding; application to enrollment error rates.--
(i) In general.--For purposes of subparagraph
(A)(iv), the requirement of this subparagraph
for a State is that the State agrees to--
(I) assign such codes as the
Secretary shall require to the children
who are enrolled in the State Medicaid
plan or the State CHIP plan through
reliance on a finding made by an
Express Lane agency for the duration of
the State's election under this
paragraph;
(II) annually provide the Secretary
with a statistically valid sample (that
is approved by Secretary) of the
children enrolled in such plans through
reliance on such a finding by
conducting a full Medicaid eligibility
review of the children identified for
such sample for purposes of determining
an eligibility error rate (as described
in clause (iv)) with respect to the
enrollment of such children (and shall
not include such children in any data
or samples used for purposes of
complying with a Medicaid Eligibility
Quality Control (MEQC) review or a
payment error rate measurement (PERM)
requirement);
(III) submit the error rate
determined under subclause (II) to the
Secretary;
(IV) if such error rate exceeds 3
percent for either of the first 2
fiscal years in which the State elects
to apply this paragraph, demonstrate to
the satisfaction of the Secretary the
specific corrective actions implemented
by the State to improve upon such error
rate; and
(V) if such error rate exceeds 3
percent for any fiscal year in which
the State elects to apply this
paragraph, a reduction in the amount
otherwise payable to the State under
section 1903(a) for quarters for that
fiscal year, equal to the total amount
of erroneous excess payments determined
for the fiscal year only with respect
to the children included in the sample
for the fiscal year that are in excess
of a 3 percent error rate with respect
to such children.
(ii) No punitive action based on error
rate.--The Secretary shall not apply the error
rate derived from the sample under clause (i)
to the entire population of children enrolled
in the State Medicaid plan or the State CHIP
plan through reliance on a finding made by an
Express Lane agency, or to the population of
children enrolled in such plans on the basis of
the State's regular procedures for determining
eligibility, or penalize the State on the basis
of such error rate in any manner other than the
reduction of payments provided for under clause
(i)(V).
(iii) Rule of construction.--Nothing in this
paragraph shall be construed as relieving a
State that elects to apply this paragraph from
being subject to a penalty under section
1903(u), for payments made under the State
Medicaid plan with respect to ineligible
individuals and families that are determined to
exceed the error rate permitted under that
section (as determined without regard to the
error rate determined under clause (i)(II)).
(iv) Error rate defined.--In this
subparagraph, the term ``error rate'' means the
rate of erroneous excess payments for medical
assistance (as defined in section
1903(u)(1)(D)) for the period involved, except
that such payments shall be limited to
individuals for which eligibility
determinations are made under this paragraph
and except that in applying this paragraph
under title XXI, there shall be substituted for
references to provisions of this title
corresponding provisions within title XXI.
(F) Express lane agency.--
(i) In general.--In this paragraph, the term
``Express Lane agency'' means a public agency
that--
(I) is determined by the State
Medicaid agency or the State CHIP
agency (as applicable) to be capable of
making the determinations of one or
more eligibility requirements described
in subparagraph (A)(i);
(II) is identified in the State
Medicaid plan or the State CHIP plan;
and
(III) notifies the child's family--
(aa) of the information which
shall be disclosed in
accordance with this paragraph;
(bb) that the information
disclosed will be used solely
for purposes of determining
eligibility for medical
assistance under the State
Medicaid plan or for child
health assistance under the
State CHIP plan; and
(cc) that the family may
elect to not have the
information disclosed for such
purposes; and
(IV) enters into, or is subject to,
an interagency agreement to limit the
disclosure and use of the information
disclosed.
(ii) Inclusion of specific public agencies
and indian tribes and tribal organizations.--
Such term includes the following:
(I) A public agency that determines
eligibility for assistance under any of
the following:
(aa) The temporary assistance
for needy families program
funded under part A of title
IV.
(bb) A State program funded
under part D of title IV.
(cc) The State Medicaid plan.
(dd) The State CHIP plan.
(ee) The Food and Nutrition
Act of 2008 (7 U.S.C. 2011 et
seq.).
(ff) The Head Start Act (42
U.S.C. 9801 et seq.).
(gg) The Richard B. Russell
National School Lunch Act (42
U.S.C. 1751 et seq.).
(hh) The Child Nutrition Act
of 1966 (42 U.S.C. 1771 et
seq.).
(ii) The Child Care and
Development Block Grant Act of
1990 (42 U.S.C. 9858 et seq.).
(jj) The Stewart B. McKinney
Homeless Assistance Act (42
U.S.C. 11301 et seq.).
(kk) The United States
Housing Act of 1937 (42 U.S.C.
1437 et seq.).
(ll) The Native American
Housing Assistance and Self-
Determination Act of 1996 (25
U.S.C. 4101 et seq.).
(II) A State-specified governmental
agency that has fiscal liability or
legal responsibility for the accuracy
of the eligibility determination
findings relied on by the State.
(III) A public agency that is subject
to an interagency agreement limiting
the disclosure and use of the
information disclosed for purposes of
determining eligibility under the State
Medicaid plan or the State CHIP plan.
(IV) The Indian Health Service, an
Indian Tribe, Tribal Organization, or
Urban Indian Organization (as defined
in section 1139(c)).
(iii) Exclusions.--Such term does not include
an agency that determines eligibility for a
program established under the Social Services
Block Grant established under title XX or a
private, for-profit organization.
(iv) Rules of construction.--Nothing in this
paragraph shall be construed as--
(I) exempting a State Medicaid agency
from complying with the requirements of
section 1902(a)(4) relating to merit-
based personnel standards for employees
of the State Medicaid agency and
safeguards against conflicts of
interest); or
(II) authorizing a State Medicaid
agency that elects to use Express Lane
agencies under this subparagraph to use
the Express Lane option to avoid
complying with such requirements for
purposes of making eligibility
determinations under the State Medicaid
plan.
(v) Additional definitions.--In this
paragraph:
(I) State.--The term ``State'' means
1 of the 50 States or the District of
Columbia.
(II) State chip agency.--The term
``State CHIP agency'' means the State
agency responsible for administering
the State CHIP plan.
(III) State chip plan.--The term
``State CHIP plan'' means the State
child health plan established under
title XXI and includes any waiver of
such plan.
(IV) State medicaid agency.--The term
``State Medicaid agency'' means the
State agency responsible for
administering the State Medicaid plan.
(V) State medicaid plan.--The term
``State Medicaid plan'' means the State
plan established under title XIX and
includes any waiver of such plan.
(G) Child defined.--For purposes of this paragraph,
the term ``child'' means an individual under 19 years
of age, or, at the option of a State, such higher age,
not to exceed 21 years of age, as the State may elect.
(H) State option to rely on state income tax data or
return.--At the option of the State, a finding from an
Express Lane agency may include gross income or
adjusted gross income shown by State income tax records
or returns.
(I) Application.--This paragraph shall not apply with
respect to eligibility determinations made after
September 30, 2017.
(14) Income determined using modified adjusted gross
income.--
(A) In general.--Notwithstanding subsection
(r) or any other provision of this title,
except as provided in subparagraph (D), for
purposes of determining income eligibility for
medical assistance under the State plan or
under any waiver of such plan and for any other
purpose applicable under the plan or waiver for
which a determination of income is required,
including with respect to the imposition of
premiums and cost-sharing, a State shall use
the modified adjusted gross income of an
individual and, in the case of an individual in
a family greater than 1, the household income
of such family. A State shall establish income
eligibility thresholds for populations to be
eligible for medical assistance under the State
plan or a waiver of the plan using modified
adjusted gross income and household income that
are not less than the effective income
eligibility levels that applied under the State
plan or waiver on the date of enactment of the
Patient Protection and Affordable Care Act. For
purposes of complying with the maintenance of
effort requirements under subsection (gg)
during the transition to modified adjusted
gross income and household income, a State
shall, working with the Secretary, establish an
equivalent income test that ensures individuals
eligible for medical assistance under the State
plan or under a waiver of the plan on the date
of enactment of the Patient Protection and
Affordable Care Act, do not lose coverage under
the State plan or under a waiver of the plan.
The Secretary may waive such provisions of this
title and title XXI as are necessary to ensure
that States establish income and eligibility
determination systems that protect
beneficiaries.
(B) No income or expense disregards.--Subject
to subparagraph (I), no type of expense, block,
or other income disregard shall be applied by a
State to determine income eligibility for
medical assistance under the State plan or
under any waiver of such plan or for any other
purpose applicable under the plan or waiver for
which a determination of income is required.
(C) No assets test.--A State shall not apply
any assets or resources test for purposes of
determining eligibility for medical assistance
under the State plan or under a waiver of the
plan.
(D) Exceptions.--
(i) Individuals eligible because of
other aid or assistance, elderly
individuals, medically needy
individuals, and individuals eligible
for medicare cost-sharing.--
Subparagraphs (A), (B), and (C) shall
not apply to the determination of
eligibility under the State plan or
under a waiver for medical assistance
for the following:
(I) Individuals who are
eligible for medical assistance
under the State plan or under a
waiver of the plan on a basis
that does not require a
determination of income by the
State agency administering the
State plan or waiver, including
as a result of eligibility for,
or receipt of, other Federal or
State aid or assistance,
individuals who are eligible on
the basis of receiving (or
being treated as if receiving)
supplemental security income
benefits under title XVI, and
individuals who are eligible as
a result of being or being
deemed to be a child in foster
care under the responsibility
of the State.
(II) Individuals who have
attained age 65.
(III) Individuals who qualify
for medical assistance under
the State plan or under any
waiver of such plan on the
basis of being blind or
disabled (or being treated as
being blind or disabled)
without regard to whether the
individual is eligible for
supplemental security income
benefits under title XVI on the
basis of being blind or
disabled and including an
individual who is eligible for
medical assistance on the basis
of section 1902(e)(3).
(IV) Individuals described in
subsection (a)(10)(C).
(V) Individuals described in
any clause of subsection
(a)(10)(E).
(ii) Express lane agency findings.--
In the case of a State that elects the
Express Lane option under paragraph
(13), notwithstanding subparagraphs
(A), (B), and (C), the State may rely
on a finding made by an Express Lane
agency in accordance with that
paragraph relating to the income of an
individual for purposes of determining
the individual's eligibility for
medical assistance under the State plan
or under a waiver of the plan.
(iii) Medicare prescription drug
subsidies determinations.--
Subparagraphs (A), (B), and (C) shall
not apply to any determinations of
eligibility for premium and cost-
sharing subsidies under and in
accordance with section 1860D-14 made
by the State pursuant to section
1935(a)(2).
(iv) Long-term care.--Subparagraphs
(A), (B), and (C) shall not apply to
any determinations of eligibility of
individuals for purposes of medical
assistance for nursing facility
services, a level of care in any
institution equivalent to that of
nursing facility services, home or
community-based services furnished
under a waiver or State plan amendment
under section 1915 or a waiver under
section 1115, and services described in
section 1917(c)(1)(C)(ii).
(v) Grandfather of current enrollees
until date of next regular
redetermination.--An individual who, on
January 1, 2014, is enrolled in the
State plan or under a waiver of the
plan and who would be determined
ineligible for medical assistance
solely because of the application of
the modified adjusted gross income or
household income standard described in
subparagraph (A), shall remain eligible
for medical assistance under the State
plan or waiver (and subject to the same
premiums and cost-sharing as applied to
the individual on that date) through
March 31, 2014, or the date on which
the individual's next regularly
scheduled redetermination of
eligibility is to occur, whichever is
later.
(E) Transition planning and oversight.--Each
State shall submit to the Secretary for the
Secretary's approval the income eligibility
thresholds proposed to be established using
modified adjusted gross income and household
income, the methodologies and procedures to be
used to determine income eligibility using
modified adjusted gross income and household
income and, if applicable, a State plan
amendment establishing an optional eligibility
category under subsection (a)(10)(A)(ii)(XX).
To the extent practicable, the State shall use
the same methodologies and procedures for
purposes of making such determinations as the
State used on the date of enactment of the
Patient Protection and Affordable Care Act. The
Secretary shall ensure that the income
eligibility thresholds proposed to be
established using modified adjusted gross
income and household income, including under
the eligibility category established under
subsection (a)(10)(A)(ii)(XX), and the
methodologies and procedures proposed to be
used to determine income eligibility, will not
result in children who would have been eligible
for medical assistance under the State plan or
under a waiver of the plan on the date of
enactment of the Patient Protection and
Affordable Care Act no longer being eligible
for such assistance.
(F) Limitation on secretarial authority.--The
Secretary shall not waive compliance with the
requirements of this paragraph except to the
extent necessary to permit a State to
coordinate eligibility requirements for dual
eligible individuals (as defined in section
1915(h)(2)(B)) under the State plan or under a
waiver of the plan and under title XVIII and
individuals who require the level of care
provided in a hospital, a nursing facility, or
an intermediate care facility for the mentally
retarded.
(G) Definitions of modified adjusted gross
income and household income.--In this
paragraph, the terms ``modified adjusted gross
income'' and ``household income'' have the
meanings given such terms in section 36B(d)(2)
of the Internal Revenue Code of 1986.
(H) Continued application of medicaid rules
regarding point-in-time income and sources of
income.--The requirement under this paragraph
for States to use modified adjusted gross
income and household income to determine income
eligibility for medical assistance under the
State plan or under any waiver of such plan and
for any other purpose applicable under the plan
or waiver for which a determination of income
is required shall not be construed as affecting
or limiting the application of--
(i) the requirement under this title
and under the State plan or a waiver of
the plan to determine an individual's
income as of the point in time at which
an application for medical assistance
under the State plan or a waiver of the
plan is processed; or
(ii) any rules established under this
title or under the State plan or a
waiver of the plan regarding sources of
countable income.
(I) Treatment of portion of modified adjusted
gross income.--For purposes of determining the
income eligibility of an individual for medical
assistance whose eligibility is determined
based on the application of modified adjusted
gross income under subparagraph (A), the State
shall--
(i) determine the dollar equivalent
of the difference between the upper
income limit on eligibility for such an
individual (expressed as a percentage
of the poverty line) and such upper
income limit increased by 5 percentage
points; and
(ii) notwithstanding the requirement
in subparagraph (A) with respect to use
of modified adjusted gross income,
utilize as the applicable income of
such individual, in determining such
income eligibility, an amount equal to
the modified adjusted gross income
applicable to such individual reduced
by such dollar equivalent amount.
(J) Treatment of certain lottery winnings and
income received as a lump sum.--
(i) In general.--In the case of an
individual who is the recipient of
qualified lottery winnings (pursuant to
lotteries occurring on or after January
1, 2020) or qualified lump sum income
(received on or after such date) and
whose eligibility for medical
assistance is determined based on the
application of modified adjusted gross
income under subparagraph (A), a State
shall, in determining such eligibility,
include such winnings or income (as
applicable) as income received--
(I) in the month in which
such winnings or income (as
applicable) is received if the
amount of such winnings or
income is less than $80,000;
(II) over a period of 2
months if the amount of such
winnings or income (as
applicable) is greater than or
equal to $80,000 but less than
$90,000;
(III) over a period of 3
months if the amount of such
winnings or income (as
applicable) is greater than or
equal to $90,000 but less than
$100,000; and
(IV) over a period of 3
months plus 1 additional month
for each increment of $10,000
of such winnings or income (as
applicable) received, not to
exceed a period of 120 months
(for winnings or income of
$1,260,000 or more), if the
amount of such winnings or
income is greater than or equal
to $100,000.
(ii) Counting in equal
installments.--For purposes of
subclauses (II), (III), and (IV) of
clause (i), winnings or income to which
such subclause applies shall be counted
in equal monthly installments over the
period of months specified under such
subclause.
(iii) Hardship exemption.--An
individual whose income, by application
of clause (i), exceeds the applicable
eligibility threshold established by
the State, may continue to be eligible
for medical assistance to the extent
that the State determines, under
procedures established by the State
under the State plan (or in the case of
a waiver of the plan under section
1115, incorporated in such waiver), or
as otherwise established by such State
in accordance with such standards as
may be specified by the Secretary, that
the denial of eligibility of the
individual would cause an undue medical
or financial hardship as determined on
the basis of criteria established by
the Secretary.
(iv) Notifications and assistance
required in case of loss of
eligibility.--A State shall, with
respect to an individual who loses
eligibility for medical assistance
under the State plan (or a waiver of
such plan) by reason of clause (i),
before the date on which the individual
loses such eligibility, inform the
individual of the date on which the
individual would no longer be
considered ineligible by reason of such
clause to receive medical assistance
under the State plan or under any
waiver of such plan and the date on
which the individual would be eligible
to reapply to receive such medical
assistance.
(v) Qualified lottery winnings
defined.--In this subparagraph, the
term ``qualified lottery winnings''
means winnings from a sweepstakes,
lottery, or pool described in paragraph
(3) of section 4402 of the Internal
Revenue Code of 1986 or a lottery
operated by a multistate or
multijurisdictional lottery
association, including amounts awarded
as a lump sum payment.
(vi) Qualified lump sum income
defined.--In this subparagraph, the
term ``qualified lump sum income''
means income that is received as a lump
sum from one of the following sources:
(I) Monetary winnings from
gambling (as defined by the
Secretary and including
monetary winnings from gambling
activities described in section
1955(b)(4) of title 18, United
States Code).
(II) Income received as
liquid assets from the estate
(as defined in section
1917(b)(4)) of a deceased
individual.
(K) Frequency of eligibility
redeterminations.--Beginning on October 1,
2017, and notwithstanding subparagraph (H), in
the case of an individual whose eligibility for
medical assistance under the State plan under
this title (or a waiver of such plan) is
determined based on the application of modified
adjusted gross income under subparagraph (A)
and who is so eligible on the basis of clause
(i)(VIII) or clause (ii)(XX) of subsection
(a)(10)(A), a State shall redetermine such
individual's eligibility for such medical
assistance no less frequently than once every 6
months.
[(14)] (15) Exclusion of compensation for
participation in a clinical trial for testing of
treatments for a rare disease or condition.--The first
$2,000 received by an individual (who has attained 19
years of age) as compensation for participation in a
clinical trial meeting the requirements of section
1612(b)(26) shall be disregarded for purposes of
determining the income eligibility of such individual
for medical assistance under the State plan or any
waiver of such plan.
(f) Notwithstanding any other provision of this title, except
as provided in subsection (e) and section 1619(b)(3) and
section 1924, except with respect to qualified disabled and
working individuals (described in section 1905(s)), and except
with respect to qualified medicare beneficiaries, qualified
severely impaired individuals, and individuals described in
subsection (m)(1), no State not eligible to participate in the
State plan program established under title XVI shall be
required to provide medical assistance to any aged, blind, or
disabled individual (within the meaning of title XVI) for any
month unless such State would be (or would have been) required
to provide medical assistance to such individual for such month
had its plan for medical assistance approved under this title
and in effect on January 1, 1972, been in effect in such month,
except that for this purpose any such individual shall be
deemed eligible for medical assistance under such State plan if
(in addition to meeting such other requirements as are or may
be imposed under the State plan) the income of any such
individual as determined in accordance with section 1903(f)
(after deducting any supplemental security income payment and
State supplementary payment made with respect to such
individual, and incurred expenses for medical care as
recognized under State law regardless of whether such expenses
are reimbursed under another public program of the State or
political subdivision thereof) is not in excess of the standard
for medical assistance established under the State plan as in
effect on January 1, 1972. In States which provide medical
assistance to individuals pursuant to paragraph (10)(C) of
subsection (a) of this section, an individual who is eligible
for medical assistance by reason of the requirements of this
section concerning the deduction of incurred medical expenses
from income shall be considered an individual eligible for
medical assistance under paragraph (10)(A) of that subsection
if that individual is, or is eligible to be (1) an individual
with respect to whom there is payable a State supplementary
payment on the basis of which similarly situated individuals
are eligible to receive medical assistance equal in amount,
duration, and scope to that provided to individuals eligible
under paragraph (10)(A), or (2) an eligible individual or
eligible spouse, as defined in title XVI, with respect to whom
supplemental security income benefits are payable; otherwise
that individual shall be considered to be an individual
eligible for medical assistance under paragraph (10)(C) of that
subsection. In States which do not provide medical assistance
to individuals pursuant to paragraph (10)(C) of that
subsection, an individual who is eligible for medical
assistance by reason of the requirements of this section
concerning the deduction of incurred medical expenses from
income shall be considered an individual eligible for medical
assistance under paragraph (10)(A) of that subsection.
(g) In addition to any other sanction available to a State, a
State may provide for a reduction of any payment amount
otherwise due with respect to a person who furnishes services
under the plan in an amount equal to up to three times the
amount of any payment sought to be collected by that person in
violation of subsection (a)(25)(C).
(h) Nothing in this title (including subsections (a)(13) and
(a)(30) of this section) shall be construed as authorizing the
Secretary to limit the amount of payment that may be made under
a plan under this title for home and community care.
(i)(1) In addition to any other authority under State law,
where a State determines that a intermediate care facility for
the mentally retarded which is certified for participation
under its plan no longer substantially meets the requirements
for such a facility under this title and further determines
that the facility's deficiencies--
(A) immediately jeopardize the health and safety of
its patients, the State shall provide for the
termination of the facility's certification for
participation under the plan and may provide, or
(B) do not immediately jeopardize the health and
safety of its patients, the State may, in lieu of
providing for terminating the facility's certification
for participation under the plan, establish alternative
remedies if the State demonstrates to the Secretary's
satisfaction that the alternative remedies are
effective in deterring noncompliance and correcting
deficiencies, and may provide
that no payment will be made under the State plan with respect
to any individual admitted to such facility after a date
specified by the State.
(2) The State shall not make such a decision with respect to
a facility until the facility has had a reasonable opportunity,
following the initial determination that it no longer
substantially meets the requirements for such a facility under
this title, to correct its deficiencies, and, following this
period, has been given reasonable notice and opportunity for a
hearing.
(3) The State's decision to deny payment may be made
effective only after such notice to the public and to the
facility as may be provided for by the State, and its
effectiveness shall terminate (A) when the State finds that the
facility is in substantial compliance (or is making good faith
efforts to achieve substantial compliance) with the
requirements for such a facility under this title, or (B) in
the case described in paragraph (1)(B), with the end of the
eleventh month following the month such decision is made
effective, whichever occurs first. If a facility to which
clause (B) of the previous sentence applies still fails to
substantially meet the provisions of the respective section on
the date specified in such clause, the State shall terminate
such facility's certification for participation under the plan
effective with the first day of the first month following the
month specified in such clause.
(j) Notwithstanding any other requirement of this title, the
Secretary may waive or modify any requirement of this title
with respect to the medical assistance program in American
Samoa and the Northern Mariana Islands, other than a waiver of
the Federal medical assistance percentage, the limitation in
section 1108(f), or the requirement that payment may be made
for medical assistance only with respect to amounts expended by
American Samoa or the Northern Mariana Islands for care and
services described in a numbered paragraph of section 1905(a).
(k)(1) The medical assistance provided to an individual
described in subclause (VIII) of subsection (a)(10)(A)(i) shall
consist of benchmark coverage described in section 1937(b)(1)
or benchmark equivalent coverage described in section
1937(b)(2). Such medical assistance shall be provided subject
to the requirements of section 1937, without regard to whether
a State otherwise has elected the option to provide medical
assistance through coverage under that section, unless an
individual described in subclause (VIII) of subsection
(a)(10)(A)(i) is also an individual for whom, under
subparagraph (B) of section 1937(a)(2), the State may not
require enrollment in benchmark coverage described in
subsection (b)(1) of section 1937 or benchmark equivalent
coverage described in subsection (b)(2) of that section.
(2) Beginning with the first day of any fiscal year quarter
that begins on or after April 1, 2010, and before January 1,
2014, a State may elect through a State plan amendment to
provide medical assistance to individuals who would be
described in subclause (VIII) of subsection (a)(10)(A)(i) if
that subclause were effective before January 1, 2014. A State
may elect to phase-in the extension of eligibility for medical
assistance to such individuals based on income, so long as the
State does not extend such eligibility to individuals described
in such subclause with higher income before making individuals
described in such subclause with lower income eligible for
medical assistance.
(3) If an individual described in subclause (VIII) of
subsection (a)(10)(A)(i) is the parent of a child who is under
19 years of age (or such higher age as the State may have
elected) who is eligible for medical assistance under the State
plan or under a waiver of such plan (under that subclause or
under a State plan amendment under paragraph (2), the
individual may not be enrolled under the State plan unless the
individual's child is enrolled under the State plan or under a
waiver of the plan or is enrolled in other health insurance
coverage. For purposes of the preceding sentence, the term
``parent'' includes an individual treated as a caretaker
relative for purposes of carrying out section 1931.
(l)(1) Individuals described in this paragraph are--
(A) women during pregnancy (and during the 60-day
period beginning on the last day of the pregnancy),
(B) infants under one year of age,
(C) children who have attained one year of age but
have not attained 6 years of age, and
(D) children born after September 30, 1983 (or, at
the option of a State, after any earlier date), who
have attained 6 years of age but have not attained 19
years of age,
who are not described in any of subclauses (I) through (III) of
subsection (a)(10)(A)(i) and whose family income does not
exceed the income level established by the State under
paragraph (2) for a family size equal to the size of the
family, including the woman, infant, or child.
(2)(A)(i) For purposes of paragraph (1) with respect to
individuals described in subparagraph (A) or (B) of that
paragraph, the State shall establish an income level which is a
percentage (not less than the percentage provided under clause
(ii) and not more than 185 percent) of the income official
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section 673(2)
of the Omnibus Budget Reconciliation Act of 1981) applicable to
a family of the size involved.
(ii) The percentage provided under this clause, with respect
to eligibility for medical assistance on or after--
(I) July 1, 1989, is 75 percent, or, if greater, the
percentage provided under clause (iii), and
(II) April 1, 1990, 133 percent, or, if greater, the
percentage provided under clause (iv).
(iii) In the case of a State which, as of the date of the
enactment of this clause, has elected to provide, and provides,
medical assistance to individuals described in this subsection
or has enacted legislation authorizing, or appropriating funds,
to provide such assistance to such individuals before July 1,
1989, the percentage provided under clause (ii)(I) shall not be
less than--
(I) the percentage specified by the State in an
amendment to its State plan (whether approved or not)
as of the date of the enactment of this clause, or
(II) if no such percentage is specified as of the
date of the enactment of this clause, the percentage
established under the State's authorizing legislation
or provided for under the State's appropriations;
but in no case shall this clause require the percentage
provided under clause (ii)(I) to exceed 100 percent.
(iv) In the case of a State which, as of the date of the
enactment of this clause, has established under clause (i), or
has enacted legislation authorizing, or appropriating funds, to
provide for, a percentage (of the income official poverty line)
that is greater than 133 percent, the percentage provided under
clause (ii) for medical assistance on or after April 1, 1990,
shall not be less than--
(I) the percentage specified by the State in an
amendment to its State plan (whether approved or not)
as of the date of the enactment of this clause, or
(II) if no such percentage is specified as of the
date of the enactment of this clause, the percentage
established under the State's authorizing legislation
or provided for under the State's appropriations.
(B) For purposes of paragraph (1) with respect to individuals
described in subparagraph (C) of such paragraph, the State
shall establish an income level which is equal to 133 percent
of the income official poverty line described in subparagraph
(A) applicable to a family of the size involved.
(C) For purposes of paragraph (1) with respect to individuals
described in subparagraph (D) of that paragraph, the State
shall establish an income level which is equal to 100 percent
(or, beginning January 1, 2014, and ending December 31, 2019,
133 percent) of the income official poverty line described in
subparagraph (A) applicable to a family of the size involved.
(3) Notwithstanding subsection (a)(17), for individuals who
are eligible for medical assistance because of subsection
(a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI), (a)(10)(A)(i)(VII), or
(a)(10)(A)(ii)(IX)--
(A) application of a resource standard shall be at
the option of the State;
(B) any resource standard or methodology that is
applied with respect to an individual described in
subparagraph (A) of paragraph (1) may not be more
restrictive than the resource standard or methodology
that is applied under title XVI;
(C) any resource standard or methodology that is
applied with respect to an individual described in
subparagraph (B), (C), or (D) of paragraph (1) may not
be more restrictive than the corresponding methodology
that is applied under the State plan under part A of
title IV;
(D) the income standard to be applied is the
appropriate income standard established under paragraph
(2); and
(E) family income shall be determined in accordance
with the methodology employed under the State plan
under part A or E of title IV (except to the extent
such methodology is inconsistent with clause (D) of
subsection (a)(17)), and costs incurred for medical
care or for any other type of remedial care shall not
be taken into account.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(17), require
or permit such treatment for other individuals.
(4)(A) In the case of any State which is providing medical
assistance to its residents under a waiver granted under
section 1115, the Secretary shall require the State to provide
medical assistance for pregnant women and infants under age 1
described in subsection (a)(10)(A)(i)(IV) and for children
described in subsection (a)(10)(A)(i)(VI) or subsection
(a)(10)(A)(i)(VII) in the same manner as the State would be
required to provide such assistance for such individuals if the
State had in effect a plan approved under this title.
(B) In the case of a State which is not one of the 50 States
or the District of Columbia, the State need not meet the
requirement of subsection (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI),
or (a)(10)(A)(i)(VII) and, for purposes of paragraph (2)(A),
the State may substitute for the percentage provided under
clause (ii) of such paragraph any percentage.
(m)(1) Individuals described in this paragraph are
individuals--
(A) who are 65 years of age or older or are disabled
individuals (as determined under section 1614(a)(3)),
(B) whose income (as determined under section 1612
for purposes of the supplemental security income
program, except as provided in paragraph (2)(C)) does
not exceed an income level established by the State
consistent with paragraph (2)(A), and
(C) whose resources (as determined under section 1613
for purposes of the supplemental security income
program) do not exceed (except as provided in paragraph
(2)(B)) the maximum amount of resources that an
individual may have and obtain benefits under that
program.
(2)(A) The income level established under paragraph (1)(B)
may not exceed a percentage (not more than 100 percent) of the
official poverty line (as defined by the Office of Management
and Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
(B) In the case of a State that provides medical assistance
to individuals not described in subsection (a)(10)(A) and at
the State's option, the State may use under paragraph (1)(C)
such resource level (which is higher than the level described
in that paragraph) as may be applicable with respect to
individuals described in paragraph (1)(A) who are not described
in subsection (a)(10)(A).
(C) The provisions of section 1905(p)(2)(D) shall apply to
determinations of income under this subsection in the same
manner as they apply to determinations of income under section
1905(p).
(3) Notwithstanding subsection (a)(17), for individuals
described in paragraph (1) who are covered under the State plan
by virtue of subsection (a)(10)(A)(ii)(X)--
(A) the income standard to be applied is the income
standard described in paragraph (1)(B), and
(B) except as provided in section 1612(b)(4)(B)(ii),
costs incurred for medical care or for any other type
of remedial care shall not be taken into account in
determining income.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(17), require
or permit such treatment for other individuals.
(4) Notwithstanding subsection (a)(17), for qualified
medicare beneficiaries described in section 1905(p)(1)--
(A) the income standard to be applied is the income
standard described in section 1905(p)(1)(B), and
(B) except as provided in section 1612(b)(4)(B)(ii),
costs incurred for medical care or for any other type
of remedial care shall not be taken into account in
determining income.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(17), require
or permit such treatment for other individuals.
(n)(1) In the case of medical assistance furnished under this
title for medicare cost-sharing respecting the furnishing of a
service or item to a qualified medicare beneficiary, the State
plan may provide payment in an amount with respect to the
service or item that results in the sum of such payment amount
and any amount of payment made under title XVIII with respect
to the service or item exceeding the amount that is otherwise
payable under the State plan for the item or service for
eligible individuals who are not qualified medicare
beneficiaries.
(2) In carrying out paragraph (1), a State is not required to
provide any payment for any expenses incurred relating to
payment for deductibles, coinsurance, or copayments for
medicare cost-sharing to the extent that payment under title
XVIII for the service would exceed the payment amount that
otherwise would be made under the State plan under this title
for such service if provided to an eligible recipient other
than a medicare beneficiary.
(3) In the case in which a State's payment for medicare cost-
sharing for a qualified medicare beneficiary with respect to an
item or service is reduced or eliminated through the
application of paragraph (2)--
(A) for purposes of applying any limitation under
title XVIII on the amount that the beneficiary may be
billed or charged for the service, the amount of
payment made under title XVIII plus the amount of
payment (if any) under the State plan shall be
considered to be payment in full for the service;
(B) the beneficiary shall not have any legal
liability to make payment to a provider or to an
organization described in section 1903(m)(1)(A) for the
service; and
(C) any lawful sanction that may be imposed upon a
provider or such an organization for excess charges
under this title or title XVIII shall apply to the
imposition of any charge imposed upon the individual in
such case.
This paragraph shall not be construed as preventing payment of
any medicare cost-sharing by a medicare supplemental policy or
an employer retiree health plan on behalf of an individual.
(o) Notwithstanding any provision of subsection (a) to the
contrary, a State plan under this title shall provide that any
supplemental security income benefits paid by reason of
subparagraph (E) or (G) of section 1611(e)(1) to an individual
who--
(1) is eligible for medical assistance under the
plan, and
(2) is in a hospital, skilled nursing facility, or
intermediate care facility at the time such benefits
are paid,
will be disregarded for purposes of determining the amount of
any post-eligibility contribution by the individual to the cost
of the care and services provided by the hospital, skilled
nursing facility, or intermediate care facility.
(p)(1) In addition to any other authority, a State may
exclude any individual or entity for purposes of participating
under the State plan under this title for any reason for which
the Secretary could exclude the individual or entity from
participation in a program under title XVIII under section
1128, 1128A, or 1866(b)(2).
(2) In order for a State to receive payments for medical
assistance under section 1903(a), with respect to payments the
State makes to a medicaid managed care organization (as defined
in section 1903(m)) or to an entity furnishing services under a
waiver approved under section 1915(b)(1), the State must
provide that it will exclude from participation, as such an
organization or entity, any organization or entity that--
(A) could be excluded under section 1128(b)(8)
(relating to owners and managing employees who have
been convicted of certain crimes or received other
sanctions),
(B) has, directly or indirectly, a substantial
contractual relationship (as defined by the Secretary)
with an individual or entity that is described in
section 1128(b)(8)(B), or
(C) employs or contracts with any individual or
entity that is excluded from participation under this
title under section 1128 or 1128A for the provision of
health care, utilization review, medical social work,
or administrative services or employs or contracts with
any entity for the provision (directly or indirectly)
through such an excluded individual or entity of such
services.
(3) As used in this subsection, the term ``exclude'' includes
the refusal to enter into or renew a participation agreement or
the termination of such an agreement.
(q)(1)(A) In order to meet the requirement of subsection
(a)(50), the State plan must provide that, in the case of an
institutionalized individual or couple described in
subparagraph (B), in determining the amount of the individual's
or couple's income to be applied monthly to payment for the
cost of care in an institution, there shall be deducted from
the monthly income (in addition to other allowances otherwise
provided under the State plan) a monthly personal needs
allowance--
(i) which is reasonable in amount for clothing and
other personal needs of the individual (or couple)
while in an institution, and
(ii) which is not less (and may be greater) than the
minimum monthly personal needs allowance described in
paragraph (2).
(B) In this subsection, the term ``institutionalized
individual or couple'' means an individual or married couple--
(i) who is an inpatient (or who are inpatients) in a
medical institution or nursing facility for which
payments are made under this title throughout a month,
and
(ii) who is or are determined to be eligible for
medical assistance under the State plan.
(2) The minimum monthly personal needs allowance described in
this paragraph is $30 for an institutionalized individual and
$60 for an institutionalized couple (if both are aged, blind,
or disabled, and their incomes are considered available to each
other in determining eligibility).
(r)(1)(A) For purposes of sections 1902(a)(17) and
1924(d)(1)(D) and for purposes of a waiver under section 1915,
with respect to the post-eligibility treatment of income of
individuals who are institutionalized or receiving home or
community-based services under such a waiver, the treatment
described in subparagraph (B) shall apply, there shall be
disregarded reparation payments made by the Federal Republic of
Germany, and there shall be taken into account amounts for
incurred expenses for medical or remedial care that are not
subject to payment by a third party, including--
(i) medicare and other health insurance premiums,
deductibles, or coinsurance, and
(ii) necessary medical or remedial care recognized
under State law but not covered under the State plan
under this title, subject to reasonable limits the
State may establish on the amount of these expenses.
(B)(i) In the case of a veteran who does not have a spouse or
a child, if the veteran--
(I) receives, after the veteran has been determined
to be eligible for medical assistance under the State
plan under this title, a veteran's pension in excess of
$90 per month, and
(II) resides in a State veterans home with respect to
which the Secretary of Veterans Affairs makes per diem
payments for nursing home care pursuant to section
1741(a) of title 38, United States Code,
any such pension payment, including any payment made due to the
need for aid and attendance, or for unreimbursed medical
expenses, that is in excess of $90 per month shall be counted
as income only for the purpose of applying such excess payment
to the State veterans home's cost of providing nursing home
care to the veteran.
(ii) The provisions of clause (i) shall apply with respect to
a surviving spouse of a veteran who does not have a child in
the same manner as they apply to a veteran described in such
clause.
(2)(A) The methodology to be employed in determining income
and resource eligibility for individuals under subsection
(a)(10)(A)(i)(III), (a)(10)(A)(i)(IV), (a)(10)(A)(i)(VI),
(a)(10)(A)(i)(VII), (a)(10)(A)(ii), (a)(10)(C)(i)(III), or (f)
or under section 1905(p) may be less restrictive, and shall be
no more restrictive, than the methodology--
(i) in the case of groups consisting of aged, blind,
or disabled individuals, under the supplemental
security income program under title XVI, or
(ii) in the case of other groups, under the State
plan most closely categorically related.
(B) For purposes of this subsection and subsection (a)(10),
methodology is considered to be ``no more restrictive'' if,
using the methodology, additional individuals may be eligible
for medical assistance and no individuals who are otherwise
eligible are made ineligible for such assistance.
(s) In order to meet the requirements of subsection (a)(55),
the State plan must provide that payments to hospitals under
the plan for inpatient hospital services furnished to infants
who have not attained the age of 1 year, and to children who
have not attained the age of 6 years and who receive such
services in a disproportionate share hospital described in
section 1923(b)(1), shall--
(1) if made on a prospective basis (whether per diem,
per case, or otherwise) provide for an outlier
adjustment in payment amounts for medically necessary
inpatient hospital services involving exceptionally
high costs or exceptionally long lengths of stay,
(2) not be limited by the imposition of day limits
with respect to the delivery of such services to such
individuals, and
(3) not be limited by the imposition of dollar limits
(other than such limits resulting from prospective
payments as adjusted pursuant to paragraph (1)) with
respect to the delivery of such services to any such
individual who has not attained their first birthday
(or in the case of such an individual who is an
inpatient on his first birthday until such individual
is discharged).
(t) Nothing in this title (including sections 1903(a) and
1905(a)) shall be construed as authorizing the Secretary to
deny or limit payments to a State for expenditures, for medical
assistance for items or services, attributable to taxes of
general applicability imposed with respect to the provision of
such items or services.
(u)(1) Individuals described in this paragraph are
individuals--
(A) who are entitled to elect COBRA continuation
coverage (as defined in paragraph (3)),
(B) whose income (as determined under section 1612
for purposes of the supplemental security income
program) does not exceed 100 percent of the official
poverty line (as defined by the Office of Management
and Budget, and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act
of 1981) applicable to a family of the size involved,
(C) whose resources (as determined under section 1613
for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual may have and obtain
benefits under that program, and
(D) with respect to whose enrollment for COBRA
continuation coverage the State has determined that the
savings in expenditures under this title resulting from
such enrollment is likely to exceed the amount of
payments for COBRA premiums made.
(2) For purposes of subsection (a)(10)(F) and this
subsection, the term ``COBRA premiums'' means the applicable
premium imposed with respect to COBRA continuation coverage.
(3) In this subsection, the term ``COBRA continuation
coverage'' means coverage under a group health plan provided by
an employer with 75 or more employees provided pursuant to
title XXII of the Public Health Service Act, section 4980B of
the Internal Revenue Code of 1986, or title VI of the Employee
Retirement Income Security Act of 1974.
(4) Notwithstanding subsection (a)(17), for individuals
described in paragraph (1) who are covered under the State plan
by virtue of subsection (a)(10)(A)(ii)(XI)--
(A) the income standard to be applied is the income
standard described in paragraph (1)(B), and
(B) except as provided in section 1612(b)(4)(B)(ii),
costs incurred for medical care or for any other type
of remedial care shall not be taken into account in
determining income.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(10)(B) or
(a)(17), require or permit such treatment for other
individuals.
(v) A State plan may provide for the making of determinations
of disability or blindness for the purpose of determining
eligibility for medical assistance under the State plan by the
single State agency or its designee, and make medical
assistance available to individuals whom it finds to be blind
or disabled and who are determined otherwise eligible for such
assistance during the period of time prior to which a final
determination of disability or blindness is made by the Social
Security Administration with respect to such an individual. In
making such determinations, the State must apply the
definitions of disability and blindness found in section
1614(a) of the Social Security Act.
(w)(1) For purposes of subsection (a)(57) and sections
1903(m)(1)(A) and 1919(c)(2)(E), the requirement of this
subsection is that a provider or organization (as the case may
be) maintain written policies and procedures with respect to
all adult individuals receiving medical care by or through the
provider or organization--
(A) to provide written information to each such
individual concerning--
(i) an individual's rights under State law
(whether statutory or as recognized by the
courts of the State) to make decisions
concerning such medical care, including the
right to accept or refuse medical or surgical
treatment and the right to formulate advance
directives (as defined in paragraph (3)), and
(ii) the provider's or organization's written
policies respecting the implementation of such
rights;
(B) to document in the individual's medical record
whether or not the individual has executed an advance
directive;
(C) not to condition the provision of care or
otherwise discriminate against an individual based on
whether or not the individual has executed an advance
directive;
(D) to ensure compliance with requirements of State
law (whether statutory or as recognized by the courts
of the State) respecting advance directives; and
(E) to provide (individually or with others) for
education for staff and the community on issues
concerning advance directives.
Subparagraph (C) shall not be construed as requiring the
provision of care which conflicts with an advance directive.
(2) The written information described in paragraph (1)(A)
shall be provided to an adult individual--
(A) in the case of a hospital, at the time of the
individual's admission as an inpatient,
(B) in the case of a nursing facility, at the time of
the individual's admission as a resident,
(C) in the case of a provider of home health care or
personal care services, in advance of the individual
coming under the care of the provider,
(D) in the case of a hospice program, at the time of
initial receipt of hospice care by the individual from
the program, and
(E) in the case of a medicaid managed care
organization, at the time of enrollment of the
individual with the organization.
(3) Nothing in this section shall be construed to prohibit
the application of a State law which allows for an objection on
the basis of conscience for any health care provider or any
agent of such provider which as a matter of conscience cannot
implement an advance directive.
(4) In this subsection, the term ``advance directive'' means
a written instruction, such as a living will or durable power
of attorney for health care, recognized under State law
(whether statutory or as recognized by the courts of the State)
and relating to the provision of such care when the individual
is incapacitated.
(5) For construction relating to this subsection, see section
7 of the Assisted Suicide Funding Restriction Act of 1997
(relating to clarification respecting assisted suicide,
euthanasia, and mercy killing).
(x) The Secretary shall establish a system, for
implementation by not later than July 1, 1991, which provides
for a unique identifier for each physician who furnishes
services for which payment may be made under a State plan
approved under this title.
(y)(1) In addition to any other authority under State law,
where a State determines that a psychiatric hospital which is
certified for participation under its plan no longer meets the
requirements for a psychiatric hospital (referred to in section
1905(h)) and further finds that the hospital's deficiencies--
(A) immediately jeopardize the health and safety of
its patients, the State shall terminate the hospital's
participation under the State plan; or
(B) do not immediately jeopardize the health and
safety of its patients, the State may terminate the
hospital's participation under the State plan, or
provide that no payment will be made under the State
plan with respect to any individual admitted to such
hospital after the effective date of the finding, or
both.
(2) Except as provided in paragraph (3), if a psychiatric
hospital described in paragraph (1)(B) has not complied with
the requirements for a psychiatric hospital under this title--
(A) within 3 months after the date the hospital is
found to be out of compliance with such requirements,
the State shall provide that no payment will be made
under the State plan with respect to any individual
admitted to such hospital after the end of such 3-month
period, or
(B) within 6 months after the date the hospital is
found to be out of compliance with such requirements,
no Federal financial participation shall be provided
under section 1903(a) with respect to further services
provided in the hospital until the State finds that the
hospital is in compliance with the requirements of this
title.
(3) The Secretary may continue payments, over a period of not
longer than 6 months from the date the hospital is found to be
out of compliance with such requirements, if--
(A) the State finds that it is more appropriate to
take alternative action to assure compliance of the
hospital with the requirements than to terminate the
certification of the hospital,
(B) the State has submitted a plan and timetable for
corrective action to the Secretary for approval and the
Secretary approves the plan of corrective action, and
(C) the State agrees to repay to the Federal
Government payments received under this paragraph if
the corrective action is not taken in accordance with
the approved plan and timetable.
(z)(1) Individuals described in this paragraph are
individuals not described in subsection (a)(10)(A)(i)--
(A) who are infected with tuberculosis;
(B) whose income (as determined under the State plan
under this title with respect to disabled individuals)
does not exceed the maximum amount of income a disabled
individual described in subsection (a)(10)(A)(i) may
have and obtain medical assistance under the plan; and
(C) whose resources (as determined under the State
plan under this title with respect to disabled
individuals) do not exceed the maximum amount of
resources a disabled individual described in subsection
(a)(10)(A)(i) may have and obtain medical assistance
under the plan.
(2) For purposes of subsection (a)(10), the term ``TB-related
services'' means each of the following services relating to
treatment of infection with tuberculosis:
(A) Prescribed drugs.
(B) Physicians' services and services described in
section 1905(a)(2).
(C) Laboratory and X-ray services (including services
to confirm the presence of infection).
(D) Clinic services and Federally-qualified health
center services.
(E) Case management services (as defined in section
1915(g)(2)).
(F) Services (other than room and board) designed to
encourage completion of regimens of prescribed drugs by
outpatients, including services to observe directly the
intake of prescribed drugs.
(aa) Individuals described in this subsection are individuals
who--
(1) are not described in subsection (a)(10)(A)(i);
(2) have not attained age 65;
(3) have been screened for breast and cervical cancer
under the Centers for Disease Control and Prevention
breast and cervical cancer early detection program
established under title XV of the Public Health Service
Act (42 U.S.C. 300k et seq.) in accordance with the
requirements of section 1504 of that Act (42 U.S.C.
300n) and need treatment for breast or cervical cancer;
and
(4) are not otherwise covered under creditable
coverage, as defined in section 2701(c) of the Public
Health Service Act (42 U.S.C. 300gg(c)), but applied
without regard to paragraph (1)(F) of such section.
(bb) Payment for Services Provided by Federally-Qualified
Health Centers and Rural Health Clinics.--
(1) In general.--Beginning with fiscal year 2001 with
respect to services furnished on or after January 1,
2001, and each succeeding fiscal year, the State plan
shall provide for payment for services described in
section 1905(a)(2)(C) furnished by a Federally-
qualified health center and services described in
section 1905(a)(2)(B) furnished by a rural health
clinic in accordance with the provisions of this
subsection.
(2) Fiscal year 2001.--Subject to paragraph (4), for
services furnished on and after January 1, 2001, during
fiscal year 2001, the State plan shall provide for
payment for such services in an amount (calculated on a
per visit basis) that is equal to 100 percent of the
average of the costs of the center or clinic of
furnishing such services during fiscal years 1999 and
2000 which are reasonable and related to the cost of
furnishing such services, or based on such other tests
of reasonableness as the Secretary prescribes in
regulations under section 1833(a)(3), or, in the case
of services to which such regulations do not apply, the
same methodology used under section 1833(a)(3),
adjusted to take into account any increase or decrease
in the scope of such services furnished by the center
or clinic during fiscal year 2001.
(3) Fiscal year 2002 and succeeding fiscal years.--
Subject to paragraph (4), for services furnished during
fiscal year 2002 or a succeeding fiscal year, the State
plan shall provide for payment for such services in an
amount (calculated on a per visit basis) that is equal
to the amount calculated for such services under this
subsection for the preceding fiscal year--
(A) increased by the percentage increase in
the MEI (as defined in section 1842(i)(3))
applicable to primary care services (as defined
in section 1842(i)(4)) for that fiscal year;
and
(B) adjusted to take into account any
increase or decrease in the scope of such
services furnished by the center or clinic
during that fiscal year.
(4) Establishment of initial year payment amount for
new centers or clinics.--In any case in which an entity
first qualifies as a Federally-qualified health center
or rural health clinic after fiscal year 2000, the
State plan shall provide for payment for services
described in section 1905(a)(2)(C) furnished by the
center or services described in section 1905(a)(2)(B)
furnished by the clinic in the first fiscal year in
which the center or clinic so qualifies in an amount
(calculated on a per visit basis) that is equal to 100
percent of the costs of furnishing such services during
such fiscal year based on the rates established under
this subsection for the fiscal year for other such
centers or clinics located in the same or adjacent area
with a similar case load or, in the absence of such a
center or clinic, in accordance with the regulations
and methodology referred to in paragraph (2) or based
on such other tests of reasonableness as the Secretary
may specify. For each fiscal year following the fiscal
year in which the entity first qualifies as a
Federally-qualified health center or rural health
clinic, the State plan shall provide for the payment
amount to be calculated in accordance with paragraph
(3).
(5) Administration in the case of managed care.--
(A) In general.--In the case of services
furnished by a Federally-qualified health
center or rural health clinic pursuant to a
contract between the center or clinic and a
managed care entity (as defined in section
1932(a)(1)(B)), the State plan shall provide
for payment to the center or clinic by the
State of a supplemental payment equal to the
amount (if any) by which the amount determined
under paragraphs (2), (3), and (4) of this
subsection exceeds the amount of the payments
provided under the contract.
(B) Payment schedule.--The supplemental
payment required under subparagraph (A) shall
be made pursuant to a payment schedule agreed
to by the State and the Federally-qualified
health center or rural health clinic, but in no
case less frequently than every 4 months.
(6) Alternative payment methodologies.--
Notwithstanding any other provision of this section,
the State plan may provide for payment in any fiscal
year to a Federally-qualified health center for
services described in section 1905(a)(2)(C) or to a
rural health clinic for services described in section
1905(a)(2)(B) in an amount which is determined under an
alternative payment methodology that--
(A) is agreed to by the State and the center
or clinic; and
(B) results in payment to the center or
clinic of an amount which is at least equal to
the amount otherwise required to be paid to the
center or clinic under this section.
(cc)(1) Individuals described in this paragraph are
individuals--
(A) who are children who have not attained 19 years
of age and are born--
(i) on or after January 1, 2001 (or, at the
option of a State, on or after an earlier
date), in the case of the second, third, and
fourth quarters of fiscal year 2007;
(ii) on or after October 1, 1995 (or, at the
option of a State, on or after an earlier
date), in the case of each quarter of fiscal
year 2008; and
(iii) after October 1, 1989, in the case of
each quarter of fiscal year 2009 and each
quarter of any fiscal year thereafter;
(B) who would be considered disabled under section
1614(a)(3)(C) (as determined under title XVI for
children but without regard to any income or asset
eligibility requirements that apply under such title
with respect to children); and
(C) whose family income does not exceed such income
level as the State establishes and does not exceed--
(i) 300 percent of the poverty line (as
defined in section 2110(c)(5)) applicable to a
family of the size involved; or
(ii) such higher percent of such poverty line
as a State may establish, except that--
(I) any medical assistance provided
to an individual whose family income
exceeds 300 percent of such poverty
line may only be provided with State
funds; and
(II) no Federal financial
participation shall be provided under
section 1903(a) for any medical
assistance provided to such an
individual.
(2)(A) If an employer of a parent of an individual described
in paragraph (1) offers family coverage under a group health
plan (as defined in section 2791(a) of the Public Health
Service Act), the State shall--
(i) notwithstanding section 1906, require such parent
to apply for, enroll in, and pay premiums for such
coverage as a condition of such parent's child being or
remaining eligible for medical assistance under
subsection (a)(10)(A)(ii)(XIX) if the parent is
determined eligible for such coverage and the employer
contributes at least 50 percent of the total cost of
annual premiums for such coverage; and
(ii) if such coverage is obtained--
(I) subject to paragraph (2) of section
1916(h), reduce the premium imposed by the
State under that section in an amount that
reasonably reflects the premium contribution
made by the parent for private coverage on
behalf of a child with a disability; and
(II) treat such coverage as a third party
liability under subsection (a)(25).
(B) In the case of a parent to which subparagraph (A)
applies, a State, notwithstanding section 1906 but subject to
paragraph (1)(C)(ii), may provide for payment of any portion of
the annual premium for such family coverage that the parent is
required to pay. Any payments made by the State under this
subparagraph shall be considered, for purposes of section
1903(a), to be payments for medical assistance.
(dd) Electronic Transmission of Information.--If the State
agency determining eligibility for medical assistance under
this title or child health assistance under title XXI verifies
an element of eligibility based on information from an Express
Lane Agency (as defined in subsection (e)(13)(F)), or from
another public agency, then the applicant's signature under
penalty of perjury shall not be required as to such element.
Any signature requirement for an application for medical
assistance may be satisfied through an electronic signature, as
defined in section 1710(1) of the Government Paperwork
Elimination Act (44 U.S.C. 3504 note). The requirements of
subparagraphs (A) and (B) of section 1137(d)(2) may be met
through evidence in digital or electronic form.
(ee)(1) For purposes of subsection (a)(46)(B)(ii), the
requirements of this subsection with respect to an individual
declaring to be a citizen or national of the United States for
purposes of establishing eligibility under this title, are, in
lieu of requiring the individual to present satisfactory
documentary evidence of citizenship or nationality under
section 1903(x) (if the individual is not described in
paragraph (2) of that section), as follows:
(A) The State submits the name and social security
number of the individual to the Commissioner of Social
Security as part of the program established under
paragraph (2).
(B) If the State receives notice from the
Commissioner of Social Security that the name or social
security number, or the declaration of citizenship or
nationality, of the individual is inconsistent with
information in the records maintained by the
Commissioner--
(i) the State makes a reasonable effort to
identify and address the causes of such
inconsistency, including through typographical
or other clerical errors, by contacting the
individual to confirm the accuracy of the name
or social security number submitted or
declaration of citizenship or nationality and
by taking such additional actions as the
Secretary, through regulation or other
guidance, or the State may identify, and
continues to provide the individual with
medical assistance while making such effort;
and
(ii) in the case such inconsistency is not
resolved under clause (i), the State--
(I) notifies the individual of such
fact;
(II) provides the individual with a
period of 90 days from the date on
which the notice required under
subclause (I) is received by the
individual to either present
satisfactory documentary evidence of
citizenship or nationality (as defined
in section 1903(x)(3)) or resolve the
inconsistency with the Commissioner of
Social Security (and continues to
provide the individual with medical
assistance during such 90-day period);
and
(III) disenrolls the individual from
the State plan under this title within
30 days after the end of such 90-day
period if no such documentary evidence
is presented or if such inconsistency
is not resolved.
(2)(A) Each State electing to satisfy the requirements of
this subsection for purposes of section 1902(a)(46)(B) shall
establish a program under which the State submits at least
monthly to the Commissioner of Social Security for comparison
of the name and social security number, of each individual
newly enrolled in the State plan under this title that month
who is not described in section 1903(x)(2) and who declares to
be a United States citizen or national, with information in
records maintained by the Commissioner.
(B) In establishing the State program under this paragraph,
the State may enter into an agreement with the Commissioner of
Social Security--
(i) to provide, through an on-line system or
otherwise, for the electronic submission of, and
response to, the information submitted under
subparagraph (A) for an individual enrolled in the
State plan under this title who declares to be citizen
or national on at least a monthly basis; or
(ii) to provide for a determination of the
consistency of the information submitted with the
information maintained in the records of the
Commissioner through such other method as agreed to by
the State and the Commissioner and approved by the
Secretary, provided that such method is no more
burdensome for individuals to comply with than any
burdens that may apply under a method described in
clause (i).
(C) The program established under this paragraph shall
provide that, in the case of any individual who is required to
submit a social security number to the State under subparagraph
(A) and who is unable to provide the State with such number,
shall be provided with at least the reasonable opportunity to
present satisfactory documentary evidence of citizenship or
nationality (as defined in section 1903(x)(3)) as is provided
under clauses (i) and (ii) of section 1137(d)(4)(A) to an
individual for the submittal to the State of evidence
indicating a satisfactory immigration status.
(3)(A) The State agency implementing the plan approved under
this title shall, at such times and in such form as the
Secretary may specify, provide information on the percentage
each month that the inconsistent submissions bears to the total
submissions made for comparison for such month. For purposes of
this subparagraph, a name, social security number, or
declaration of citizenship or nationality of an individual
shall be treated as inconsistent and included in the
determination of such percentage only if--
(i) the information submitted by the individual is
not consistent with information in records maintained
by the Commissioner of Social Security;
(ii) the inconsistency is not resolved by the State;
(iii) the individual was provided with a reasonable
period of time to resolve the inconsistency with the
Commissioner of Social Security or provide satisfactory
documentation of citizenship status and did not
successfully resolve such inconsistency; and
(iv) payment has been made for an item or service
furnished to the individual under this title.
(B) If, for any fiscal year, the average monthly percentage
determined under subparagraph (A) is greater than 3 percent--
(i) the State shall develop and adopt a corrective
plan to review its procedures for verifying the
identities of individuals seeking to enroll in the
State plan under this title and to identify and
implement changes in such procedures to improve their
accuracy; and
(ii) pay to the Secretary an amount equal to the
amount which bears the same ratio to the total payments
under the State plan for the fiscal year for providing
medical assistance to individuals who provided
inconsistent information as the number of individuals
with inconsistent information in excess of 3 percent of
such total submitted bears to the total number of
individuals with inconsistent information.
(C) The Secretary may waive, in certain limited cases, all or
part of the payment under subparagraph (B)(ii) if the State is
unable to reach the allowable error rate despite a good faith
effort by such State.
(D) Subparagraphs (A) and (B) shall not apply to a State for
a fiscal year if there is an agreement described in paragraph
(2)(B) in effect as of the close of the fiscal year that
provides for the submission on a real-time basis of the
information described in such paragraph.
(4) Nothing in this subsection shall affect the rights of any
individual under this title to appeal any disenrollment from a
State plan.
(ff) Notwithstanding any other requirement of this title or
any other provision of Federal or State law, a State shall
disregard the following property from resources for purposes of
determining the eligibility of an individual who is an Indian
for medical assistance under this title:
(1) Property, including real property and
improvements, that is held in trust, subject to Federal
restrictions, or otherwise under the supervision of the
Secretary of the Interior, located on a reservation,
including any federally recognized Indian Tribe's
reservation, pueblo, or colony, including former
reservations in Oklahoma, Alaska Native regions
established by the Alaska Native Claims Settlement Act,
and Indian allotments on or near a reservation as
designated and approved by the Bureau of Indian Affairs
of the Department of the Interior.
(2) For any federally recognized Tribe not described
in paragraph (1), property located within the most
recent boundaries of a prior Federal reservation.
(3) Ownership interests in rents, leases, royalties,
or usage rights related to natural resources (including
extraction of natural resources or harvesting of
timber, other plants and plant products, animals, fish,
and shellfish) resulting from the exercise of federally
protected rights.
(4) Ownership interests in or usage rights to items
not covered by paragraphs (1) through (3) that have
unique religious, spiritual, traditional, or cultural
significance or rights that support subsistence or a
traditional lifestyle according to applicable tribal
law or custom.
(gg) Maintenance of Effort.--
(1) General requirement to maintain eligibility
standards until state exchange is fully operational.--
Subject to the succeeding paragraphs of this
subsection, during the period that begins on the date
of enactment of the Patient Protection and Affordable
Care Act and ends on the date on which the Secretary
determines that an Exchange established by the State
under section 1311 of the Patient Protection and
Affordable Care Act is fully operational, as a
condition for receiving any Federal payments under
section 1903(a) for calendar quarters occurring during
such period, a State shall not have in effect
eligibility standards, methodologies, or procedures
under the State plan under this title or under any
waiver of such plan that is in effect during that
period, that are more restrictive than the eligibility
standards, methodologies, or procedures, respectively,
under the plan or waiver that are in effect on the date
of enactment of the Patient Protection and Affordable
Care Act.
(2) Continuation of eligibility standards for
children until october 1, 2019.--The requirement under
paragraph (1) shall continue to apply to a State
through September 30, 2019, with respect to the
eligibility standards, methodologies, and procedures
under the State plan under this title or under any
waiver of such plan that are applicable to determining
the eligibility for medical assistance of any child who
is under 19 years of age (or such higher age as the
State may have elected).
(3) Nonapplication.--During the period that begins on
January 1, 2011, and ends on December 31, 2013, the
requirement under paragraph (1) shall not apply to a
State with respect to nonpregnant, nondisabled adults
who are eligible for medical assistance under the State
plan or under a waiver of the plan at the option of the
State and whose income exceeds 133 percent of the
poverty line (as defined in section 2110(c)(5))
applicable to a family of the size involved if, on or
after December 31, 2010, the State certifies to the
Secretary that, with respect to the State fiscal year
during which the certification is made, the State has a
budget deficit, or with respect to the succeeding State
fiscal year, the State is projected to have a budget
deficit. Upon submission of such a certification to the
Secretary, the requirement under paragraph (1) shall
not apply to the State with respect to any remaining
portion of the period described in the preceding
sentence.
(4) Determination of compliance.--
(A) States shall apply modified adjusted
gross income.--A State's determination of
income in accordance with subsection (e)(14)
shall not be considered to be eligibility
standards, methodologies, or procedures that
are more restrictive than the standards,
methodologies, or procedures in effect under
the State plan or under a waiver of the plan on
the date of enactment of the Patient Protection
and Affordable Care Act for purposes of
determining compliance with the requirements of
paragraph (1), (2), or (3).
(B) States may expand eligibility or move
waivered populations into coverage under the
state plan.--With respect to any period
applicable under paragraph (1), (2), or (3), a
State that applies eligibility standards,
methodologies, or procedures under the State
plan under this title or under any waiver of
the plan that are less restrictive than the
eligibility standards, methodologies, or
procedures, applied under the State plan or
under a waiver of the plan on the date of
enactment of the Patient Protection and
Affordable Care Act, or that makes individuals
who, on such date of enactment, are eligible
for medical assistance under a waiver of the
State plan, after such date of enactment
eligible for medical assistance through a State
plan amendment with an income eligibility level
that is not less than the income eligibility
level that applied under the waiver, or as a
result of the application of subclause (VIII)
of section 1902(a)(10)(A)(i), shall not be
considered to have in effect eligibility
standards, methodologies, or procedures that
are more restrictive than the standards,
methodologies, or procedures in effect under
the State plan or under a waiver of the plan on
the date of enactment of the Patient Protection
and Affordable Care Act for purposes of
determining compliance with the requirements of
paragraph (1), (2), or (3).
(hh)(1) A State may elect to phase-in the extension of
eligibility for medical assistance to individuals described in
subclause (XX) of subsection (a)(10)(A)(ii) based on the
categorical group (including nonpregnant childless adults) or
income, so long as the State does not extend such eligibility
to individuals described in such subclause with higher income
before making individuals described in such subclause with
lower income eligible for medical assistance.
(2) If an individual described in subclause (XX) of
subsection (a)(10)(A)(ii) is the parent of a child who is under
19 years of age (or such higher age as the State may have
elected) who is eligible for medical assistance under the State
plan or under a waiver of such plan, the individual may not be
enrolled under the State plan unless the individual's child is
enrolled under the State plan or under a waiver of the plan or
is enrolled in other health insurance coverage. For purposes of
the preceding sentence, the term ``parent'' includes an
individual treated as a caretaker relative for purposes of
carrying out section 1931.
(ii)(1) Individuals described in this subsection are
individuals--
(A) whose income does not exceed an income
eligibility level established by the State that
does not exceed the highest income eligibility
level established under the State plan under
this title (or under its State child health
plan under title XXI) for pregnant women; and
(B) who are not pregnant.
(2) At the option of a State, individuals described
in this subsection may include individuals who, had
individuals applied on or before January 1, 2007, would
have been made eligible pursuant to the standards and
processes imposed by that State for benefits described
in clause (XVI) of the matter following subparagraph
(G) of section subsection (a)(10) pursuant to a waiver
granted under section 1115.
(3) At the option of a State, for purposes of
subsection (a)(17)(B), in determining eligibility for
services under this subsection, the State may consider
only the income of the applicant or recipient.
(jj) Primary Care Services Defined.--For purposes of
subsection (a)(13)(C), the term ``primary care services''
means--
(1) evaluation and management services that are
procedure codes (for services covered under title
XVIII) for services in the category designated
Evaluation and Management in the Healthcare Common
Procedure Coding System (established by the Secretary
under section 1848(c)(5) as of December 31, 2009, and
as subsequently modified); and
(2) services related to immunization administration
for vaccines and toxoids for which CPT codes 90465,
90466, 90467, 90468, 90471, 90472, 90473, or 90474 (as
subsequently modified) apply under such System.
(kk) Provider and Supplier Screening, Oversight, and
Reporting Requirements.--For purposes of subsection (a)(77),
the requirements of this subsection are the following:
(1) Screening.--The State complies with the process
for screening providers and suppliers under this title,
as established by the Secretary under section
1866(j)(2).
(2) Provisional period of enhanced oversight for new
providers and suppliers.--The State complies with
procedures to provide for a provisional period of
enhanced oversight for new providers and suppliers
under this title, as established by the Secretary under
section 1866(j)(3).
(3) Disclosure requirements.--The State requires
providers and suppliers under the State plan or under a
waiver of the plan to comply with the disclosure
requirements established by the Secretary under section
1866(j)(5).
(4) Temporary moratorium on enrollment of new
providers or suppliers.--
(A) Temporary moratorium imposed by the
secretary.--
(i) In general.--Subject to clause
(ii), the State complies with any
temporary moratorium on the enrollment
of new providers or suppliers imposed
by the Secretary under section
1866(j)(7).
(ii) Exceptions.--
(I) Compliance with
moratorium.--A State shall not
be required to comply with a
temporary moratorium described
in clause (i) if the State
determines that the imposition
of such temporary moratorium
would adversely impact
beneficiaries' access to
medical assistance.
(II) FFP available.--
Notwithstanding section
1903(i)(2)(E), payment may be
made to a State under this
title with respect to amounts
expended for items and services
described in such section if
the Secretary, in consultation
with the State agency
administering the State plan
under this title (or a waiver
of the plan), determines that
denying payment to the State
pursuant to such section would
adversely impact beneficiaries'
access to medical assistance.
(iii) Limitation on charges to
beneficiaries.--With respect to any
amount expended for items or services
furnished during calendar quarters
beginning on or after October 1, 2017,
the State prohibits, during the period
of a temporary moratorium described in
clause (i), a provider meeting the
requirements specified in subparagraph
(C)(iii) of section 1866(j)(7) from
charging an individual or other person
eligible to receive medical assistance
under the State plan under this title
(or a waiver of the plan) for an item
or service described in section
1903(i)(2)(E) furnished to such an
individual.
(B) Moratorium on enrollment of providers and
suppliers.--At the option of the State, the
State imposes, for purposes of entering into
participation agreements with providers or
suppliers under the State plan or under a
waiver of the plan, periods of enrollment
moratoria, or numerical caps or other limits,
for providers or suppliers identified by the
Secretary as being at high-risk for fraud,
waste, or abuse as necessary to combat fraud,
waste, or abuse, but only if the State
determines that the imposition of any such
period, cap, or other limits would not
adversely impact beneficiaries' access to
medical assistance.
(5) Compliance programs.--The State requires
providers and suppliers under the State plan or under a
waiver of the plan to establish, in accordance with the
requirements of section 1866(j)(7), a compliance
program that contains the core elements established
under subparagraph (B) of that section 1866(j)(7) for
providers or suppliers within a particular industry or
category.
(6) Reporting of adverse provider actions.--The State
complies with the national system for reporting
criminal and civil convictions, sanctions, negative
licensure actions, and other adverse provider actions
to the Secretary, through the Administrator of the
Centers for Medicare & Medicaid Services, in accordance
with regulations of the Secretary.
(7) Enrollment and npi of ordering or referring
providers.--The State requires--
(A) all ordering or referring physicians or
other professionals to be enrolled under the
State plan or under a waiver of the plan as a
participating provider; and
(B) the national provider identifier of any
ordering or referring physician or other
professional to be specified on any claim for
payment that is based on an order or referral
of the physician or other professional.
(8) Provider terminations.--
(A) In general.--Beginning on July 1, 2018,
in the case of a notification under subsection
(a)(41) with respect to a termination for a
reason specified in section 455.101 of title
42, Code of Federal Regulations (as in effect
on November 1, 2015) or for any other reason
specified by the Secretary, of the
participation of a provider of services or any
other person under the State plan (or under a
waiver of the plan), the State, not later than
30 days after the effective date of such
termination, submits to the Secretary with
respect to any such provider or person, as
appropriate--
(i) the name of such provider or
person;
(ii) the provider type of such
provider or person;
(iii) the specialty of such
provider's or person's practice;
(iv) the date of birth, Social
Security number, national provider
identifier (if applicable), Federal
taxpayer identification number, and the
State license or certification number
of such provider or person (if
applicable);
(v) the reason for the termination;
(vi) a copy of the notice of
termination sent to the provider or
person;
(vii) the date on which such
termination is effective, as specified
in the notice; and
(viii) any other information required
by the Secretary.
(B) Effective date defined.--For purposes of
this paragraph, the term ``effective date''
means, with respect to a termination described
in subparagraph (A), the later of--
(i) the date on which such
termination is effective, as specified
in the notice of such termination; or
(ii) the date on which all appeal
rights applicable to such termination
have been exhausted or the timeline for
any such appeal has expired.
(9) Other state oversight.--Nothing in this
subsection shall be interpreted to preclude or limit
the ability of a State to engage in provider and
supplier screening or enhanced provider and supplier
oversight activities beyond those required by the
Secretary.
(ll) Termination Notification Database.--In the case of a
provider of services or any other person whose participation
under this title or title XXI is terminated (as described in
subsection (kk)(8)), the Secretary shall, not later than 30
days after the date on which the Secretary is notified of such
termination under subsection (a)(41) (as applicable), review
such termination and, if the Secretary determines appropriate,
include such termination in any database or similar system
developed pursuant to section 6401(b)(2) of the Patient
Protection and Affordable Care Act (42 U.S.C. 1395cc note;
Public Law 111-148).
(mm) Directory Physician or Provider Described.--A physician
or provider described in this subsection is--
(1) in the case of a physician or provider of a
provider type for which the State agency, as a
condition on receiving payment for items and services
furnished by the physician or provider to individuals
eligible to receive medical assistance under the State
plan, requires the enrollment of the physician or
provider with the State agency, a physician or a
provider that--
(A) is enrolled with the agency as of the
date on which the directory is published or
updated (as applicable) under subsection
(a)(83); and
(B) received payment under the State plan in
the 12-month period preceding such date; and
(2) in the case of a physician or provider of a
provider type for which the State agency does not
require such enrollment, a physician or provider that
received payment under the State plan (or a waiver of
the plan) in the 12-month period preceding the date on
which the directory is published or updated (as
applicable) under subsection (a)(83).
PAYMENT TO STATES
Sec. 1903. (a) From the sums appropriated therefor, the
Secretary (except as otherwise provided in this section and
section 1903A(a)) shall pay to each State which has a plan
approved under this title, for each quarter, beginning with the
quarter commencing January 1, 1966--
(1) an amount equal to the Federal medical assistance
percentage (as defined in section 1905(b), subject to
subsections (g) and (j) of this section and subsection
1923(f)) of the total amount expended during such
quarter as medical assistance under the State plan;
plus
(2)(A) an amount equal to 75 per centum of so much of
the sums expended during such quarter (as found
necessary by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to compensation or training of skilled professional
medical personnel, and staff directly supporting such
personnel, of the State agency or any other public
agency; plus
(B) notwithstanding paragraph (1) or subparagraph
(A), with respect to amounts expended for nursing aide
training and competency evaluation programs, and
competency evaluation programs, described in section
1919(e)(1) (including the costs for nurse aides to
complete such competency evaluation programs),
regardless of whether the programs are provided in or
outside nursing facilities or of the skill of the
personnel involved in such programs, an amount equal to
50 percent (or, for calendar quarters beginning on or
after July 1, 1988, and before October 1, 1990, the
lesser of 90 percent or the Federal medical assistance
percentage plus 25 percentage points) of so much of the
sums expended during such quarter (as found necessary
by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to such programs; plus
(C) an amount equal to 75 percent of so much of the
sums expended during such quarter (as found necessary
by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to preadmission screening and resident review
activities conducted by the State under section
1919(e)(7); plus
(D) for each calendar quarter during--
(i) fiscal year 1991, an amount equal to 90
percent,
(ii) fiscal year 1992, an amount equal to 85
percent,
(iii) fiscal year 1993, an amount equal to 80
percent, and
(iv) fiscal year 1994 and thereafter, an
amount equal to 75 percent,
of so much of the sums expended during such quarter (as
found necessary by the Secretary for the proper and
efficient administration of the State plan) as are
attributable to State activities under section 1919(g);
plus
(E) an amount equal to 75 percent of so much of the
sums expended during such quarter (as found necessary
by the Secretary for the proper and efficient
administration of the State plan) as are attributable
to translation or interpretation services in connection
with the enrollment of, retention of, and use of
services under this title by, children of families for
whom English is not the primary language; plus
(3) an amount equal to--
(A)(i) 90 per centum of so much of the sums
expended during such quarter as are
attributable to the design, development, or
installation of such mechanized claims
processing and information retrieval systems as
the Secretary determines are likely to provide
more efficient, economical, and effective
administration of the plan and to be compatible
with the claims processing and information
retrieval systems utilized in the
administration of title XVIII, including the
State's share of the cost of installing such a
system to be used jointly in the administration
of such State's plan and the plan of any other
State approved under this title,
(ii) 90 per centum of so much of the sums
expended during any such quarter in the fiscal
year ending June 30, 1972, or the fiscal year
ending June 30, 1973, as are attributable to
the design, development, or installation of
cost determination systems for State-owned
general hospitals (except that the total amount
paid to all States under this clause for either
such fiscal year shall not exceed $150,000),
and
(iii) an amount equal to the Federal medical
assistance percentage (as defined in section
1905(b)) of so much of the sums expended during
such quarter (as found necessary by the
Secretary for the proper and efficient
administration of the State plan) as are
attributable to such developments or
modifications of systems of the type described
in clause (i) as are necessary for the
efficient collection and reporting on child
health measures; and
(B) 75 per centum of so much of the sums
expended during such quarter as are
attributable to the operation of systems
(whether such systems are operated directly by
the State or by another person under a contract
with the State) of the type described in
subparagraph (A)(i) (whether or not designed,
developed, or installed with assistance under
such subparagraph) which are approved by the
Secretary and which include provision for
prompt written notice to each individual who is
furnished services covered by the plan, or to
each individual in a sample group of
individuals who are furnished such services, of
the specific services (other than confidential
services) so covered, the name of the person or
persons furnishing the services, the date or
dates on which the services were furnished, and
the amount of the payment or payments made
under the plan on account of the services; and
(C)(i) 75 per centum of the sums expended
with respect to costs incurred during such
quarter (as found necessary by the Secretary
for the proper and efficient administration of
the State plan) as are attributable to the
performance of medical and utilization review
by a utilization and quality control peer
review organization or by an entity which meets
the requirements of section 1152, as determined
by the Secretary, under a contract entered into
under section 1902(d); and
(ii) 75 percent of the sums expended with
respect to costs incurred during such quarter
(as found necessary by the Secretary for the
proper and efficient administration of the
State plan) as are attributable to the
performance of independent external reviews
conducted under section 1932(c)(2); and
(D) 75 percent of so much of the sums
expended by the State plan during a quarter in
1991, 1992, or 1993, as the Secretary
determines is attributable to the statewide
adoption of a drug use review program which
conforms to the requirements of section
1927(g);
(E) 50 percent of the sums expended with
respect to costs incurred during such quarter
as are attributable to providing--
(i) services to identify and educate
individuals who are likely to be
eligible for medical assistance under
this title and who have Sickle Cell
Disease or who are carriers of the
sickle cell gene, including education
regarding how to identify such
individuals; or
(ii) education regarding the risks of
stroke and other complications, as well
as the prevention of stroke and other
complications, in individuals who are
likely to be eligible for medical
assistance under this title and who
have Sickle Cell Disease; and
(F)(i) 100 percent of so much of the sums
expended during such quarter as are
attributable to payments to Medicaid providers
described in subsection (t)(1) to encourage the
adoption and use of certified EHR technology;
and
(ii) 90 percent of so much of the sums
expended during such quarter as are
attributable to payments for reasonable
administrative expenses related to the
administration of payments described in clause
(i) if the State meets the condition described
in subsection (t)(9); plus
(H)(i) 90 percent of the sums expended during
the quarter as are attributable to the design,
development, or installation of such mechanized
verification and information retrieval systems
as the Secretary determines are necessary to
implement section 1902(ee) (including a system
described in paragraph (2)(B) thereof), and
(ii) 75 percent of the sums expended during
the quarter as are attributable to the
operation of systems to which clause (i)
applies, plus
(4) an amount equal to 100 percent of the sums
expended during the quarter which are attributable to
the costs of the implementation and operation of the
immigration status verification system described in
section 1137(d); plus
(5) an amount equal to 90 per centum of the sums
expended during such quarter which are attributable to
the offering, arranging, and furnishing (directly or on
a contract basis) of family planning services and
supplies;
(6) subject to subsection (b)(3), an amount equal
to--
(A) 90 per centum of the sums expended during
such a quarter within the twelve-quarter period
beginning with the first quarter in which a
payment is made to the State pursuant to this
paragraph, and
(B) 75 per centum of the sums expended during
each succeeding calendar quarter,
with respect to costs incurred during such quarter (as
found necessary by the Secretary for the elimination of
fraud in the provision and administration of medical
assistance provided under the State plan) which are
attributable to the establishment and operation of
(including the training of personnel employed by) a
State medicaid fraud control unit (described in
subsection (q)); plus
(7) subject to section 1919(g)(3)(B), an amount equal
to 50 per centum of the remainder of the amounts
expended during such quarter as found necessary by the
Secretary for the proper and efficient administration
of the State plan.
(b)(1) Notwithstanding the preceding provisions of this
section, the amount determined under subsection (a)(1) for any
State for any quarter beginning after December 31, 1969, shall
not take into account any amounts expended as medical
assistance with respect to individuals aged 65 or over and
disabled individuals entitled to hospital insurance benefits
under title XVIII which would not have been so expended if the
individuals involved had been enrolled in the insurance program
established by part B of title XVIII, other than amounts
expended under provisions of the plan of such State required by
section 1902(a)(34).
(2) For limitation on Federal participation for capital
expenditures which are out of conformity with a comprehensive
plan of a State or areawide planning agency, see section 1122.
(3) The amount of funds which the Secretary is otherwise
obligated to pay a State during a quarter under subsection
(a)(6) may not exceed the higher of--
(A) $125,000, or
(B) one-quarter of 1 per centum of the sums expended
by the Federal, State, and local governments during the
previous quarter in carrying out the State's plan under
this title.
(4) Amounts expended by a State for the use of an enrollment
broker in marketing medicaid managed care organizations and
other managed care entities to eligible individuals under this
title shall be considered, for purposes of subsection (a)(7),
to be necessary for the proper and efficient administration of
the State plan but only if the following conditions are met
with respect to the broker:
(A) The broker is independent of any such entity and
of any health care providers (whether or not any such
provider participates in the State plan under this
title) that provide coverage of services in the same
State in which the broker is conducting enrollment
activities.
(B) No person who is an owner, employee, consultant,
or has a contract with the broker either has any direct
or indirect financial interest with such an entity or
health care provider or has been excluded from
participation in the program under this title or title
XVIII or debarred by any Federal agency, or subject to
a civil money penalty under this Act.
(5) Notwithstanding the preceding provisions of this section,
the amount determined under subsection (a)(1) for any State
shall be decreased in a quarter by the amount of any health
care related taxes (described in section 1902(w)(3)(A)) that
are imposed on a hospital described in subsection (w)(3)(F) in
that quarter.
(c) Nothing in this title shall be construed as prohibiting
or restricting, or authorizing the Secretary to prohibit or
restrict, payment under subsection (a) for medical assistance
for covered services furnished to a child with a disability
because such services are included in the child's
individualized education program established pursuant to part B
of the Individuals with Disabilities Education Act or furnished
to an infant or toddler with a disability because such services
are included in the child's individualized family service plan
adopted pursuant to part C of such Act.
(d)(1) Prior to the beginning of each quarter, the Secretary
shall estimate the amount [to which] to which, subject to
section 1903A(a), a State will be entitled under subsections
(a) and (b) for such quarter, such estimates to be based on (A)
a report filed by the State containing its estimate of the
total sum to be expended in such quarter in accordance with the
provisions of such subsections, and stating the amount
appropriated or made available by the State and its political
subdivisions for such expenditures in such quarter, and if such
amount is less than the State's proportionate share of the
total sum of such estimated expenditures, the source or sources
from which the difference is expected to be derived, and (B)
such other investigation as the Secretary may find necessary.
(2)(A) The Secretary shall then pay to the State, in such
installments as he may determine, the amount so estimated,
reduced or increased to the extent of any overpayment or
underpayment which the Secretary determines was made under this
section to such State for any prior quarter and with respect to
which adjustment has not already been made under this
subsection.
(B) Expenditures for which payments were made to the State
under subsection (a) shall be treated as an overpayment to the
extent that the State or local agency administering such plan
has been reimbursed for such expenditures by a third party
pursuant to the provisions of its plan in compliance with
section 1902(a)(25).
(C) For purposes of this subsection, when an overpayment is
discovered, which was made by a State to a person or other
entity, the State shall have a period of 1 year in which to
recover or attempt to recover such overpayment before
adjustment is made in the Federal payment to such State on
account of such overpayment. Except as otherwise provided in
subparagraph (D), the adjustment in the Federal payment shall
be made at the end of the 1-year period, whether or not
recovery was made.
(D)(i) In any case where the State is unable to recover a
debt which represents an overpayment (or any portion thereof)
made to a person or other entity on account of such debt having
been discharged in bankruptcy or otherwise being uncollectable,
no adjustment shall be made in the Federal payment to such
State on account of such overpayment (or portion thereof).
(ii) In any case where the State is unable to recover a debt
which represents an overpayment (or any portion thereof) made
to a person or other entity due to fraud within 1 year of
discovery because there is not a final determination of the
amount of the overpayment under an administrative or judicial
process (as applicable), including as a result of a judgment
being under appeal, no adjustment shall be made in the Federal
payment to such State on account of such overpayment (or
portion thereof) before the date that is 30 days after the date
on which a final judgment (including, if applicable, a final
determination on an appeal) is made.
(3)(A) The pro rata share to which the United States is
equitably entitled, as determined by the Secretary, of the net
amount recovered during any quarter by the State or any
political subdivision thereof with respect to medical
assistance furnished under the State plan shall be considered
an overpayment to be adjusted under this subsection.
(B)(i) Subparagraph (A) and paragraph (2)(B) shall not apply
to any amount recovered or paid to a State as part of the
comprehensive settlement of November 1998 between manufacturers
of tobacco products, as defined in section 5702(d) of the
Internal Revenue Code of 1986, and State Attorneys General, or
as part of any individual State settlement or judgment reached
in litigation initiated or pursued by a State against one or
more such manufacturers.
(ii) Except as provided in subsection (i)(19), a State may
use amounts recovered or paid to the State as part of a
comprehensive or individual settlement, or a judgment,
described in clause (i) for any expenditures determined
appropriate by the State.
(4) Upon the making of any estimate by the Secretary under
this subsection, any appropriations available for payments
under this section shall be deemed obligated.
(5) In any case in which the Secretary estimates that there
has been an overpayment under this section to a State on the
basis of a claim by such State that has been disallowed by the
Secretary under section 1116(d), and such State disputes such
disallowance, the amount of the Federal payment in controversy
shall, at the option of the State, be retained by such State or
recovered by the Secretary pending a final determination with
respect to such payment amount. If such final determination is
to the effect that any amount was properly disallowed, and the
State chose to retain payment of the amount in controversy, the
Secretary shall offset, from any subsequent payments made to
such State under this title, an amount equal to the proper
amount of the disallowance plus interest on such amount
disallowed for the period beginning on the date such amount was
disallowed and ending on the date of such final determination
at a rate (determined by the Secretary) based on the average of
the bond equivalent of the weekly 90-day treasury bill auction
rates during such period.
(6)(A) Each State (as defined in subsection (w)(7)(D)) shall
include, in the first report submitted under paragraph (1)
after the end of each fiscal year, information related to--
(i) provider-related donations made to the State or
units of local government during such fiscal year, and
(ii) health care related taxes collected by the State
or such units during such fiscal year.
(B) Each State shall include, in the first report submitted
under paragraph (1) after the end of each fiscal year,
information related to the total amount of payment adjustments
made, and the amount of payment adjustments made to individual
providers (by provider), under section 1923(c) during such
fiscal year.
(e) A State plan approved under this title may include, as a
cost with respect to hospital services under the plan under
this title, periodic expenditures made to reflect transitional
allowances established with respect to a hospital closure or
conversion under section 1884.
(f)(1)(A) Except as provided in paragraph (4), payment under
the preceding provisions of this section shall not be made with
respect to any amount expended as medical assistance in a
calendar quarter, in any State, for any member of a family the
annual income of which exceeds the applicable income limitation
determined under this paragraph.
(B)(i) Except as provided in clause (ii) of this
subparagraph, the applicable income limitation with respect to
any family is the amount determined, in accordance with
standards prescribed by the Secretary, to be equivalent to
133\1/3\ percent of the highest amount which would ordinarily
be paid to a family of the same size without any income or
resources, in the form of money payments, under the plan of the
State approved under part A of title IV of this Act.
(ii) If the Secretary finds that the operation of a uniform
maximum limits payments to families of more than one size, he
may adjust the amount otherwise determined under clause (i) to
take account of families of different sizes.
(C) The total amount of any applicable income limitation
determined under subparagraph (B) shall, if it is not a
multiple of $100 or such other amount as the Secretary may
prescribe, be rounded to the next higher multiple of $100 or
such other amount, as the case may be.
(2)(A) In computing a family's income for purposes of
paragraph (1), there shall be excluded any costs (whether in
the form of insurance premiums or otherwise and regardless of
whether such costs are reimbursed under another public program
of the State or political subdivision thereof) incurred by such
family for medical care or for any other type of remedial care
recognized under State law or, (B) notwithstanding section 1916
at State option, an amount paid by such family, at the family's
option, to the State, provided that the amount, when combined
with costs incurred in prior months, is sufficient when
excluded from the family's income to reduce such family's
income below the applicable income limitation described in
paragraph (1). The amount of State expenditures for which
medical assistance is available under subsection (a)(1) will be
reduced by amounts paid to the State pursuant to this
subparagraph.
(3) For purposes of paragraph (1)(B), in the case of a family
consisting of only one individual, the ``highest amount which
would ordinarily be paid'' to such family under the State's
plan approved under part A of title IV of this Act shall be the
amount determined by the State agency (on the basis of
reasonable relationship to the amounts payable under such plan
to families consisting of two or more persons) to be the amount
of the aid which would ordinarily be payable under such plan to
a family (without any income or resources) consisting of one
person if such plan provided for aid to such a family.
(4) The limitations on payment imposed by the preceding
provisions of this subsection shall not apply with respect to
any amount expended by a State as medical assistance for any
individual described in section 1902(a)(10)(A)(i)(III),
1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(i)(V),
1902(a)(10)(A)(i)(VI), 1902(a)(10)(A)(i)(VII),
1902(a)(10)(A)(i)(VIII),1902(a)(10)(A)(i)(IX),
1902(a)(10)(A)(ii)(IX), 1902(a)(10)(A)(ii)(X),
1902(a)(10)(A)(ii)(XIII), 1902(a)(10)(A)(ii)(XIV), or
1902(a)(10)(A)(ii)(XV), 1902(a)(10)(A)(ii)(XVI),
1902(a)(10)(A)(ii)(XVII), 1902(a)(10)(A)(ii)(XVIII),
1902(a)(10)(A)(ii)(XIX), 1902(a)(10)(A)(ii)(XX),
1902(a)(10)(A)(ii)(XXI), 1902(a)(10)(A)(ii)(XXII), 1905(p)(1)
or for any individual--
(A) who is receiving aid or assistance under any plan
of the State approved under title I, X, XIV or XVI, or
part A of title IV, or with respect to whom
supplemental security income benefits are being paid
under title XVI, or
(B) who is not receiving such aid or assistance, and
with respect to whom such benefits are not being paid,
but (i) is eligible to receive such aid or assistance,
or to have such benefits paid with respect to him, or
(ii) would be eligible to receive such aid or
assistance, or to have such benefits paid with respect
to him if he were not in a medical institution, or
(C) with respect to whom there is being paid, or who
is eligible, or would be eligible if he were not in a
medical institution, to have paid with respect to him,
a State supplementary payment and is eligible for
medical assistance equal in amount, duration, and scope
to the medical assistance made available to individuals
described in section 1902(a)(10)(A), or who is a PACE
program eligible individual enrolled in a PACE program
under section 1934, but only if the income of such
individual (as determined under section 1612, but
without regard to subsection (b) thereof) does not
exceed 300 percent of the supplemental security income
benefit rate established by section 1611(b)(1),
at the time of the provision of the medical assistance giving
rise to such expenditure.
(g)(1) Subject to paragraph (3), with respect to amounts paid
for the following services furnished under the State plan after
June 30, 1973 (other than services furnished pursuant to a
contract with a health maintenance organization as defined in
section 1876 or which is a qualified health maintenance
organization (as defined in section 1310(d) of the Public
Health Service Act)), the Federal medical assistance percentage
shall be decreased as follows: After an individual has received
inpatient hospital services or services in an intermediate care
facility for the mentally retarded for 60 days or inpatient
mental hospital services for 90 days (whether or not such days
are consecutive), during any fiscal year, the Federal medical
assistance percentage with respect to amounts paid for any such
care furnished thereafter to such individual shall be decreased
by a per centum thereof (determined under paragraph (5)) unless
the State agency responsible for the administration of the plan
makes a showing satisfactory to the Secretary that, with
respect to each calendar quarter for which the State submits a
request for payment at the full Federal medical assistance
percentage for amounts paid for inpatient hospital services or
services in an intermediate care facility for the mentally
retarded furnished beyond 60 days (or inpatient mental hospital
services furnished beyond 90 days), such State has an effective
program of medical review of the care of patients in mental
hospitals and intermediate care facilities for the mentally
retarded pursuant to paragraphs (26) and (31) of section
1902(a) whereby the professional management of each case is
reviewed and evaluated at least annually by independent
professional review teams. In determining the number of days on
which an individual has received services described in this
subsection, there shall not be counted any days with respect to
which such individual is entitled to have payments made (in
whole or in part) on his behalf under section 1812.
(2) The Secretary shall, as part of his validation procedures
under this subsection, conduct timely sample onsite surveys of
private and public institutions in which recipients of medical
assistance may receive care and services under a State plan
approved under this title, and his findings with respect to
such surveys (as well as the showings of the State agency
required under this subsection) shall be made available for
public inspection.
(3)(A) No reduction in the Federal medical assistance
percentage of a State otherwise required to be imposed under
this subsection shall take effect--
(i) if such reduction is due to the State's
unsatisfactory or invalid showing made with respect to
a calendar quarter beginning before January 1, 1977;
(ii) before January 1, 1978;
(iii) unless a notice of such reduction has been
provided to the State at least 30 days before the date
such reduction takes effect; or
(iv) due to the State's unsatisfactory or invalid
showing made with respect to a calendar quarter
beginning after September 30, 1977, unless notice of
such reduction has been provided to the State no later
than the first day of the fourth calendar quarter
following the calendar quarter with respect to which
such showing was made.
(B) The Secretary shall waive application of any reduction in
the Federal medical assistance percentage of a State otherwise
required to be imposed under paragraph (1) because a showing by
the State, made under such paragraph with respect to a calendar
quarter ending after January 1, 1977, and before January 1,
1978, is determined to be either unsatisfactory under such
paragraph or invalid under paragraph (2), if the Secretary
determines that the State's showing made under paragraph (1)
with respect to any calendar quarter ending on or before
December 31, 1978, is satisfactory under such paragraph and is
valid under paragraph (2).
(4)(A) The Secretary may not find the showing of a State,
with respect to a calendar quarter under paragraph (1), to be
satisfactory if the showing is submitted to the Secretary later
than the 30th day after the last day of the calendar quarter,
unless the State demonstrates to the satisfaction of the
Secretary good cause for not meeting such deadline.
(B) The Secretary shall find a showing of a State, with
respect to a calendar quarter under paragraph (1), to be
satisfactory under such paragraph with respect to the
requirement that the State conduct annual onsite inspections in
mental hospitals and intermediate care facilities for the
mentally retarded under paragraphs (26) and (31) of section
1902(a), if the showing demonstrates that the State has
conducted such an onsite inspection during the 12-month period
ending on the last date of the calendar quarter--
(i) in each of not less than 98 per centum of the
number of such hospitals and facilities requiring such
inspection, and
(ii) in every such hospital or facility which has 200
or more beds,
and that, with respect to such hospitals and facilities not
inspected within such period, the State has exercised good
faith and due diligence in attempting to conduct such
inspection, or if the State demonstrates to the satisfaction of
the Secretary that it would have made such a showing but for
failings of a technical nature only.
(5) In the case of a State's unsatisfactory or invalid
showing made with respect to a type of facility or
institutional services in a calendar quarter, the per centum
amount of the reduction of the State's Federal medical
assistance percentage for that type of services under paragraph
(1) is equal to 33\1/3\ per centum multiplied by a fraction,
the denominator of which is equal to the total number of
patients receiving that type of services in that quarter under
the State plan in facilities or institutions for which a
showing was required to be made under this subsection, and the
numerator of which is equal to the number of such patients
receiving such type of services in that quarter in those
facilities or institutions for which a satisfactory and valid
showing was not made for that calendar quarter.
(6)(A) Recertifications required under section 1902(a)(44)
shall be conducted at least every 60 days in the case of
inpatient hospital services.
(B) Such recertifications in the case of services in an
intermediate care facility for the mentally retarded shall be
conducted at least--
(i) 60 days after the date of the initial
certification,
(ii) 180 days after the date of the initial
certification,
(iii) 12 months after the date of the initial
certification,
(iv) 18 months after the date of the initial
certification,
(v) 24 months after the date of the initial
certification, and
(vi) every 12 months thereafter.
(C) For purposes of determining compliance with the schedule
established by this paragraph, a recertification shall be
considered to have been done on a timely basis if it was
performed not later than 10 days after the date the
recertification was otherwise required and the State
establishes good cause why the physician or other person making
such recertification did not meet such schedule.
(i) Payment under the preceding provisions of this section
shall not be made--
(1) for organ transplant procedures unless the State
plan provides for written standards respecting the
coverage of such procedures and unless such standards
provide that--
(A) similarly situated individuals are
treated alike; and
(B) any restriction, on the facilities or
practitioners which may provide such
procedures, is consistent with the
accessibility of high quality care to
individuals eligible for the procedures under
the State plan; or
(2) with respect to any amount expended for an item
or service (other than an emergency item or service,
not including items or services furnished in an
emergency room of a hospital) furnished--
(A) under the plan by any individual or
entity during any period when the individual or
entity is excluded from participation under
title V, XVIII, or XX or under this title
pursuant to section 1128, 1128A, 1156, or
1842(j)(2);
(B) at the medical direction or on the
prescription of a physician, during the period
when such physician is excluded from
participation under title V, XVIII, or XX or
under this title pursuant to section 1128,
1128A, 1156, or 1842(j)(2) and when the person
furnishing such item or service knew or had
reason to know of the exclusion (after a
reasonable time period after reasonable notice
has been furnished to the person);
(C) by any individual or entity to whom the
State has failed to suspend payments under the
plan during any period when there is pending an
investigation of a credible allegation of fraud
against the individual or entity, as determined
by the State in accordance with regulations
promulgated by the Secretary for purposes of
section 1862(o) and this subparagraph, unless
the State determines in accordance with such
regulations there is good cause not to suspend
such payments;
(D) beginning on July 1, 2018, under the plan
by any provider of services or person whose
participation in the State plan is terminated
(as described in section 1902(kk)(8)) after the
date that is 60 days after the date on which
such termination is included in the database or
other system under section 1902(ll); or
(E) with respect to any amount expended for
such an item or service furnished during
calendar quarters beginning on or after October
1, 2017, subject to section
1902(kk)(4)(A)(ii)(II), within a geographic
area that is subject to a moratorium imposed
under section 1866(j)(7) by a provider or
supplier that meets the requirements specified
in subparagraph (C)(iii) of such section,
during the period of such moratorium; or
(3) with respect to any amount expended for inpatient
hospital services furnished under the plan (other than
amounts attributable to the special situation of a
hospital which serves a disproportionate number of low
income patients with special needs) to the extent that
such amount exceeds the hospital's customary charges
with respect to such services or (if such services are
furnished under the plan by a public institution free
of charge or at nominal charges to the public) exceeds
an amount determined on the basis of those items
(specified in regulations prescribed by the Secretary)
included in the determination of such payment which the
Secretary finds will provide fair compensation to such
institution for such services; or
(4) with respect to any amount expended for care or
services furnished under the plan by a hospital unless
such hospital has in effect a utilization review plan
which meets the requirements imposed by section 1861(k)
for purposes of title XVIII; and if such hospital has
in effect such a utilization review plan for purposes
of title XVIII, such plan shall serve as the plan
required by this subsection (with the same standards
and procedures and the same review committee or group)
as a condition of payment under this title; the
Secretary is authorized to waive the requirements of
this paragraph if the State agency demonstrates to his
satisfaction that it has in operation utilization
review procedures which are superior in their
effectiveness to the procedures required under section
1861(k); or
(5) with respect to any amount expended for any drug
product for which payment may not be made under part B
of title XVIII because of section 1862(c); or
(6) with respect to any amount expended for inpatient
hospital tests (other than in emergency situations) not
specifically ordered by the attending physician or
other responsible practitioner; or
(7) with respect to any amount expended for clinical
diagnostic laboratory tests performed by a physician,
independent laboratory, or hospital, to the extent such
amount exceeds the amount that would be recognized
under section 1833(h) for such tests performed for an
individual enrolled under part B of title XVIII; or
(8) with respect to any amount expended for medical
assistance (A) for nursing facility services to
reimburse (or otherwise compensate) a nursing facility
for payment of a civil money penalty imposed under
section 1919(h) or (B) for home and community care to
reimburse (or otherwise compensate) a provider of such
care for payment of a civil money penalty imposed under
this title or title XI or for legal expenses in defense
of an exclusion or civil money penalty under this title
or title XI if there is no reasonable legal ground for
the provider's case; or
(10)(A) with respect to covered outpatient drugs
unless there is a rebate agreement in effect under
section 1927 with respect to such drugs or unless
section 1927(a)(3) applies,
(B) with respect to any amount expended for an
innovator multiple source drug (as defined in section
1927(k)) dispensed on or after July 1, 1991, if, under
applicable State law, a less expensive multiple source
drug could have been dispensed, but only to the extent
that such amount exceeds the upper payment limit for
such multiple source drug;
(C) with respect to covered outpatient drugs
described in section 1927(a)(7), unless
information respecting utilization data and
coding on such drugs that is required to be
submitted under such section is submitted in
accordance with such section, and
(D) with respect to any amount expended for
reimbursement to a pharmacy under this title for the
ingredient cost of a covered outpatient drug for which
the pharmacy has already received payment under this
title (other than with respect to a reasonable
restocking fee for such drug); or
(11) with respect to any amount expended for
physicians' services furnished on or after the first
day of the first quarter beginning more than 60 days
after the date of establishment of the physician
identifier system under section 1902(x), unless the
claim for the services includes the unique physician
identifier provided under such system; or
(13) with respect to any amount expended to reimburse
(or otherwise compensate) a nursing facility for
payment of legal expenses associated with any action
initiated by the facility that is dismissed on the
basis that no reasonable legal ground existed for the
institution of such action; or
(14) with respect to any amount expended on
administrative costs to carry out the program under
section 1928; or
(15) with respect to any amount expended for a
single-antigen vaccine and its administration in any
case in which the administration of a combined-antigen
vaccine was medically appropriate (as determined by the
Secretary); or
(16) with respect to any amount expended for which
funds may not be used under the Assisted Suicide
Funding Restriction Act of 1997; or
(17) with respect to any amount expended for roads,
bridges, stadiums, or any other item or service not
covered under a State plan under this title; or
(18) with respect to any amount expended for home
health care services provided by an agency or
organization unless the agency or organization provides
the State agency on a continuing basis a surety bond in
a form specified by the Secretary under paragraph (7)
of section 1861(o) and in an amount that is not less
than $50,000 or such comparable surety bond as the
Secretary may permit under the last sentence of such
section; or
(19) with respect to any amount expended on
administrative costs to initiate or pursue litigation
described in subsection (d)(3)(B);
(20) with respect to amounts expended for medical
assistance provided to an individual described in
subclause (XV) or (XVI) of section 1902(a)(10)(A)(ii)
for a fiscal year unless the State demonstrates to the
satisfaction of the Secretary that the level of State
funds expended for such fiscal year for programs to
enable working individuals with disabilities to work
(other than for such medical assistance) is not less
than the level expended for such programs during the
most recent State fiscal year ending before the date of
the enactment of this paragraph;
(21) with respect to amounts expended for covered
outpatient drugs described in section 1927(d)(2)(C)
(relating to drugs when used for cosmetic purposes or
hair growth), except where medically necessary, and
section 1927(d)(2)(K) (relating to drugs when used for
treatment of sexual or erectile dysfunction);
(22) [with respect to amounts expended] (A) with
respect to amounts expended for medical assistance for
an individual who declares under section 1137(d)(1)(A)
to be a citizen or national of the United States for
purposes of establishing eligibility for benefits under
this title, unless the requirement of section
1902(a)(46)(B) is met; and
(B) in the case of a State that elects to provide a
reasonable period to present satisfactory documentary
evidence of such citizenship or nationality pursuant to
paragraph (2)(C) of section 1902(ee) or paragraph (4)
of subsection (x) of this section, for amounts expended
for medical assistance for such an individual (other
than an individual described in paragraph (2) of such
subsection (x)) during such period;
(23) with respect to amounts expended for medical
assistance for covered outpatient drugs (as defined in
section 1927(k)(2)) for which the prescription was
executed in written (and non-electronic) form unless
the prescription was executed on a tamper-resistant
pad;
(24) if a State is required to implement an asset
verification program under section 1940 and fails to
implement such program in accordance with such section,
with respect to amounts expended by such State for
medical assistance for individuals subject to asset
verification under such section, unless--
(A) the State demonstrates to the Secretary's
satisfaction that the State made a good faith
effort to comply;
(B) not later than 60 days after the date of
a finding that the State is in noncompliance,
the State submits to the Secretary (and the
Secretary approves) a corrective action plan to
remedy such noncompliance; and
(C) not later than 12 months after the date
of such submission (and approval), the State
fulfills the terms of such corrective action
plan;
(25) with respect to any amounts expended for medical
assistance for individuals for whom the State does not
report enrollee encounter data (as defined by the
Secretary) to the Medicaid Statistical Information
System (MSIS) in a timely manner (as determined by the
Secretary);
(26) with respect to any amounts expended for medical
assistance for individuals described in subclause
(VIII) of subsection (a)(10)(A)(i) other than medical
assistance provided through benchmark coverage
described in section 1937(b)(1) or benchmark equivalent
coverage described in section 1937(b)(2); or
(27) with respect to any amounts expended by the
State on the basis of a fee schedule for items
described in section 1861(n) and furnished on or after
January 1, 2018, as determined in the aggregate with
respect to each class of such items as defined by the
Secretary, in excess of the aggregate amount, if any,
that would be paid for such items within such class on
a fee-for-service basis under the program under part B
of title XVIII, including, as applicable, under a
competitive acquisition program under section 1847 in
an area of the State.
Nothing in paragraph (1) shall be construed as permitting a
State to provide services under its plan under this title that
are not reasonable in amount, duration, and scope to achieve
their purpose. Paragraphs (1), (2), (16), (17), and (18) shall
apply with respect to items or services furnished and amounts
expended by or through a managed care entity (as defined in
section 1932(a)(1)(B)) in the same manner as such paragraphs
apply to items or services furnished and amounts expended
directly by the State.
(j) Notwithstanding the preceding provisions of this section,
the amount determined under subsection (a)(1) for any State for
any quarter shall be adjusted in accordance with section 1914.
(k) The Secretary is authorized to provide at the request of
any State (and without cost to such State) such technical and
actuarial assistance as may be necessary to assist such State
to contract with any medicaid managed care organization which
meets the requirements of subsection (m) of this section for
the purpose of providing medical care and services to
individuals who are entitled to medical assistance under this
title.
(l)(1) Subject to paragraphs (3) and (4), with respect to any
amount expended for personal care services or home health care
services requiring an in-home visit by a provider that are
provided under a State plan under this title (or under a waiver
of the plan) and furnished in a calendar quarter beginning on
or after January 1, 2019 (or, in the case of home health care
services, on or after January 1, 2023), unless a State requires
the use of an electronic visit verification system for such
services furnished in such quarter under the plan or such
waiver, the Federal medical assistance percentage shall be
reduced--
(A) in the case of personal care services--
(i) for calendar quarters in 2019 and 2020,
by .25 percentage points;
(ii) for calendar quarters in 2021, by .5
percentage points;
(iii) for calendar quarters in 2022, by .75
percentage points; and
(iv) for calendar quarters in 2023 and each
year thereafter, by 1 percentage point; and
(B) in the case of home health care services--
(i) for calendar quarters in 2023 and 2024,
by .25 percentage points;
(ii) for calendar quarters in 2025, by .5
percentage points;
(iii) for calendar quarters in 2026, by .75
percentage points; and
(iv) for calendar quarters in 2027 and each
year thereafter, by 1 percentage point.
(2) Subject to paragraphs (3) and (4), in implementing the
requirement for the use of an electronic visit verification
system under paragraph (1), a State shall--
(A) consult with agencies and entities that provide
personal care services, home health care services, or
both under the State plan (or under a waiver of the
plan) to ensure that such system--
(i) is minimally burdensome;
(ii) takes into account existing best
practices and electronic visit verification
systems in use in the State; and
(iii) is conducted in accordance with the
requirements of HIPAA privacy and security law
(as defined in section 3009 of the Public
Health Service Act);
(B) take into account a stakeholder process that
includes input from beneficiaries, family caregivers,
individuals who furnish personal care services or home
health care services, and other stakeholders, as
determined by the State in accordance with guidance
from the Secretary; and
(C) ensure that individuals who furnish personal care
services, home health care services, or both under the
State plan (or under a waiver of the plan) are provided
the opportunity for training on the use of such system.
(3) Paragraphs (1) and (2) shall not apply in the case of a
State that, as of the date of the enactment of this subsection,
requires the use of any system for the electronic verification
of visits conducted as part of both personal care services and
home health care services, so long as the State continues to
require the use of such system with respect to the electronic
verification of such visits.
(4)(A) In the case of a State described in subparagraph (B),
the reduction under paragraph (1) shall not apply--
(i) in the case of personal care services, for
calendar quarters in 2019; and
(ii) in the case of home health care services, for
calendar quarters in 2023.
(B) For purposes of subparagraph (A), a State described in
this subparagraph is a State that demonstrates to the Secretary
that the State--
(i) has made a good faith effort to comply with the
requirements of paragraphs (1) and (2) (including by
taking steps to adopt the technology used for an
electronic visit verification system); and
(ii) in implementing such a system, has encountered
unavoidable system delays.
(5) In this subsection:
(A) The term ``electronic visit verification system''
means, with respect to personal care services or home
health care services, a system under which visits
conducted as part of such services are electronically
verified with respect to--
(i) the type of service performed;
(ii) the individual receiving the service;
(iii) the date of the service;
(iv) the location of service delivery;
(v) the individual providing the service; and
(vi) the time the service begins and ends.
(B) The term ``home health care services'' means
services described in section 1905(a)(7) provided under
a State plan under this title (or under a waiver of the
plan).
(C) The term ``personal care services'' means
personal care services provided under a State plan
under this title (or under a waiver of the plan),
including services provided under section 1905(a)(24),
1915(c), 1915(i), 1915(j), or 1915(k) or under a wavier
under section 1115.
(6)(A) In the case in which a State requires personal care
service and home health care service providers to utilize an
electronic visit verification system operated by the State or a
contractor on behalf of the State, the Secretary shall pay to
the State, for each quarter, an amount equal to 90 per centum
of so much of the sums expended during such quarter as are
attributable to the design, development, or installation of
such system, and 75 per centum of so much of the sums for the
operation and maintenance of such system.
(B) Subparagraph (A) shall not apply in the case in which a
State requires personal care service and home health care
service providers to utilize an electronic visit verification
system that is not operated by the State or a contractor on
behalf of the State.
(m)(1)(A) The term ``medicaid managed care organization''
means a health maintenance organization, an eligible
organization with a contract under section 1876 or a
Medicare+Choice organization with a contract under part C of
title XVIII, a provider sponsored organization, or any other
public or private organization, which meets the requirement of
section 1902(w) and--
(i) makes services it provides to individuals
eligible for benefits under this title accessible to
such individuals, within the area served by the
organization, to the same extent as such services are
made accessible to individuals (eligible for medical
assistance under the State plan) not enrolled with the
organization, and
(ii) has made adequate provision against the risk of
insolvency, which provision is satisfactory to the
State, meets the requirements of subparagraph (C)(i)
(if applicable), and which assures that individuals
eligible for benefits under this title are in no case
held liable for debts of the organization in case of
the organization's insolvency.
An organization that is a qualified health maintenance
organization (as defined in section 1310(d) of the Public
Health Service Act) is deemed to meet the requirements of
clauses (i) and (ii).
(B) The duties and functions of the Secretary, insofar as
they involve making determinations as to whether an
organization is a medicaid managed care organization within the
meaning of subparagraph (A), shall be integrated with the
administration of section 1312 (a) and (b) of the Public Health
Service Act.
(C)(i) Subject to clause (ii), a provision meets the
requirements of this subparagraph for an organization if the
organization meets solvency standards established by the State
for private health maintenance organizations or is licensed or
certified by the State as a risk-bearing entity.
(ii) Clause (i) shall not apply to an organization if--
(I) the organization is not responsible for the
provision (directly or through arrangements with
providers of services) of inpatient hospital services
and physicians' services;
(II) the organization is a public entity;
(III) the solvency of the organization is guaranteed
by the State; or
(IV) the organization is (or is controlled by) one or
more Federally-qualified health centers and meets
solvency standards established by the State for such an
organization.
For purposes of subclause (IV), the term ``control'' means the
possession, whether direct or indirect, of the power to direct
or cause the direction of the management and policies of the
organization through membership, board representation, or an
ownership interest equal to or greater than 50.1 percent.
(2)(A) Except as provided in subparagraphs (B), (C), and (G),
no payment shall be made under this title to a State with
respect to expenditures incurred by it for payment (determined
under a prepaid capitation basis or under any other risk basis)
for services provided by any entity (including a health
insuring organization) which is responsible for the provision
(directly or through arrangements with providers of services)
of inpatient hospital services and any other service described
in paragraph (2), (3), (4), (5), or (7) of section 1905(a) or
for the provision of any three or more of the services
described in such paragraphs unless--
(i) the Secretary has determined that the entity is a
medicaid managed care organization organization as
defined in paragraph (1);
(iii) such services are provided for the benefit of
individuals eligible for benefits under this title in
accordance with a contract between the State and the
entity under which prepaid payments to the entity are
made on an actuarially sound basis and under which the
Secretary must provide prior approval for contracts
providing for expenditures in excess of $1,000,000 for
1998 and, for a subsequent year, the amount established
under this clause for the previous year increased by
the percentage increase in the consumer price index for
all urban consumers over the previous year;
(iv) such contract provides that the Secretary and
the State (or any person or organization designated by
either) shall have the right to audit and inspect any
books and records of the entity (and of any
subcontractor) that pertain (I) to the ability of the
entity to bear the risk of potential financial losses,
or (II) to services performed or determinations of
amounts payable under the contract;
(v) such contract provides that in the entity's
enrollment, reenrollment, or disenrollment of
individuals who are eligible for benefits under this
title and eligible to enroll, reenroll, or disenroll
with the entity pursuant to the contract, the entity
will not discriminate among such individuals on the
basis of their health status or requirements for health
care services;
(vi) such contract (I) permits individuals who have
elected under the plan to enroll with the entity for
provision of such benefits to terminate such enrollment
in accordance with section 1932(a)(4), and (II)
provides for notification in accordance with such
section of each such individual, at the time of the
individual's enrollment, of such right to terminate
such enrollment;
(vii) such contract provides that, in the case of
medically necessary services which were provided (I) to
an individual enrolled with the entity under the
contract and entitled to benefits with respect to such
services under the State's plan and (II) other than
through the organization because the services were
immediately required due to an unforeseen illness,
injury, or condition, either the entity or the State
provides for reimbursement with respect to those
services,
(viii) such contract provides for disclosure of
information in accordance with section 1124 and
paragraph (4) of this subsection;
(ix) such contract provides, in the case of an entity
that has entered into a contract for the provision of
services with a Federally-qualified health center or a
rural health clinic, that the entity shall provide
payment that is not less than the level and amount of
payment which the entity would make for the services if
the services were furnished by a provider which is not
a Federally-qualified health center or a rural health
clinic;
(x) any physician incentive plan that it operates
meets the requirements described in section 1876(i)(8);
(xi) such contract provides for maintenance of
sufficient patient encounter data to identify the
physician who delivers services to patients and for the
provision of such data to the State at a frequency and
level of detail to be specified by the Secretary;
(xii) such contract, and the entity complies with the
applicable requirements of section 1932; and
(xiii) such contract provides that (I)
covered outpatient drugs dispensed to
individuals eligible for medical assistance who
are enrolled with the entity shall be subject
to the same rebate required by the agreement
entered into under section 1927 as the State is
subject to and that the State shall collect
such rebates from manufacturers, (II)
capitation rates paid to the entity shall be
based on actual cost experience related to
rebates and subject to the Federal regulations
requiring actuarially sound rates, and (III)
the entity shall report to the State, on such
timely and periodic basis as specified by the
Secretary in order to include in the
information submitted by the State to a
manufacturer and the Secretary under section
1927(b)(2)(A), information on the total number
of units of each dosage form and strength and
package size by National Drug Code of each
covered outpatient drug dispensed to
individuals eligible for medical assistance who
are enrolled with the entity and for which the
entity is responsible for coverage of such drug
under this subsection (other than covered
outpatient drugs that under subsection (j)(1)
of section 1927 are not subject to the
requirements of that section) and such other
data as the Secretary determines necessary to
carry out this subsection.
(B) Subparagraph (A) except with respect to clause (ix) of
subparagraph (A), does not apply with respect to payments under
this title to a State with respect to expenditures incurred by
it for payment for services provided by an entity which--
(i)(I) received a grant of at least $100,000 in the
fiscal year ending June 30, 1976, under section
329(d)(1)(A) or 330(d)(1) of the Public Health Service
Act, and for the period beginning July 1, 1976, and
ending on the expiration of the period for which
payments are to be made under this title has been the
recipient of a grant under either such section; and
(II) provides to its enrollees, on a prepaid
capitation risk basis or on any other risk basis, all
of the services and benefits described in paragraphs
(1), (2), (3), (4)(C), and (5) of section 1905(a) and,
to the extent required by section 1902(a)(10)(D) to be
provided under a State plan for medical assistance, the
services and benefits described in paragraph (7) of
section 1905(a); or
(ii) is a nonprofit primary health care entity
located in a rural area (as defined by the Appalachian
Regional Commission)--
(I) which received in the fiscal year ending
June 30, 1976, at least $100,000 (by grant,
subgrant, or subcontract) under the Appalachian
Regional Development Act of 1965, and
(II) for the period beginning July 1, 1976,
and ending on the expiration of the period for
which payments are to be made under this title
either has been the recipient of a grant,
subgrant, or subcontract under such Act or has
provided services under a contract (initially
entered into during a year in which the entity
was the recipient of such a grant, subgrant, or
subcontract) with a State agency under this
title on a prepaid capitation risk basis or on
any other risk basis; or
(iii) which has contracted with the single State
agency for the provision of services (but not including
inpatient hospital services) to persons eligible under
this title on a prepaid risk basis prior to 1970.
(G) In the case of an entity which is receiving (and has
received during the previous two years) a grant of at least
$100,000 under section 329(d)(1)(A) or 330(d)(1) of the Public
Health Service Act or is receiving (and has received during the
previous two years) at least $100,000 (by grant, subgrant, or
subcontract) under the Appalachian Regional Development Act of
1965, clause (i) of subparagraph (A) shall not apply.
(H) In the case of an individual who--
(i) in a month is eligible for benefits under this
title and enrolled with a medicaid managed care
organization with a contract under this paragraph or
with a primary care case manager with a contract
described in section 1905(t)(3),
(ii) in the next month (or in the next 2 months) is
not eligible for such benefits, but
(iii) in the succeeding month is again eligible for
such benefits,
the State plan, subject to subparagraph (A)(vi), may enroll the
individual for that succeeding month with the organization
described in clause (i) if the organization continues to have a
contract under this paragraph with the State or with the
manager described in such clause if the manager continues to
have a contract described in section 1905(t)(3) with the State.
(3) No payment shall be made under this title to a State with
respect to expenditures incurred by the State for payment for
services provided by a managed care entity (as defined under
section 1932(a)(1)) under the State plan under this title (or
under a waiver of the plan) unless the State--
(A) beginning on July 1, 2018, has a contract with
such entity that complies with the requirement
specified in section 1932(d)(5); and
(B) beginning on January 1, 2018, complies with the
requirement specified in section 1932(d)(6)(A).
(4)(A) Each medicaid managed care organization which is not a
qualified health maintenance organization (as defined in
section 1310(d) of the Public Health Service Act) must report
to the State and, upon request, to the Secretary, the Inspector
General of the Department of Health and Human Services, and the
Comptroller General a description of transactions between the
organization and a party in interest (as defined in section
1318(b) of such Act), including the following transactions:
(i) Any sale or exchange, or leasing of any property
between the organization and such a party.
(ii) Any furnishing for consideration of goods,
services (including management services), or facilities
between the organization and such a party, but not
including salaries paid to employees for services
provided in the normal course of their employment.
(iii) Any lending of money or other extension of
credit between the organization and such a party.
The State or Secretary may require that information reported
respecting an organization which controls, or is controlled by,
or is under common control with, another entity be in the form
of a consolidated financial statement for the organization and
such entity.
(B) Each organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees upon
reasonable request.
(5)(A) If the Secretary determines that an entity with a
contract under this subsection--
(i) fails substantially to provide medically
necessary items and services that are required (under
law or under the contract) to be provided to an
individual covered under the contract, if the failure
has adversely affected (or has substantial likelihood
of adversely affecting) the individual;
(ii) imposes premiums on individuals enrolled under
this subsection in excess of the premiums permitted
under this title;
(iii) acts to discriminate among individuals in
violation of the provision of paragraph (2)(A)(v),
including expulsion or refusal to re-enroll an
individual or engaging in any practice that would
reasonably be expected to have the effect of denying or
discouraging enrollment (except as permitted by this
subsection) by eligible individuals with the
organization whose medical condition or history
indicates a need for substantial future medical
services;
(iv) misrepresents or falsifies information that is
furnished--
(I) to the Secretary or the State under this
subsection, or
(II) to an individual or to any other entity
under this subsection, or
(v) fails to comply with the requirements of section
1876(i)(8),
the Secretary may provide, in addition to any other remedies
available under law, for any of the remedies described in
subparagraph (B).
(B) The remedies described in this subparagraph are--
(i) civil money penalties of not more than $25,000
for each determination under subparagraph (A), or, with
respect to a determination under clause (iii) or
(iv)(I) of such subparagraph, of not more than $100,000
for each such determination, plus, with respect to a
determination under subparagraph (A)(ii), double the
excess amount charged in violation of such subparagraph
(and the excess amount charged shall be deducted from
the penalty and returned to the individual concerned),
and plus, with respect to a determination under
subparagraph (A)(iii), $15,000 for each individual not
enrolled as a result of a practice described in such
subparagraph, or
(ii) denial of payment to the State for medical
assistance furnished under the contract under this
subsection for individuals enrolled after the date the
Secretary notifies the organization of a determination
under subparagraph (A) and until the Secretary is
satisfied that the basis for such determination has
been corrected and is not likely to recur.
The provisions of section 1128A (other than subsections (a) and
(b)) shall apply to a civil money penalty under clause (i) in
the same manner as such provisions apply to a penalty or
proceeding under section 1128A(a).
(6)(A) For purposes of this subsection and section
1902(e)(2)(A), in the case of the State of New Jersey, the term
``contract'' shall be deemed to include an undertaking by the
State agency, in the State plan under this title, to operate a
program meeting all requirements of this subsection.
(B) The undertaking described in subparagraph (A) must
provide--
(i) for the establishment of a separate entity
responsible for the operation of a program meeting the
requirements of this subsection, which entity may be a
subdivision of the State agency administering the State
plan under this title;
(ii) for separate accounting for the funds used to
operate such program; and
(iii) for setting the capitation rates and any other
payment rates for services provided in accordance with
this subsection using a methodology satisfactory to the
Secretary designed to ensure that total Federal
matching payments under this title for such services
will be lower than the matching payments that would be
made for the same services, if provided under the State
plan on a fee for service basis to an actuarially
equivalent population.
(C) The undertaking described in subparagraph (A) shall be
subject to approval (and annual re-approval) by the Secretary
in the same manner as a contract under this subsection.
(D) The undertaking described in subparagraph (A) shall not
be eligible for a waiver under section 1915(b).
(o) Notwithstanding the preceding provisions of this section,
no payment shall be made to a State under the preceding
provisions of this section for expenditures for medical
assistance provided for an individual under its State plan
approved under this title to the extent that a private insurer
(as defined by the Secretary by regulation and including a
group health plan (as defined in section 607(1) of the Employee
Retirement Income Security Act of 1974), a service benefit
plan, and a health maintenance organization) would have been
obligated to provide such assistance but for a provision of its
insurance contract which has the effect of limiting or
excluding such obligation because the individual is eligible
for or is provided medical assistance under the plan.
(p)(1) When a political subdivision of a State makes, for the
State of which it is a political subdivision, or one State
makes, for another State, the enforcement and collection of
rights of support or payment assigned under section 1912,
pursuant to a cooperative arrangement under such section
(either within or outside of such State), there shall be paid
to such political subdivision or such other State from amounts
which would otherwise represent the Federal share of payments
for medical assistance provided to the eligible individuals on
whose behalf such enforcement and collection was made, an
amount equal to 15 percent of any amount collected which is
attributable to such rights of support or payment.
(2) Where more than one jurisdiction is involved in such
enforcement or collection, the amount of the incentive payment
determined under paragraph (1) shall be allocated among the
jurisdictions in a manner to be prescribed by the Secretary.
(q) For the purposes of this section, the term ``State
medicaid fraud control unit'' means a single identifiable
entity of the State government which the Secretary certifies
(and annually recertifies) as meeting the following
requirements:
(1) The entity (A) is a unit of the office of the
State Attorney General or of another department of
State government which possesses statewide authority to
prosecute individuals for criminal violations, (B) is
in a State the constitution of which does not provide
for the criminal prosecution of individuals by a
statewide authority and has formal procedures, approved
by the Secretary, that (i) assure its referral of
suspected criminal violations relating to the program
under this title to the appropriate authority or
authorities in the State for prosecution and (ii)
assure its assistance of, and coordination with, such
authority or authorities in such prosecutions, or (C)
has a formal working relationship with the office of
the State Attorney General and has formal procedures
(including procedures for its referral of suspected
criminal violations to such office) which are approved
by the Secretary and which provide effective
coordination of activities between the entity and such
office with respect to the detection, investigation,
and prosecution of suspected criminal violations
relating to the program under this title.
(2) The entity is separate and distinct from the
single State agency that administers or supervises the
administration of the State plan under this title.
(3) The entity's function is conducting a statewide
program for the investigation and prosecution of
violations of all applicable State laws regarding any
and all aspects of fraud in connection with (A) any
aspect of the provision of medical assistance and the
activities of providers of such assistance under the
State plan under this title; and (B) upon the approval
of the Inspector General of the relevant Federal
agency, any aspect of the provision of health care
services and activities of providers of such services
under any Federal health care program (as defined in
section 1128B(f)(1)), if the suspected fraud or
violation of law in such case or investigation is
primarily related to the State plan under this title.
(4)(A) The entity has--
(i) procedures for reviewing complaints of
abuse or neglect of patients in health care
facilities which receive payments under the
State plan under this title;
(ii) at the option of the entity, procedures
for reviewing complaints of abuse or neglect of
patients residing in board and care facilities;
and
(iii) procedures for acting upon such
complaints under the criminal laws of the State
or for referring such complaints to other State
agencies for action.
(B) For purposes of this paragraph, the term ``board
and care facility'' means a residential setting which
receives payment (regardless of whether such payment is
made under the State plan under this title) from or on
behalf of two or more unrelated adults who reside in
such facility, and for whom one or both of the
following is provided:
(i) Nursing care services provided by, or
under the supervision of, a registered nurse,
licensed practical nurse, or licensed nursing
assistant.
(ii) A substantial amount of personal care
services that assist residents with the
activities of daily living, including personal
hygiene, dressing, bathing, eating, toileting,
ambulation, transfer, positioning, self-
medication, body care, travel to medical
services, essential shopping, meal preparation,
laundry, and housework.
(5) The entity provides for the collection, or
referral for collection to a single State agency, of
overpayments that are made under the State plan or
under any Federal health care program (as so defined)
to health care facilities and that are discovered by
the entity in carrying out its activities. All funds
collected in accordance with this paragraph shall be
credited exclusively to, and available for expenditure
under, the Federal health care program (including the
State plan under this title) that was subject to the
activity that was the basis for the collection.
(6) The entity employs such auditors, attorneys,
investigators, and other necessary personnel and is
organized in such a manner as is necessary to promote
the effective and efficient conduct of the entity's
activities.
(7) The entity submits to the Secretary an
application and annual reports containing such
information as the Secretary determines, by regulation,
to be necessary to determine whether the entity meets
the other requirements of this subsection.
(r)(1) In order to receive payments under subsection (a) for
use of automated data systems in administration of the State
plan under this title, a State must, in addition to meeting the
requirements of paragraph (3), have in operation mechanized
claims processing and information retrieval systems that meet
the requirements of this subsection and that the Secretary has
found--
(A) are adequate to provide efficient, economical,
and effective administration of such State plan;
(B) are compatible with the claims processing and
information retrieval systems used in the
administration of title XVIII, and for this purpose--
(i) have a uniform identification coding
system for providers, other payees, and
beneficiaries under this title or title XVIII;
(ii) provide liaison between States and
carriers and intermediaries with agreements
under title XVIII to facilitate timely exchange
of appropriate data;
(iii) provide for exchange of data between
the States and the Secretary with respect to
persons sanctioned under this title or title
XVIII; and
(iv) effective for claims filed on or after
October 1, 2010, incorporate compatible
methodologies of the National Correct Coding
Initiative administered by the Secretary (or
any successor initiative to promote correct
coding and to control improper coding leading
to inappropriate payment) and such other
methodologies of that Initiative (or such other
national correct coding methodologies) as the
Secretary identifies in accordance with
paragraph (4);
(C) are capable of providing accurate and timely
data;
(D) are complying with the applicable provisions of
part C of title XI;
(E) are designed to receive provider claims in
standard formats to the extent specified by the
Secretary; and
(F) effective for claims filed on or after January 1,
1999, provide for electronic transmission of claims
data in the format specified by the Secretary and
consistent with the Medicaid Statistical Information
System (MSIS) (including detailed individual enrollee
encounter data and other information that the Secretary
may find necessary and including, for data submitted to
the Secretary on or after January 1, 2010, data
elements from the automated data system that the
Secretary determines to be necessary for program
integrity, program oversight, and administration, at
such frequency as the Secretary shall determine).
(2) In order to meet the requirements of this paragraph,
mechanized claims processing and information retrieval systems
must meet the following requirements:
(A) The systems must be capable of developing
provider, physician, and patient profiles which are
sufficient to provide specific information as to the
use of covered types of services and items, including
prescribed drugs.
(B) The State must provide that information on
probable fraud or abuse which is obtained from, or
developed by, the systems, is made available to the
State's medicaid fraud control unit (if any) certified
under subsection (q) of this section.
(C) The systems must meet all performance standards
and other requirements for initial approval developed
by the Secretary.
(3) In order to meet the requirements of this paragraph, a
State must have in operation an eligibility determination
system which provides for data matching through the Public
Assistance Reporting Information System (PARIS) facilitated by
the Secretary (or any successor system), including matching
with medical assistance programs operated by other States.
(4) For purposes of paragraph (1)(B)(iv), the Secretary shall
do the following:
(A) Not later than September 1, 2010:
(i) Identify those methodologies of the
National Correct Coding Initiative administered
by the Secretary (or any successor initiative
to promote correct coding and to control
improper coding leading to inappropriate
payment) which are compatible to claims filed
under this title.
(ii) Identify those methodologies of such
Initiative (or such other national correct
coding methodologies) that should be
incorporated into claims filed under this title
with respect to items or services for which
States provide medical assistance under this
title and no national correct coding
methodologies have been established under such
Initiative with respect to title XVIII.
(iii) Notify States of--
(I) the methodologies identified
under subparagraphs (A) and (B) (and of
any other national correct coding
methodologies identified under
subparagraph (B)); and
(II) how States are to incorporate
such methodologies into claims filed
under this title.
(B) Not later than March 1, 2011, submit a report to
Congress that includes the notice to States under
clause (iii) of subparagraph (A) and an analysis
supporting the identification of the methodologies made
under clauses (i) and (ii) of subparagraph (A).
(s) Notwithstanding the preceding provisions of this section,
no payment shall be made to a State under this section for
expenditures for medical assistance under the State plan
consisting of a designated health service (as defined in
subsection (h)(6) of section 1877) furnished to an individual
on the basis of a referral that would result in the denial of
payment for the service under title XVIII if such title
provided for coverage of such service to the same extent and
under the same terms and conditions as under the State plan,
and subsections (f) and (g)(5) of such section shall apply to a
provider of such a designated health service for which payment
may be made under this title in the same manner as such
subsections apply to a provider of such a service for which
payment may be made under such title.
(t)(1) For purposes of subsection (a)(3)(F), the payments
described in this paragraph to encourage the adoption and use
of certified EHR technology are payments made by the State in
accordance with this subsection --
(A) to Medicaid providers described in paragraph
(2)(A) not in excess of 85 percent of net average
allowable costs (as defined in paragraph (3)(E)) for
certified EHR technology (and support services
including maintenance and training that is for, or is
necessary for the adoption and operation of, such
technology) with respect to such providers; and
(B) to Medicaid providers described in paragraph
(2)(B) not in excess of the maximum amount permitted
under paragraph (5) for the provider involved.
(2) In this subsection and subsection (a)(3)(F), the term
``Medicaid provider'' means--
(A) an eligible professional (as defined in paragraph
(3)(B))--
(i) who is not hospital-based and has at
least 30 percent of the professional's patient
volume (as estimated in accordance with a
methodology established by the Secretary)
attributable to individuals who are receiving
medical assistance under this title;
(ii) who is not described in clause (i), who
is a pediatrician, who is not hospital-based,
and who has at least 20 percent of the
professional's patient volume (as estimated in
accordance with a methodology established by
the Secretary) attributable to individuals who
are receiving medical assistance under this
title; and
(iii) who practices predominantly in a
Federally qualified health center or rural
health clinic and has at least 30 percent of
the professional's patient volume (as estimated
in accordance with a methodology established by
the Secretary) attributable to needy
individuals (as defined in paragraph (3)(F));
and
(B)(i) a children's hospital, or
(ii) an acute-care hospital that is not described in
clause (i) and that has at least 10 percent of the
hospital's patient volume (as estimated in accordance
with a methodology established by the Secretary)
attributable to individuals who are receiving medical
assistance under this title.
An eligible professional shall not qualify as a Medicaid
provider under this subsection unless any right to payment
under sections 1848(o) and 1853(l) with respect to the eligible
professional has been waived in a manner specified by the
Secretary. For purposes of calculating patient volume under
subparagraph (A)(iii), insofar as it is related to
uncompensated care, the Secretary may require the adjustment of
such uncompensated care data so that it would be an appropriate
proxy for charity care, including a downward adjustment to
eliminate bad debt data from uncompensated care. In applying
subparagraphs (A) and (B)(ii), the methodology established by
the Secretary for patient volume shall include individuals
enrolled in a Medicaid managed care plan (under section 1903(m)
or section 1932).
(3) In this subsection and subsection (a)(3)(F):
(A) The term ``certified EHR technology'' means a
qualified electronic health record (as defined in
3000(13) of the Public Health Service Act) that is
certified pursuant to section 3001(c)(5) of such Act as
meeting standards adopted under section 3004 of such
Act that are applicable to the type of record involved
(as determined by the Secretary, such as an ambulatory
electronic health record for office-based physicians or
an inpatient hospital electronic health record for
hospitals).
(B) The term ``eligible professional'' means a--
(i) physician;
(ii) dentist;
(iii) certified nurse mid-wife;
(iv) nurse practitioner; and
(v) physician assistant insofar as the
assistant is practicing in a rural health
clinic that is led by a physician assistant or
is practicing in a Federally qualified health
center that is so led.
(C) The term ``average allowable costs'' means, with
respect to certified EHR technology of Medicaid
providers described in paragraph (2)(A) for--
(i) the first year of payment with respect to
such a provider, the average costs for the
purchase and initial implementation or upgrade
of such technology (and support services
including training that is for, or is necessary
for the adoption and initial operation of, such
technology) for such providers, as determined
by the Secretary based upon studies conducted
under paragraph (4)(C); and
(ii) a subsequent year of payment with
respect to such a provider, the average costs
not described in clause (i) relating to the
operation, maintenance, and use of such
technology for such providers, as determined by
the Secretary based upon studies conducted
under paragraph (4)(C).
(D) The term ``hospital-based'' means, with respect
to an eligible professional, a professional (such as a
pathologist, anesthesiologist, or emergency physician)
who furnishes substantially all of the individual's
professional services in a hospital inpatient or
emergency room setting and through the use of the
facilities and equipment, including qualified
electronic health records, of the hospital. The
determination of whether an eligible professional is a
hospital-based eligible professional shall be made on
the basis of the site of service (as defined by the
Secretary) and without regard to any employment or
billing arrangement between the eligible professional
and any other provider.
(E) The term ``net average allowable costs'' means,
with respect to a Medicaid provider described in
paragraph (2)(A), average allowable costs reduced by
the average payment the Secretary estimates will be
made to such Medicaid providers (determined on a
percentage or other basis for such classes or types of
providers as the Secretary may specify) from other
sources (other than under this subsection, or by the
Federal government or a State or local government) that
is directly attributable to payment for certified EHR
technology or support services described in
subparagraph (C).
(F) The term ``needy individual'' means, with respect
to a Medicaid provider, an individual--
(i) who is receiving assistance under this
title;
(ii) who is receiving assistance under title
XXI;
(iii) who is furnished uncompensated care by
the provider; or
(iv) for whom charges are reduced by the
provider on a sliding scale basis based on an
individual's ability to pay.
(4)(A) With respect to a Medicaid provider described in
paragraph (2)(A), subject to subparagraph (B), in no case
shall--
(i) the net average allowable costs under
this subsection for the first year of payment
(which may not be later than 2016), which is
intended to cover the costs described in
paragraph (3)(C)(i), exceed $25,000 (or such
lesser amount as the Secretary determines based
on studies conducted under subparagraph (C));
(ii) the net average allowable costs under
this subsection for a subsequent year of
payment, which is intended to cover costs
described in paragraph (3)(C)(ii), exceed
$10,000; and
(iii) payments be made for costs described in
clause (ii) after 2021 or over a period of
longer than 5 years.
(B) In the case of Medicaid provider described in paragraph
(2)(A)(ii), the dollar amounts specified in subparagraph (A)
shall be \2/3\ of the dollar amounts otherwise specified.
(C) For the purposes of determining average allowable costs
under this subsection, the Secretary shall study the average
costs to Medicaid providers described in paragraph (2)(A) of
purchase and initial implementation and upgrade of certified
EHR technology described in paragraph (3)(C)(i) and the average
costs to such providers of operations, maintenance, and use of
such technology described in paragraph (3)(C)(ii). In
determining such costs for such providers, the Secretary may
utilize studies of such amounts submitted by States.
(5)(A) In no case shall the payments described in paragraph
(1)(B) with respect to a Medicaid provider described in
paragraph (2)(B) exceed--
(i) in the aggregate the product of--
(I) the overall hospital EHR amount
for the provider computed under
subparagraph (B); and
(II) the Medicaid share for such
provider computed under subparagraph
(C);
(ii) in any year 50 percent of the product described
in clause (i); and
(iii) in any 2-year period 90 percent of such
product.
(B) For purposes of this paragraph, the overall hospital EHR
amount, with respect to a Medicaid provider, is the sum of the
applicable amounts specified in section 1886(n)(2)(A) for such
provider for the first 4 payment years (as estimated by the
Secretary) determined as if the Medicare share specified in
clause (ii) of such section were 1. The Secretary shall
establish, in consultation with the State, the overall hospital
EHR amount for each such Medicaid provider eligible for
payments under paragraph (1)(B). For purposes of this
subparagraph in computing the amounts under section
1886(n)(2)(C) for payment years after the first payment year,
the Secretary shall assume that in subsequent payment years
discharges increase at the average annual rate of growth of the
most recent 3 years for which discharge data are available per
year.
(C) The Medicaid share computed under this subparagraph, for
a Medicaid provider for a period specified by the Secretary,
shall be calculated in the same manner as the Medicare share
under section 1886(n)(2)(D) for such a hospital and period,
except that there shall be substituted for the numerator under
clause (i) of such section the amount that is equal to the
number of inpatient-bed-days (as established by the Secretary)
which are attributable to individuals who are receiving medical
assistance under this title and who are not described in
section 1886(n)(2)(D)(i). In computing inpatient-bed-days under
the previous sentence, the Secretary shall take into account
inpatient-bed-days attributable to inpatient-bed-days that are
paid for individuals enrolled in a Medicaid managed care plan
(under section 1903(m) or section 1932).
(D) In no case may the payments described in paragraph (1)(B)
with respect to a Medicaid provider described in paragraph
(2)(B) be paid--
(i) for any year beginning after 2016 unless the
provider has been provided payment under paragraph
(1)(B) for the previous year; and
(ii) over a period of more than 6 years of payment.
(6) Payments described in paragraph (1) are not in accordance
with this subsection unless the following requirements are met:
(A)(i) The State provides assurances satisfactory to
the Secretary that amounts received under subsection
(a)(3)(F) with respect to payments to a Medicaid
provider are paid, subject to clause (ii), directly to
such provider (or to an employer or facility to which
such provider has assigned payments) without any
deduction or rebate.
(ii) Amounts described in clause (i) may also be paid
to an entity promoting the adoption of certified EHR
technology, as designated by the State, if
participation in such a payment arrangement is
voluntary for the eligible professional involved and if
such entity does not retain more than 5 percent of such
payments for costs not related to certified EHR
technology (and support services including maintenance
and training) that is for, or is necessary for the
operation of, such technology.
(B) A Medicaid provider described in paragraph (2)(A)
is responsible for payment of the remaining 15 percent
of the net average allowable cost and shall be
determined to have met such responsibility to the
extent that the payment to the Medicaid provider is not
in excess of 85 percent of the net average allowable
cost.
(C)(i) Subject to clause (ii), with respect to
payments to a Medicaid provider--
(I) for the first year of payment to the
Medicaid provider under this subsection, the
Medicaid provider demonstrates that it is
engaged in efforts to adopt, implement, or
upgrade certified EHR technology; and
(II) for a year of payment, other than the
first year of payment to the Medicaid provider
under this subsection, the Medicaid provider
demonstrates meaningful use of certified EHR
technology through a means that is approved by
the State and acceptable to the Secretary, and
that may be based upon the methodologies
applied under section 1848(o) or 1886(n).
(ii) In the case of a Medicaid provider who has
completed adopting, implementing, or upgrading such
technology prior to the first year of payment to the
Medicaid provider under this subsection, clause (i)(I)
shall not apply and clause (i)(II) shall apply to each
year of payment to the Medicaid provider under this
subsection, including the first year of payment.
(D) To the extent specified by the Secretary, the
certified EHR technology is compatible with State or
Federal administrative management systems.
For purposes of subparagraph (B), a Medicaid provider described
in paragraph (2)(A) may accept payments for the costs described
in such subparagraph from a State or local government. For
purposes of subparagraph (C), in establishing the means
described in such subparagraph, which may include clinical
quality reporting to the State, the State shall ensure that
populations with unique needs, such as children, are
appropriately addressed.
(7) With respect to Medicaid providers described in paragraph
(2)(A), the Secretary shall ensure coordination of payment with
respect to such providers under sections 1848(o) and 1853(l)
and under this subsection to assure no duplication of funding.
Such coordination shall include, to the extent practicable, a
data matching process between State Medicaid agencies and the
Centers for Medicare & Medicaid Services using national
provider identifiers. For such purposes, the Secretary may
require the submission of such data relating to payments to
such Medicaid providers as the Secretary may specify.
(8) In carrying out paragraph (6)(C), the State and Secretary
shall seek, to the maximum extent practicable, to avoid
duplicative requirements from Federal and State governments to
demonstrate meaningful use of certified EHR technology under
this title and title XVIII. In doing so, the Secretary may deem
satisfaction of requirements for such meaningful use for a
payment year under title XVIII to be sufficient to qualify as
meaningful use under this subsection. The Secretary may also
specify the reporting periods under this subsection in order to
carry out this paragraph.
(9) In order to be provided Federal financial participation
under subsection (a)(3)(F)(ii), a State must demonstrate to the
satisfaction of the Secretary, that the State--
(A) is using the funds provided for the purposes of
administering payments under this subsection, including
tracking of meaningful use by Medicaid providers;
(B) is conducting adequate oversight of the program
under this subsection, including routine tracking of
meaningful use attestations and reporting mechanisms;
and
(C) is pursuing initiatives to encourage the adoption
of certified EHR technology to promote health care
quality and the exchange of health care information
under this title, subject to applicable laws and
regulations governing such exchange.
(10) The Secretary shall periodically submit reports to the
Committee on Energy and Commerce of the House of
Representatives and the Committee on Finance of the Senate on
status, progress, and oversight of payments described in
paragraph (1), including steps taken to carry out paragraph
(7). Such reports shall also describe the extent of adoption of
certified EHR technology among Medicaid providers resulting
from the provisions of this subsection and any improvements in
health outcomes, clinical quality, or efficiency resulting from
such adoption.
(u)(1)(A) Notwithstanding subsection (a)(1), if the ratio of
a State's erroneous excess payments for medical assistance (as
defined in subparagraph (D)) to its total expenditures for
medical assistance under the State plan approved under this
title exceeds 0.03, for the period consisting of the third and
fourth quarters of fiscal year 1983, or for any full fiscal
year thereafter, then the Secretary shall make no payment for
such period or fiscal year with respect to so much of such
erroneous excess payments as exceeds such allowable error rate
of 0.03.
(B) The Secretary may waive, in certain limited cases, all or
part of the reduction required under subparagraph (A) with
respect to any State if such State is unable to reach the
allowable error rate for a period or fiscal year despite a good
faith effort by such State.
(C) In estimating the amount to be paid to a State under
subsection (d), the Secretary shall take into consideration the
limitation on Federal financial participation imposed by
subparagraph (A) and shall reduce the estimate he makes under
subsection (d)(1), for purposes of payment to the State under
subsection (d)(3), in light of any expected erroneous excess
payments for medical assistance (estimated in accordance with
such criteria, including sampling procedures, as he may
prescribe and subject to subsequent adjustment, if necessary,
under subsection (d)(2)).
(D)(i) For purposes of this subsection, the term ``erroneous
excess payments for medical assistance'' means the total of--
(I) payments under the State plan with respect to
ineligible individuals and families, and
(II) overpayments on behalf of eligible individuals
and families by reason of error in determining the
amount of expenditures for medical care required of an
individual or family as a condition of eligibility.
(ii) In determining the amount of erroneous excess payments
for medical assistance to an ineligible individual or family
under clause (i)(I), if such ineligibility is the result of an
error in determining the amount of the resources of such
individual or family, the amount of the erroneous excess
payment shall be the smaller of (I) the amount of the payment
with respect to such individual or family, or (II) the
difference between the actual amount of such resources and the
allowable resource level established under the State plan.
(iii) In determining the amount of erroneous excess payments
for medical assistance to an individual or family under clause
(i)(II), the amount of the erroneous excess payment shall be
the smaller of (I) the amount of the payment on behalf of the
individual or family, or (II) the difference between the actual
amount incurred for medical care by the individual or family
and the amount which should have been incurred in order to
establish eligibility for medical assistance.
(iv) In determining the amount of erroneous excess payments,
there shall not be included any error resulting from a failure
of an individual to cooperate or give correct information with
respect to third-party liability as required under section
1912(a)(1)(C) or 402(a)(26)(C) or with respect to payments made
in violation of section 1906.
(v) In determining the amount of erroneous excess payments,
there shall not be included any erroneous payments made for
ambulatory prenatal care provided during a presumptive
eligibility period (as defined in section 1920(b)(1)), for
items and services described in subsection (a) of section 1920A
provided to a child during a presumptive eligibility period
under such section, for medical assistance provided to an
individual described in subsection (a) of section 1920B during
a presumptive eligibility period under such section, or for
medical assistance provided to an individual during a
presumptive eligibility period resulting from a determination
of presumptive eligibility made by a hospital that elects under
section 1902(a)(47)(B) to be a qualified entity for such
purpose.
(E) For purposes of subparagraph (D), there shall be
excluded, in determining both erroneous excess payments for
medical assistance and total expenditures for medical
assistance--
(i) payments with respect to any individual whose
eligibility therefor was determined exclusively by the
Secretary under an agreement pursuant to section 1634
and such other classes of individuals as the Secretary
may by regulation prescribe whose eligibility was
determined in part under such an agreement; and
(ii) payments made as the result of a technical
error.
(2) The State agency administering the plan approved under
this title shall, at such times and in such form as the
Secretary may specify, provide information on the rates of
erroneous excess payments made (or expected, with respect to
future periods specified by the Secretary) in connection with
its administration of such plan, together with any other data
he requests that are reasonably necessary for him to carry out
the provisions of this subsection.
(3)(A) If a State fails to cooperate with the Secretary in
providing information necessary to carry out this subsection,
the Secretary, directly or through contractual or such other
arrangements as he may find appropriate, shall establish the
error rates for that State on the basis of the best data
reasonably available to him and in accordance with such
techniques for sampling and estimating as he finds appropriate.
(B) In any case in which it is necessary for the Secretary to
exercise his authority under subparagraph (A) to determine a
State's error rates for a fiscal year, the amount that would
otherwise be payable to such State under this title for
quarters in such year shall be reduced by the costs incurred by
the Secretary in making (directly or otherwise) such
determination.
(4) This subsection shall not apply with respect to Puerto
Rico, Guam, the Virgin Islands, the Northern Mariana Islands,
or American Samoa.
(v)(1) Notwithstanding the preceding provisions of this
section, except as provided in paragraphs (2) and (4), no
payment may be made to a State under this section for medical
assistance furnished to an alien who is not lawfully admitted
for permanent residence or otherwise permanently residing in
the United States under color of law.
(2) Payment shall be made under this section for care and
services that are furnished to an alien described in paragraph
(1) only if--
(A) such care and services are necessary for the
treatment of an emergency medical condition of the
alien,
(B) such alien otherwise meets the eligibility
requirements for medical assistance under the State
plan approved under this title (other than the
requirement of the receipt of aid or assistance under
title IV, supplemental security income benefits under
title XVI, or a State supplementary payment), and
(C) such care and services are not related to an
organ transplant procedure.
(3) For purposes of this subsection, the term ``emergency
medical condition'' means a medical condition (including
emergency labor and delivery) manifesting itself by acute
symptoms of sufficient severity (including severe pain) such
that the absence of immediate medical attention could
reasonably be expected to result in--
(A) placing the patient's health in serious jeopardy,
(B) serious impairment to bodily functions, or
(C) serious dysfunction of any bodily organ or part.
(4)(A) A State may elect (in a plan amendment under this
title) to provide medical assistance under this title,
notwithstanding sections 401(a), 402(b), 403, and 421 of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996, to children and pregnant women who are lawfully
residing in the United States (including battered individuals
described in section 431(c) of such Act) and who are otherwise
eligible for such assistance, within either or both of the
following eligibility categories:
(i) Pregnant women.--Women during pregnancy (and
during the 60-day period beginning on the last day of
the pregnancy).
(ii) Children.--Individuals under 21 years of age,
including optional targeted low-income children
described in section 1905(u)(2)(B).
(B) In the case of a State that has elected to provide
medical assistance to a category of aliens under subparagraph
(A), no debt shall accrue under an affidavit of support against
any sponsor of such an alien on the basis of provision of
assistance to such category and the cost of such assistance
shall not be considered as an unreimbursed cost.
(C) As part of the State's ongoing eligibility
redetermination requirements and procedures for an individual
provided medical assistance as a result of an election by the
State under subparagraph (A), a State shall verify that the
individual continues to lawfully reside in the United States
using the documentation presented to the State by the
individual on initial enrollment. If the State cannot
successfully verify that the individual is lawfully residing in
the United States in this manner, it shall require that the
individual provide the State with further documentation or
other evidence to verify that the individual is lawfully
residing in the United States.
(w)(1)(A) Notwithstanding the previous provisions of this
section, for purposes of determining the amount to be paid to a
State (as defined in paragraph (7)(D)) under subsection (a)(1)
for quarters in any fiscal year, the total amount expended
during such fiscal year as medical assistance under the State
plan (as determined without regard to this subsection) shall be
reduced by the sum of any revenues received by the State (or by
a unit of local government in the State) during the fiscal
year--
(i) from provider-related donations (as defined in
paragraph (2)(A)), other than--
(I) bona fide provider-related donations (as
defined in paragraph (2)(B)), and
(II) donations described in paragraph (2)(C);
(ii) from health care related taxes (as defined in
paragraph (3)(A)), other than broad-based health care
related taxes (as defined in paragraph (3)(B));
(iii) from a broad-based health care related tax, if
there is in effect a hold harmless provision (described
in paragraph (4)) with respect to the tax; or
(iv) only with respect to State fiscal years (or
portions thereof) occurring on or after January 1,
1992, and before October 1, 1995, from broad-based
health care related taxes to the extent the amount of
such taxes collected exceeds the limit established
under paragraph (5).
(B) Notwithstanding the previous provisions of this section,
for purposes of determining the amount to be paid to a State
under subsection (a)(7) for all quarters in a Federal fiscal
year (beginning with fiscal year 1993), the total amount
expended during the fiscal year for administrative expenditures
under the State plan (as determined without regard to this
subsection) shall be reduced by the sum of any revenues
received by the State (or by a unit of local government in the
State) during such quarters from donations described in
paragraph (2)(C), to the extent the amount of such donations
exceeds 10 percent of the amounts expended under the State plan
under this title during the fiscal year for purposes described
in paragraphs (2), (3), (4), (6), and (7) of subsection (a).
(C)(i) Except as otherwise provided in clause (ii),
subparagraph (A)(i) shall apply to donations received on or
after January 1, 1992.
(ii) Subject to the limits described in clause (iii) and
subparagraph (E), subparagraph (A)(i) shall not apply to
donations received before the effective date specified in
subparagraph (F) if such donations are received under programs
in effect or as described in State plan amendments or related
documents submitted to the Secretary by September 30, 1991, and
applicable to State fiscal year 1992, as demonstrated by State
plan amendments, written agreements, State budget
documentation, or other documentary evidence in existence on
that date.
(iii) In applying clause (ii) in the case of donations
received in State fiscal year 1993, the maximum amount of such
donations to which such clause may be applied may not exceed
the total amount of such donations received in the
corresponding period in State fiscal year 1992 (or not later
than 5 days after the last day of the corresponding period).
(D)(i) Except as otherwise provided in clause (ii),
subparagraphs (A)(ii) and (A)(iii) shall apply to taxes
received on or after January 1, 1992.
(ii) Subparagraphs (A)(ii) and (A)(iii) shall not apply to
impermissible taxes (as defined in clause (iii)) received
before the effective date specified in subparagraph (F) to the
extent the taxes (including the tax rate or base) were in
effect, or the legislation or regulations imposing such taxes
were enacted or adopted, as of November 22, 1991.
(iii) In this subparagraph and subparagraph (E), the term
``impermissible tax'' means a health care related tax for which
a reduction may be made under clause (ii) or (iii) of
subparagraph (A).
(E)(i) In no case may the total amount of donations and taxes
permitted under the exception provided in subparagraphs (C)(ii)
and (D)(ii) for the portion of State fiscal year 1992 occurring
during calendar year 1992 exceed the limit under paragraph (5)
minus the total amount of broad-based health care related taxes
received in the portion of that fiscal year.
(ii) In no case may the total amount of donations and taxes
permitted under the exception provided in subparagraphs (C)(ii)
and (D)(ii) for State fiscal year 1993 exceed the limit under
paragraph (5) minus the total amount of broad-based health care
related taxes received in that fiscal year.
(F) In this paragraph in the case of a State--
(i) except as provided in clause (iii), with a State
fiscal year beginning on or before July 1, the
effective date is October 1, 1992,
(ii) except as provided in clause (iii), with a State
fiscal year that begins after July 1, the effective
date is January 1, 1993, or
(iii) with a State legislature which is not scheduled
to have a regular legislative session in 1992, with a
State legislature which is not scheduled to have a
regular legislative session in 1993, or with a
provider-specific tax enacted on November 4, 1991, the
effective date is July 1, 1993.
(2)(A) In this subsection (except as provided in paragraph
(6)), the term ``provider-related donation'' means any donation
or other voluntary payment (whether in cash or in kind) made
(directly or indirectly) to a State or unit of local government
by--
(i) a health care provider (as defined in paragraph
(7)(B)),
(ii) an entity related to a health care provider (as
defined in paragraph (7)(C)), or
(iii) an entity providing goods or services under the
State plan for which payment is made to the State under
paragraph (2), (3), (4), (6), or (7) of subsection (a).
(B) For purposes of paragraph (1)(A)(i)(I), the term ``bona
fide provider-related donation'' means a provider-related
donation that has no direct or indirect relationship (as
determined by the Secretary) to payments made under this title
to that provider, to providers furnishing the same class of
items and services as that provider, or to any related entity,
as established by the State to the satisfaction of the
Secretary. The Secretary may by regulation specify types of
provider-related donations described in the previous sentence
that will be considered to be bona fide provider-related
donations.
(C) For purposes of paragraph (1)(A)(i)(II), donations
described in this subparagraph are funds expended by a
hospital, clinic, or similar entity for the direct cost
(including costs of training and of preparing and distributing
outreach materials) of State or local agency personnel who are
stationed at the hospital, clinic, or entity to determine the
eligibility of individuals for medical assistance under this
title and to provide outreach services to eligible or
potentially eligible individuals.
(3)(A) In this subsection (except as provided in paragraph
(6)), the term ``health care related tax'' means a tax (as
defined in paragraph (7)(F)) that--
(i) is related to health care items or services, or
to the provision of, the authority to provide, or
payment for, such items or services, or
(ii) is not limited to such items or services but
provides for treatment of individuals or entities that
are providing or paying for such items or services that
is different from the treatment provided to other
individuals or entities.
In applying clause (i), a tax is considered to relate to health
care items or services if at least 85 percent of the burden of
such tax falls on health care providers.
(B) In this subsection, the term ``broad-based health care
related tax'' means a health care related tax which is imposed
with respect to a class of health care items or services (as
described in paragraph (7)(A)) or with respect to providers of
such items or services and which, except as provided in
subparagraphs (D), (E), and (F)--
(i) is imposed at least with respect to all items or
services in the class furnished by all non-Federal,
nonpublic providers in the State (or, in the case of a
tax imposed by a unit of local government, the area
over which the unit has jurisdiction) or is imposed
with respect to all non-Federal, nonpublic providers in
the class; and
(ii) is imposed uniformly (in accordance with
subparagraph (C)).
(C)(i) Subject to clause (ii), for purposes of subparagraph
(B)(ii), a tax is considered to be imposed uniformly if--
(I) in the case of a tax consisting of a licensing
fee or similar tax on a class of health care items or
services (or providers of such items or services), the
amount of the tax imposed is the same for every
provider providing items or services within the class;
(II) in the case of a tax consisting of a licensing
fee or similar tax imposed on a class of health care
items or services (or providers of such services) on
the basis of the number of beds (licensed or otherwise)
of the provider, the amount of the tax is the same for
each bed of each provider of such items or services in
the class;
(III) in the case of a tax based on revenues or
receipts with respect to a class of items or services
(or providers of items or services) the tax is imposed
at a uniform rate for all items and services (or
providers of such items of services) in the class on
all the gross revenues or receipts, or net operating
revenues, relating to the provision of all such items
or services (or all such providers) in the State (or,
in the case of a tax imposed by a unit of local
government within the State, in the area over which the
unit has jurisdiction); or
(IV) in the case of any other tax, the State
establishes to the satisfaction of the Secretary that
the tax is imposed uniformly.
(ii) Subject to subparagraphs (D) and (E), a tax imposed with
respect to a class of health care items and services is not
considered to be imposed uniformly if the tax provides for any
credits, exclusions, or deductions which have as their purpose
or effect the return to providers of all or a portion of the
tax paid in a manner that is inconsistent with subclauses (I)
and (II) of subparagraph (E)(ii) or provides for a hold
harmless provision described in paragraph (4).
(D) A tax imposed with respect to a class of health care
items and services is considered to be imposed uniformly--
(i) notwithstanding that the tax is not imposed with
respect to items or services (or the providers thereof)
for which payment is made under a State plan under this
title or title XVIII, or
(ii) in the case of a tax described in subparagraph
(C)(i)(III), notwithstanding that the tax provides for
exclusion (in whole or in part) of revenues or receipts
from a State plan under this title or title XVIII.
(E)(i) A State may submit an application to the Secretary
requesting that the Secretary treat a tax as a broad-based
health care related tax, notwithstanding that the tax does not
apply to all health care items or services in class (or all
providers of such items and services), provides for a credit,
deduction, or exclusion, is not applied uniformly, or otherwise
does not meet the requirements of subparagraph (B) or (C).
Permissible waivers may include exemptions for rural or sole-
community providers.
(ii) The Secretary shall approve such an application if the
State establishes to the satisfaction of the Secretary that--
(I) the net impact of the tax and associated
expenditures under this title as proposed by the State
is generally redistributive in nature, and
(II) the amount of the tax is not directly correlated
to payments under this title for items or services with
respect to which the tax is imposed.
The Secretary shall by regulation specify types of credits,
exclusions, and deductions that will be considered to meet the
requirements of this subparagraph.
(F) In no case shall a tax not qualify as a broad-based
health care related tax under this paragraph because it does
not apply to a hospital that is described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code and that does not accept
payment under the State plan under this title or under title
XVIII.
(4) For purposes of paragraph (1)(A)(iii), there is in effect
a hold harmless provision with respect to a broad-based health
care related tax imposed with respect to a class of items or
services if the Secretary determines that any of the following
applies:
(A) The State or other unit of government imposing
the tax provides (directly or indirectly) for a payment
(other than under this title) to taxpayers and the
amount of such payment is positively correlated either
to the amount of such tax or to the difference between
the amount of the tax and the amount of payment under
the State plan.
(B) All or any portion of the payment made under this
title to the taxpayer varies based only upon the amount
of the total tax paid.
(C)(i) The State or other unit of government imposing
the tax provides (directly or indirectly) for any
payment, offset, or waiver that guarantees to hold
taxpayers harmless for any portion of the costs of the
tax.
(ii) For purposes of clause (i), a determination of
the existence of an indirect guarantee shall be made
under paragraph (3)(i) of section 433.68(f) of title
42, Code of Federal Regulations, as in effect on
November 1, 2006, except that for portions of fiscal
years beginning on or after January 1, 2008, and before
October 1, 2011, ``5.5 percent'' shall be substituted
for ``6 percent'' each place it appears.
The provisions of this paragraph shall not prevent use of the
tax to reimburse health care providers in a class for
expenditures under this title nor preclude States from relying
on such reimbursement to justify or explain the tax in the
legislative process.
(5)(A) For purposes of this subsection, the limit under this
subparagraph with respect to a State is an amount equal to 25
percent (or, if greater, the State base percentage, as defined
in subparagraph (B)) of the non-Federal share of the total
amount expended under the State plan during a State fiscal year
(or portion thereof), as it would be determined pursuant to
paragraph (1)(A) without regard to paragraph (1)(A)(iv).
(B)(i) In subparagraph (A), the term ``State base
percentage'' means, with respect to a State, an amount
(expressed as a percentage) equal to--
(I) the total of the amount of health care related
taxes (whether or not broad-based) and the amount of
provider-related donations (whether or not bona fide)
projected to be collected (in accordance with clause
(ii)) during State fiscal year 1992, divided by
(II) the non-Federal share of the total amount
estimated to be expended under the State plan during
such State fiscal year.
(ii) For purposes of clause (i)(I), in the case of a tax that
is not in effect throughout State fiscal year 1992 or the rate
(or base) of which is increased during such fiscal year, the
Secretary shall project the amount to be collected during such
fiscal year as if the tax (or increase) were in effect during
the entire State fiscal year.
(C)(i) The total amount of health care related taxes under
subparagraph (B)(i)(I) shall be determined by the Secretary
based on only those taxes (including the tax rate or base)
which were in effect, or for which legislation or regulations
imposing such taxes were enacted or adopted, as of November 22,
1991.
(ii) The amount of provider-related donations under
subparagraph (B)(i)(I) shall be determined by the Secretary
based on programs in effect on September 30, 1991, and
applicable to State fiscal year 1992, as demonstrated by State
plan amendments, written agreements, State budget
documentation, or other documentary evidence in existence on
that date.
(iii) The amount of expenditures described in subparagraph
(B)(i)(II) shall be determined by the Secretary based on the
best data available as of the date of the enactment of this
subsection.
(6)(A) Notwithstanding the provisions of this subsection, the
Secretary may not restrict States' use of funds where such
funds are derived from State or local taxes (or funds
appropriated to State university teaching hospitals)
transferred from or certified by units of government within a
State as the non-Federal share of expenditures under this
title, regardless of whether the unit of government is also a
health care provider, except as provided in section 1902(a)(2),
unless the transferred funds are derived by the unit of
government from donations or taxes that would not otherwise be
recognized as the non-Federal share under this section.
(B) For purposes of this subsection, funds the use of which
the Secretary may not restrict under subparagraph (A) shall not
be considered to be a provider-related donation or a health
care related tax.
(7) For purposes of this subsection:
(A) Each of the following shall be considered a
separate class of health care items and services:
(i) Inpatient hospital services.
(ii) Outpatient hospital services.
(iii) Nursing facility services (other than
services of intermediate care facilities for
the mentally retarded).
(iv) Services of intermediate care facilities
for the mentally retarded.
(v) Physicians' services.
(vi) Home health care services.
(vii) Outpatient prescription drugs.
(viii) Services of managed care organizations
(including health maintenance organizations,
preferred provider organizations, and such
other similar organizations as the Secretary
may specify by regulation).
(ix) Such other classification of health care
items and services consistent with this
subparagraph as the Secretary may establish by
regulation.
(B) The term ``health care provider'' means an
individual or person that receives payments for the
provision of health care items or services.
(C) An entity is considered to be ``related'' to a
health care provider if the entity--
(i) is an organization, association,
corporation or partnership formed by or on
behalf of health care providers;
(ii) is a person with an ownership or control
interest (as defined in section 1124(a)(3)) in
the provider;
(iii) is the employee, spouse, parent, child,
or sibling of the provider (or of a person
described in clause (ii)); or
(iv) has a similar, close relationship (as
defined in regulations) to the provider.
(D) The term ``State'' means only the 50 States and
the District of Columbia but does not include any State
whose entire program under this title is operated under
a waiver granted under section 1115.
(E) The ``State fiscal year'' means, with respect to
a specified year, a State fiscal year ending in that
specified year.
(F) The term ``tax'' includes any licensing fee,
assessment, or other mandatory payment, but does not
include payment of a criminal or civil fine or penalty
(other than a fine or penalty imposed in lieu of or
instead of a fee, assessment, or other mandatory
payment).
(G) The term ``unit of local government'' means, with
respect to a State, a city, county, special purpose
district, or other governmental unit in the State.
(x)(1) For purposes of section 1902(a)(46)(B)(i), the
requirement of this subsection is, with respect to an
individual declaring to be a citizen or national of the United
States, that, subject to paragraph (2), there is presented
satisfactory documentary evidence of citizenship or nationality
(as defined in paragraph (3)) of the individual.
(2) The requirement of paragraph (1) shall not apply to an
individual declaring to be a citizen or national of the United
States who is eligible for medical assistance under this
title--
(A) and is entitled to or enrolled for benefits under
any part of title XVIII;
(B) and is receiving--
(i) disability insurance benefits under
section 223 or monthly insurance benefits under
section 202 based on such individual's
disability (as defined in section 223(d)); or
(ii) supplemental security income benefits
under title XVI;
(C) and with respect to whom--
(i) child welfare services are made available
under part B of title IV on the basis of being
a child in foster care; or
(ii) adoption or foster care assistance is
made available under part E of title IV;
(D) pursuant to the application of section 1902(e)(4)
(and, in the case of an individual who is eligible for
medical assistance on such basis, the individual shall
be deemed to have provided satisfactory documentary
evidence of citizenship or nationality and shall not be
required to provide further documentary evidence on any
date that occurs during or after the period in which
the individual is eligible for medical assistance on
such basis); or
(E) on such basis as the Secretary may specify under
which satisfactory documentary evidence of citizenship
or nationality has been previously presented.
(3)(A) For purposes of this subsection, the term
``satisfactory documentary evidence of citizenship or
nationality'' means--
(i) any document described in subparagraph (B); or
(ii) a document described in subparagraph (C) and a
document described in subparagraph (D).
(B) The following are documents described in this
subparagraph:
(i) A United States passport.
(ii) Form N-550 or N-570 (Certificate of
Naturalization).
(iii) Form N-560 or N-561 (Certificate of United
States Citizenship).
(iv) A valid State-issued driver's license or other
identity document described in section 274A(b)(1)(D) of
the Immigration and Nationality Act, but only if the
State issuing the license or such document requires
proof of United States citizenship before issuance of
such license or document or obtains a social security
number from the applicant and verifies before
certification that such number is valid and assigned to
the applicant who is a citizen.
(v)(I) Except as provided in subclause (II), a
document issued by a federally recognized Indian tribe
evidencing membership or enrollment in, or affiliation
with, such tribe (such as a tribal enrollment card or
certificate of degree of Indian blood).
(II) With respect to those federally recognized
Indian tribes located within States having an
international border whose membership includes
individuals who are not citizens of the United States,
the Secretary shall, after consulting with such tribes,
issue regulations authorizing the presentation of such
other forms of documentation (including tribal
documentation, if appropriate) that the Secretary
determines to be satisfactory documentary evidence of
citizenship or nationality for purposes of satisfying
the requirement of this subsection.
(vi) Such other document as the Secretary may
specify, by regulation, that provides proof of United
States citizenship or nationality and that provides a
reliable means of documentation of personal identity.
(C) The following are documents described in this
subparagraph:
(i) A certificate of birth in the United States.
(ii) Form FS-545 or Form DS-1350 (Certification of
Birth Abroad).
(iii) Form I-197 (United States Citizen
Identification Card).
(iv) Form FS-240 (Report of Birth Abroad of a Citizen
of the United States).
(v) Such other document (not described in
subparagraph (B)(iv)) as the Secretary may specify that
provides proof of United States citizenship or
nationality.
(D) The following are documents described in this
subparagraph:
(i) Any identity document described in section
274A(b)(1)(D) of the Immigration and Nationality Act.
(ii) Any other documentation of personal identity of
such other type as the Secretary finds, by regulation,
provides a reliable means of identification.
(E) A reference in this paragraph to a form includes a
reference to any successor form.
(4) In the case of an individual declaring to be a citizen or
national of the United States with respect to whom a State
requires the presentation of satisfactory documentary evidence
of citizenship or nationality under section 1902(a)(46)(B)(i),
the individual shall be provided at least the reasonable
opportunity to present satisfactory documentary evidence of
citizenship or nationality under this subsection as is provided
under clauses (i) and (ii) of section 1137(d)(4)(A) to an
individual for the submittal to the State of evidence
indicating a satisfactory immigration status.
(5) Nothing in subparagraph (A) or (B) of section
1902(a)(46), the preceding paragraphs of this subsection, or
the Deficit Reduction Act of 2005, including section 6036 of
such Act, shall be construed as changing the requirement of
section 1902(e)(4) that a child born in the United States to an
alien mother for whom medical assistance for the delivery of
such child is available as treatment of an emergency medical
condition pursuant to subsection (v) shall be deemed eligible
for medical assistance during the first year of such child's
life.
(y) Payments for Establishment of Alternate Non-Emergency
Services Providers.--
(1) Payments.--In addition to the payments otherwise
provided under subsection (a), subject to paragraph
(2), the Secretary shall provide for payments to States
under such subsection for the establishment of
alternate non-emergency service providers (as defined
in section 1916A(e)(5)(B)), or networks of such
providers.
(2) Limitation.--The total amount of payments under
this subsection shall not exceed $50,000,000 during the
4-year period beginning with 2006. This subsection
constitutes budget authority in advance of
appropriations Acts and represents the obligation of
the Secretary to provide for the payment of amounts
provided under this subsection.
(3) Preference.--In providing for payments to States
under this subsection, the Secretary shall provide
preference to States that establish, or provide for,
alternate non-emergency services providers or networks
of such providers that--
(A) serve rural or underserved areas where
beneficiaries under this title may not have
regular access to providers of primary care
services; or
(B) are in partnership with local community
hospitals.
(4) Form and manner of payment.--Payment to a State
under this subsection shall be made only upon the
filing of such application in such form and in such
manner as the Secretary shall specify. Payment to a
State under this subsection shall be made in the same
manner as other payments under section 1903(a).
(z) Medicaid Transformation Payments.--
(1) In general.--In addition to the payments provided
under subsection (a), subject to paragraph (4), the
Secretary shall provide for payments to States for the
adoption of innovative methods to improve the
effectiveness and efficiency in providing medical
assistance under this title.
(2) Permissible uses of funds.--The following are
examples of innovative methods for which funds provided
under this subsection may be used:
(A) Methods for reducing patient error rates
through the implementation and use of
electronic health records, electronic clinical
decision support tools, or e-prescribing
programs.
(B) Methods for improving rates of collection
from estates of amounts owed under this title.
(C) Methods for reducing waste, fraud, and
abuse under the program under this title, such
as reducing improper payment rates as measured
by annual payment error rate measurement (PERM)
project rates.
(D) Implementation of a medication risk
management program as part of a drug use review
program under section 1927(g).
(E) Methods in reducing, in clinically
appropriate ways, expenditures under this title
for covered outpatient drugs, particularly in
the categories of greatest drug utilization, by
increasing the utilization of generic drugs
through the use of education programs and other
incentives to promote greater use of generic
drugs.
(F) Methods for improving access to primary
and specialty physician care for the uninsured
using integrated university-based hospital and
clinic systems.
(3) Application; terms and conditions.--
(A) In general.--No payments shall be made to
a State under this subsection unless the State
applies to the Secretary for such payments in a
form, manner, and time specified by the
Secretary.
(B) Terms and conditions.--Such payments are
made under such terms and conditions consistent
with this subsection as the Secretary
prescribes.
(C) Annual report.--Payment to a State under
this subsection is conditioned on the State
submitting to the Secretary an annual report on
the programs supported by such payment. Such
report shall include information on--
(i) the specific uses of such
payment;
(ii) an assessment of quality
improvements and clinical outcomes
under such programs; and
(iii) estimates of cost savings
resulting from such programs.
(4) Funding.--
(A) Limitation on funds.--The total amount of
payments under this subsection shall be equal
to, and shall not exceed--
(i) $75,000,000 for fiscal year 2007;
and
(ii) $75,000,000 for fiscal year
2008.
This subsection constitutes budget authority in
advance of appropriations Acts and represents
the obligation of the Secretary to provide for
the payment of amounts provided under this
subsection.
(B) Allocation of funds.--The Secretary shall
specify a method for allocating the funds made
available under this subsection among States.
Such method shall provide preference for States
that design programs that target health
providers that treat significant numbers of
Medicaid beneficiaries. Such method shall
provide that not less than 25 percent of such
funds shall be allocated among States the
population of which (as determined according to
data collected by the United States Census
Bureau) as of July 1, 2004, was more than 105
percent of the population of the respective
State (as so determined) as of April 1, 2000.
(C) Form and manner of payment.--Payment to a
State under this subsection shall be made in
the same manner as other payments under section
1903(a). There is no requirement for State
matching funds to receive payments under this
subsection.
(5) Medication risk management program.--
(A) In general.--For purposes of this
subsection, the term ``medication risk
management program'' means a program for
targeted beneficiaries that ensures that
covered outpatient drugs are appropriately used
to optimize therapeutic outcomes through
improved medication use and to reduce the risk
of adverse events.
(B) Elements.--Such program may include the
following elements:
(i) The use of established principles
and standards for drug utilization
review and best practices to analyze
prescription drug claims of targeted
beneficiaries and identify outlier
physicians.
(ii) On an ongoing basis provide
outlier physicians--
(I) a comprehensive pharmacy
claims history for each
targeted beneficiary under
their care;
(II) information regarding
the frequency and cost of
relapses and hospitalizations
of targeted beneficiaries under
the physician's care; and
(III) applicable best
practice guidelines and
empirical references.
(iii) Monitor outlier physician's
prescribing, such as failure to refill,
dosage strengths, and provide
incentives and information to encourage
the adoption of best clinical
practices.
(C) Targeted beneficiaries.--For purposes of
this paragraph, the term ``targeted
beneficiaries'' means Medicaid eligible
beneficiaries who are identified as having high
prescription drug costs and medical costs, such
as individuals with behavioral disorders or
multiple chronic diseases who are taking
multiple medications.
SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.
(a) Application of Per Capita Cap on Payments for Medical
Assistance Expenditures.--
(1) In general.--If a State has excess aggregate
medical assistance expenditures (as defined in
paragraph (2)) for a fiscal year (beginning with fiscal
year 2020), the amount of payment to the State under
section 1903(a)(1) for each quarter in the following
fiscal year shall be reduced by 1/4 of the excess
aggregate medical assistance payments (as defined in
paragraph (3)) for that previous fiscal year. In this
section, the term ``State'' means only the 50 States
and the District of Columbia.
(2) Excess aggregate medical assistance
expenditures.--In this subsection, the term ``excess
aggregate medical assistance expenditures'' means, for
a State for a fiscal year, the amount (if any) by
which--
(A) the amount of the adjusted total medical
assistance expenditures (as defined in
subsection (b)(1)) for the State and fiscal
year; exceeds
(B) the amount of the target total medical
assistance expenditures (as defined in
subsection (c)) for the State and fiscal year.
(3) Excess aggregate medical assistance payments.--In
this subsection, the term ``excess aggregate medical
assistance payments'' means, for a State for a fiscal
year, the product of--
(A) the excess aggregate medical assistance
expenditures (as defined in paragraph (2)) for
the State for the fiscal year; and
(B) the Federal average medical assistance
matching percentage (as defined in paragraph
(4)) for the State for the fiscal year.
(4) Federal average medical assistance matching
percentage.--In this subsection, the term ``Federal
average medical assistance matching percentage'' means,
for a State for a fiscal year, the ratio (expressed as
a percentage) of--
(A) the amount of the Federal payments that
would be made to the State under section
1903(a)(1) for medical assistance expenditures
for calendar quarters in the fiscal year if
paragraph (1) did not apply; to
(B) the amount of the medical assistance
expenditures for the State and fiscal year.
(b) Adjusted Total Medical Assistance Expenditures.--Subject
to subsection (g), the following shall apply:
(1) In general.--In this section, the term ``adjusted
total medical assistance expenditures'' means, for a
State--
(A) for fiscal year 2016, the product of--
(i) the amount of the medical
assistance expenditures (as defined in
paragraph (2)) for the State and fiscal
year, reduced by the amount of any
excluded expenditures (as defined in
paragraph (3)) for the State and fiscal
year otherwise included in such medical
assistance expenditures; and
(ii) the 1903A FY16 population
percentage (as defined in paragraph
(4)) for the State; or
(B) for fiscal year 2019 or a subsequent
fiscal year, the amount of the medical
assistance expenditures (as defined in
paragraph (2)) for the State and fiscal year
that is attributable to 1903A enrollees,
reduced by the amount of any excluded
expenditures (as defined in paragraph (3)) for
the State and fiscal year otherwise included in
such medical assistance expenditures.
(2) Medical assistance expenditures.--In this
section, the term ``medical assistance expenditures''
means, for a State and fiscal year, the medical
assistance payments as reported by medical service
category on the Form CMS-64 quarterly expense report
(or successor to such a report form, and including
enrollment data and subsequent adjustments to any such
report, in this section referred to collectively as a
``CMS-64 report'') that directly result from providing
medical assistance under the State plan (including
under a waiver of the plan) for which payment is (or
may otherwise be) made pursuant to section 1903(a)(1).
(3) Excluded expenditures.--In this section, the term
``excluded expenditures'' means, for a State and fiscal
year, expenditures under the State plan (or under a
waiver of such plan) that are attributable to any of
the following:
(A) DSH.--Payment adjustments made for
disproportionate share hospitals under section
1923.
(B) Medicare cost-sharing.--Payments made for
medicare cost-sharing (as defined in section
1905(p)(3)).
(C) Safety net provider payment adjustments
in non-expansion states.--Payment adjustments
under subsection (a) of section 1923A for which
payment is permitted under subsection (c) of
such section.
(4) 1903A fy 16 population percentage.--In this
subsection, the term ``1903A FY16 population
percentage'' means, for a State, the Secretary's
calculation of the percentage of the actual medical
assistance expenditures, as reported by the State on
the CMS-64 reports for calendar quarters in fiscal year
2016, that are attributable to 1903A enrollees (as
defined in subsection (e)(1)).
(c) Target Total Medical Assistance Expenditures.--
(1) Calculation.--In this section, the term ``target
total medical assistance expenditures'' means, for a
State for a fiscal year, the sum of the products, for
each of the 1903A enrollee categories (as defined in
subsection (e)(2)), of--
(A) the target per capita medical assistance
expenditures (as defined in paragraph (2)) for
the enrollee category, State, and fiscal year;
and
(B) the number of 1903A enrollees for such
enrollee category, State, and fiscal year, as
determined under subsection (e)(4).
(2) Target per capita medical assistance
expenditures.--In this subsection, the term ``target
per capita medical assistance expenditures'' means, for
a 1903A enrollee category, State, and a fiscal year, an
amount equal to--
(A) the provisional FY19 target per capita
amount for such enrollee category (as
calculated under subsection (d)(5)) for the
State; increased by
(B) the percentage increase in the medical
care component of the consumer price index for
all urban consumers (U.S. city average) from
September of 2019 to September of the fiscal
year involved.
(d) Calculation of FY19 Provisional Target Amount for Each
1903A Enrollee Category.--Subject to subsection (g), the
following shall apply:
(1) Calculation of base amounts for fiscal year
2016.--For each State the Secretary shall calculate
(and provide notice to the State not later than April
1, 2018, of) the following:
(A) The amount of the adjusted total medical
assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2016.
(B) The number of 1903A enrollees for the
State in fiscal year 2016 (as determined under
subsection (e)(4)).
(C) The average per capita medical assistance
expenditures for the State for fiscal year 2016
equal to--
(i) the amount calculated under
subparagraph (A); divided by
(ii) the number calculated under
subparagraph (B).
(2) Fiscal year 2019 average per capita amount based
on inflating the fiscal year 2016 amount to fiscal year
2019 by cpi-medical.--The Secretary shall calculate a
fiscal year 2019 average per capita amount for each
State equal to--
(A) the average per capita medical assistance
expenditures for the State for fiscal year 2016
(calculated under paragraph (1)(C)); increased
by
(B) the percentage increase in the medical
care component of the consumer price index for
all urban consumers (U.S. city average) from
September, 2016 to September, 2019.
(3) Aggregate and average expenditures per capita for
fiscal year 2019.--The Secretary shall calculate for
each State the following:
(A) The amount of the adjusted total medical
assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2019.
(B) The number of 1903A enrollees for the
State in fiscal year 2019 (as determined under
subsection (e)(4)).
(4) Per capita expenditures for fiscal year 2019 for
each 1903a enrollee category.--The Secretary shall
calculate (and provide notice to each State not later
than January 1, 2020, of) the following:
(A)(i) For each 1903A enrollee category, the
amount of the adjusted total medical assistance
expenditures (as defined in subsection (b)(1))
for the State for fiscal year 2019 for
individuals in the enrollee category,
calculated by excluding from medical assistance
expenditures those expenditures attributable to
expenditures described in clause (iii) or non-
DSH supplemental expenditures (as defined in
clause (ii)).
(ii) In this paragraph, the term ``non-DSH
supplemental expenditure'' means a payment to a
provider under the State plan (or under a
waiver of the plan) that--
(I) is not made under section 1923;
(II) is not made with respect to a
specific item or service for an
individual;
(III) is in addition to any payments
made to the provider under the plan (or
waiver) for any such item or service;
and
(IV) complies with the limits for
additional payments to providers under
the plan (or waiver) imposed pursuant
to section 1902(a)(30)(A), including
the regulations specifying upper
payment limits under the State plan in
part 447 of title 42, Code of Federal
Regulations (or any successor
regulations).
(iii) An expenditure described in this clause
is an expenditure that meets the criteria
specified in subclauses (I), (II), and (III) of
clause (ii) and is authorized under section
1115 for the purposes of funding a delivery
system reform pool, uncompensated care pool, a
designated state health program, or any other
similar expenditure (as defined by the
Secretary).
(B) For each 1903A enrollee category, the
number of 1903A enrollees for the State in
fiscal year 2019 in the enrollee category (as
determined under subsection (e)(4)).
(C) For fiscal year 2016, the State's non-DSH
supplemental payment percentage is equal to the
ratio (expressed as a percentage) of--
(i) the total amount of non-DSH
supplemental expenditures (as defined
in subparagraph (A)(ii)) for the State
for fiscal year 2016; to
(ii) the amount described in
subsection (b)(1)(A) for the State for
fiscal year 2016.
(D) For each 1903A enrollee category an
average medical assistance expenditures per
capita for the State for fiscal year 2019 for
the enrollee category equal to--
(i) the amount calculated under
subparagraph (A) for the State,
increased by the non-DSH supplemental
payment percentage for the State (as
calculated under subparagraph (C));
divided by
(ii) the number calculated under
subparagraph (B) for the State for the
enrollee category.
(5) Provisional fy19 per capita target amount for
each 1903a enrollee category.--Subject to subsection
(f)(2), the Secretary shall calculate for each State a
provisional FY19 per capita target amount for each
1903A enrollee category equal to the average medical
assistance expenditures per capita for the State for
fiscal year 2019 (as calculated under paragraph (4)(D))
for such enrollee category multiplied by the ratio of--
(A) the product of--
(i) the fiscal year 2019 average per
capita amount for the State, as
calculated under paragraph (2); and
(ii) the number of 1903A enrollees
for the State in fiscal year 2019, as
calculated under paragraph (3)(B); to
(B) the amount of the adjusted total medical
assistance expenditures for the State for
fiscal year 2019, as calculated under paragraph
(3)(A).
(e) 1903A Enrollee; 1903A Enrollee Category.--Subject to
subsection (g), for purposes of this section, the following
shall apply:
(1) 1903A enrollee.--The term ``1903A enrollee''
means, with respect to a State and a month, any
Medicaid enrollee (as defined in paragraph (3)) for the
month, other than such an enrollee who for such month
is in any of the following categories of excluded
individuals:
(A) CHIP.--An individual who is provided,
under this title in the manner described in
section 2101(a)(2), child health assistance
under title XXI.
(B) IHS.--An individual who receives any
medical assistance under this title for
services for which payment is made under the
third sentence of section 1905(b).
(C) Breast and cervical cancer services
eligible individual.--An individual who is
entitled to medical assistance under this title
only pursuant to section
1902(a)(10)(A)(ii)(XVIII).
(D) Partial-benefit enrollees.--An individual
who--
(i) is an alien who is entitled to
medical assistance under this title
only pursuant to section 1903(v)(2);
(ii) is entitled to medical
assistance under this title only
pursuant to subclause (XII) or (XXI) of
section 1902(a)(10)(A)(ii) (or pursuant
to a waiver that provides only
comparable benefits);
(iii) is a dual eligible individual
(as defined in section 1915(h)(2)(B))
and is entitled to medical assistance
under this title (or under a waiver)
only for some or all of medicare cost-
sharing (as defined in section
1905(p)(3)); or
(iv) is entitled to medical
assistance under this title and for
whom the State is providing a payment
or subsidy to an employer for coverage
of the individual under a group health
plan pursuant to section 1906 or
section 1906A (or pursuant to a waiver
that provides only comparable
benefits).
(2) 1903A enrollee category.--The term ``1903A
enrollee category'' means each of the following:
(A) Elderly.--A category of 1903A enrollees
who are 65 years of age or older.
(B) Blind and disabled.--A category of 1903A
enrollees (not described in the previous
subparagraph) who are eligible for medical
assistance under this title on the basis of
being blind or disabled.
(C) Children.--A category of 1903A enrollees
(not described in a previous subparagraph) who
are children under 19 years of age.
(D) Expansion enrollees.--A category of 1903A
enrollees (not described in a previous
subparagraph) for whom the amounts expended for
medical assistance are subject to an increase
or change in the Federal medical assistance
percentage under subsection (y) or (z)(2),
respectively, of section 1905.
(E) Other nonelderly, nondisabled, non-
expansion adults.--A category of 1903A
enrollees who are not described in any previous
subparagraph.
(3) Medicaid enrollee.--The term ``Medicaid
enrollee'' means, with respect to a State for a month,
an individual who is eligible for medical assistance
for items or services under this title and enrolled
under the State plan (or a waiver of such plan) under
this title for the month.
(4) Determination of number of 1903a enrollees.--The
number of 1903A enrollees for a State and fiscal year,
and, if applicable, for a 1903A enrollee category, is
the average monthly number of Medicaid enrollees for
such State and fiscal year (and, if applicable, in such
category) that are reported through the CMS-64 report
under (and subject to audit under) subsection (h).
(f) Special Payment Rules.--
(1) Application in case of research and demonstration
projects and other waivers.--In the case of a State
with a waiver of the State plan approved under section
1115, section 1915, or another provision of this title,
this section shall apply to medical assistance
expenditures and medical assistance payments under the
waiver, in the same manner as if such expenditures and
payments had been made under a State plan under this
title and the limitations on expenditures under this
section shall supersede any other payment limitations
or provisions (including limitations based on a per
capita limitation) otherwise applicable under such a
waiver.
(2) Treatment of states expanding coverage after
fiscal year 2016.--In the case of a State that did not
provide for medical assistance for the 1903A enrollee
category described in subsection (e)(2)(D) during
fiscal year 2016 but which provides for such assistance
for such category in a subsequent year, the provisional
FY19 per capita target amount for such enrollee
category under subsection (d)(5) shall be equal to the
provisional FY19 per capita target amount for the 1903A
enrollee category described in subsection (e)(2)(E).
(3) In case of state failure to report necessary
data.--If a State for any quarter in a fiscal year
(beginning with fiscal year 2019) fails to
satisfactorily submit data on expenditures and
enrollees in accordance with subsection (h)(1), for
such fiscal year and any succeeding fiscal year for
which such data are not satisfactorily submitted--
(A) the Secretary shall calculate and apply
subsections (a) through (e) with respect to the
State as if all 1903A enrollee categories for
which such expenditure and enrollee data were
not satisfactorily submitted were a single
1903A enrollee category; and
(B) the growth factor otherwise applied under
subsection (c)(2)(B) shall be decreased by 1
percentage point.
(g) Recalculation of Certain Amounts for Data Errors.--The
amounts and percentage calculated under paragraphs (1) and
(4)(C) of subsection (d) for a State for fiscal year 2016, and
the amounts of the adjusted total medical assistance
expenditures calculated under subsection (b) and the number of
Medicaid enrollees and 1903A enrollees determined under
subsection (e)(4) for a State for fiscal year 2016, fiscal year
2019, and any subsequent fiscal year, may be adjusted by the
Secretary based upon an appeal (filed by the State in such a
form, manner, and time, and containing such information
relating to data errors that support such appeal, as the
Secretary specifies) that the Secretary determines to be valid,
except that any adjustment by the Secretary under this
subsection for a State may not result in an increase of the
target total medical assistance expenditures exceeding 2
percent.
(h) Required Reporting and Auditing of CMS-64 Data;
Transitional Increase in Federal Matching Percentage for
Certain Administrative Expenses.--
(1) Reporting.--In addition to the data required on
form Group VIII on the CMS-64 report form as of January
1, 2017, in each CMS-64 report required to be submitted
(for each quarter beginning on or after October 1,
2018), the State shall include data on medical
assistance expenditures within such categories of
services and categories of enrollees (including each
1903A enrollee category and each category of excluded
individuals under subsection (e)(1)) and the numbers of
enrollees within each of such enrollee categories, as
the Secretary determines are necessary (including
timely guidance published as soon as possible after the
date of the enactment of this section) in order to
implement this section and to enable States to comply
with the requirement of this paragraph on a timely
basis.
(2) Auditing.--The Secretary shall conduct for each
State an audit of the number of individuals and
expenditures reported through the CMS-64 report for
fiscal year 2016, fiscal year 2019, and each subsequent
fiscal year, which audit may be conducted on a
representative sample (as determined by the Secretary).
(3) Temporary increase in federal matching percentage
to support improved data reporting systems for fiscal
years 2018 and 2019.--For amounts expended during
calendar quarters beginning on or after October 1,
2017, and before October 1, 2019--
(A) the Federal matching percentage applied
under section 1903(a)(3)(A)(i) shall be
increased by 10 percentage points to 100
percent;
(B) the Federal matching percentage applied
under section 1903(a)(3)(B) shall be increased
by 25 percentage points to 100 percent; and
(C) the Federal matching percentage applied
under section 1903(a)(7) shall be increased by
10 percentage points to 60 percent but only
with respect to amounts expended that are
attributable to a State's additional
administrative expenditures to implement the
data requirements of paragraph (1).
* * * * * * *
DEFINITIONS
Sec. 1905. For purposes of this title--
(a) The term ``medical assistance'' means payment of part or
all of the cost of the following care and services or the care
and services themselves, or both (if provided [in or after the
third month before the month in which the recipient makes
application for assistance] in or after the month in which the
recipient makes application for assistance or, in the case of
medicare cost-sharing with respect to a qualified medicare
beneficiary described in subsection (p)(1), if provided after
the month in which the individual becomes such a beneficiary)
for individuals, and, with respect to physicians' or dentists'
services, at the option of the State, to individuals (other
than individuals with respect to whom there is being paid, or
who are eligible, or would be eligible if they were not in a
medical institution, to have paid with respect to them a State
supplementary payment and are eligible for medical assistance
equal in amount, duration, and scope to the medical assistance
made available to individuals described in section
1902(a)(10)(A)) not receiving aid or assistance under any plan
of the State approved under title I, X, XIV, or XVI, or part A
of title IV, and with respect to whom supplemental security
income benefits are not being paid under title XVI, who are--
(i) under the age of 21, or, at the option of the
State, under the age of 20, 19, or 18 as the State may
choose,
(ii) relatives specified in section 406(b)(1) with
whom a child is living if such child is (or would, if
needy, be) a dependent child under part A of title IV,
(iii) 65 years of age or older,
(iv) blind, with respect to States eligible to
participate in the State plan program established under
title XVI,
(v) 18 years of age or older and permanently and
totally disabled, with respect to States eligible to
participate in the State plan program established under
title XVI,
(vi) persons essential (as described in the second
sentence of this subsection) to individuals receiving
aid or assistance under State plans approved under
title I, X, XIV, or XVI,
(vii) blind or disabled as defined in section 1614,
with respect to States not eligible to participate in
the State plan program established under title XVI,
(viii) pregnant women,
(ix) individuals provided extended benefits under
section 1925,
(x) individuals described in section 1902(u)(1),
(xi) individuals described in section 1902(z)(1),
(xii) employed individuals with a medically improved
disability (as defined in subsection (v)),
(xiii) individuals described in section 1902(aa),
(xiv) individuals described in section
1902(a)(10)(A)(i)(VIII) or 1902(a)(10)(A)(i)(IX),
(xv) individuals described in section
1902(a)(10)(A)(ii)(XX),
(xvi) individuals described in
section 1902(ii), or
(xvii) individuals who are eligible for home and
community-based services under needs-based criteria
established under paragraph (1)(A) of section 1915(i),
or who are eligible for home and community-based
services under paragraph (6) of such section, and who
will receive home and community-based services pursuant
to a State plan amendment under such subsection,
but whose income and resources are insufficient to meet all of
such cost--
(1) inpatient hospital services (other than services
in an institution for mental diseases);
(2)(A) outpatient hospital services, (B) consistent
with State law permitting such services, rural health
clinic services (as defined in subsection (l)(1)) and
any other ambulatory services which are offered by a
rural health clinic (as defined in subsection (l)(1))
and which are otherwise included in the plan, and (C)
Federally-qualified health center services (as defined
in subsection (l)(2)) and any other ambulatory services
offered by a Federally-qualified health center and
which are otherwise included in the plan;
(3) other laboratory and X-ray services;
(4)(A) nursing facility services (other than services
in an institution for mental diseases) for individuals
21 years of age or older; (B) early and periodic
screening, diagnostic, and treatment services (as
defined in subsection (r)) for individuals who are
eligible under the plan and are under the age of 21;
(C) family planning services and supplies furnished
(directly or under arrangements with others) to
individuals of child-bearing age (including minors who
can be considered to be sexually active) who are
eligible under the State plan and who desire such
services and supplies; and (D) counseling and
pharmacotherapy for cessation of tobacco use by
pregnant women (as defined in subsection (bb));
(5)(A) physicians' services furnished by a physician
(as defined in section 1861(r)(1)), whether furnished
in the office, the patient's home, a hospital, or a
nursing facility, or elsewhere, and (B) medical and
surgical services furnished by a dentist (described in
section 1861(r)(2)) to the extent such services may be
performed under State law either by a doctor of
medicine or by a doctor of dental surgery or dental
medicine and would be described in clause (A) if
furnished by a physician (as defined in section
1861(r)(1));
(6) medical care, or any other type of remedial care
recognized under State law, furnished by licensed
practitioners within the scope of their practice as
defined by State law;
(7) home health care services;
(8) private duty nursing services;
(9) clinic services furnished by or under the
direction of a physician, without regard to whether the
clinic itself is administered by a physician, including
such services furnished outside the clinic by clinic
personnel to an eligible individual who does not reside
in a permanent dwelling or does not have a fixed home
or mailing address;
(10) dental services;
(11) physical therapy and related services;
(12) prescribed drugs, dentures, and prosthetic
devices; and eyeglasses prescribed by a physician
skilled in diseases of the eye or by an optometrist,
whichever the individual may select;
(13) other diagnostic, screening, preventive, and
rehabilitative services, including--
(A) any clinical preventive services that are
assigned a grade of A or B by the United States
Preventive Services Task Force;
(B) with respect to an adult individual,
approved vaccines recommended by the Advisory
Committee on Immunization Practices (an
advisory committee established by the
Secretary, acting through the Director of the
Centers for Disease Control and Prevention) and
their administration; and
(C) any medical or remedial services
(provided in a facility, a home, or other
setting) recommended by a physician or other
licensed practitioner of the healing arts
within the scope of their practice under State
law, for the maximum reduction of physical or
mental disability and restoration of an
individual to the best possible functional
level;
(14) inpatient hospital services and nursing facility
services for individuals 65 years of age or over in an
institution for mental diseases;
(15) services in an intermediate care facility for
the mentally retarded (other than in an institution for
mental diseases) for individuals who are determined, in
accordance with section 1902(a)(31), to be in need of
such care;
(16) (A) effective January 1, 1973, inpatient
psychiatric hospital services for individuals under age
21, as defined in subsection (h), and, (B) for
individuals receiving services described in
subparagraph (A), early and periodic screening,
diagnostic, and treatment services (as defined in
subsection (r)), whether or not such screening,
diagnostic, and treatment services are furnished by the
provider of the services described in such
subparagraph;
(17) services furnished by a nurse-midwife (as
defined in section 1861(gg)) which the nurse-midwife is
legally authorized to perform under State law (or the
State regulatory mechanism provided by State law),
whether or not the nurse-midwife is under the
supervision of, or associated with, a physician or
other health care provider, and without regard to
whether or not the services are performed in the area
of management of the care of mothers and babies
throughout the maternity cycle;
(18) hospice care (as defined in subsection (o));
(19) case management services (as defined in section
1915(g)(2)) and TB-related services described in
section 1902(z)(2)(F);
(20) respiratory care services (as defined in section
1902(e)(9)(C));
(21) services furnished by a certified pediatric
nurse practitioner or certified family nurse
practitioner (as defined by the Secretary) which the
certified pediatric nurse practitioner or certified
family nurse practitioner is legally authorized to
perform under State law (or the State regulatory
mechanism provided by State law), whether or not the
certified pediatric nurse practitioner or certified
family nurse practitioner is under the supervision of,
or associated with, a physician or other health care
provider;
(22) home and community care (to the extent allowed
and as defined in section 1929) for functionally
disabled elderly individuals;
(23) community supported living arrangements services
(to the extent allowed and as defined in section 1930);
(24) personal care services furnished to an
individual who is not an inpatient or resident of a
hospital, nursing facility, intermediate care facility
for the mentally retarded, or institution for mental
disease that are (A) authorized for the individual by a
physician in accordance with a plan of treatment or (at
the option of the State) otherwise authorized for the
individual in accordance with a service plan approved
by the State, (B) provided by an individual who is
qualified to provide such services and who is not a
member of the individual's family, and (C) furnished in
a home or other location;
(25) primary care case management services (as
defined in subsection (t));
(26) services furnished under a PACE program under
section 1934 to PACE program eligible individuals
enrolled under the program under such section;
(27) subject to subsection (x), primary and secondary
medical strategies and treatment and services for
individuals who have Sickle Cell Disease;
(28) freestanding birth center services (as defined
in subsection (l)(3)(A)) and other ambulatory services
that are offered by a freestanding birth center (as
defined in subsection (l)(3)(B)) and that are otherwise
included in the plan; and
(29) any other medical care, and any other type of
remedial care recognized under State law, specified by
the Secretary,
except as otherwise provided in paragraph (16), such term does
not include--
(A) any such payments with respect to care or
services for any individual who is an inmate of a
public institution (except as a patient in a medical
institution); or
(B) any such payments with respect to care or
services for any individual who has not attained 65
years of age and who is a patient in an institution for
mental diseases.
For purposes of clause (vi) of the preceding sentence, a person
shall be considered essential to another individual if such
person is the spouse of and is living with such individual, the
needs of such person are taken into account in determining the
amount of aid or assistance furnished to such individual (under
a State plan approved under title I, X, XIV, or XVI), and such
person is determined, under such a State plan, to be essential
to the well-being of such individual. The payment described in
the first sentence may include expenditures for medicare cost-
sharing and for premiums under part B of title XVIII for
individuals who are eligible for medical assistance under the
plan and (A) are receiving aid or assistance under any plan of
the State approved under title I, X, XIV, or XVI, or part A of
title IV, or with respect to whom supplemental security income
benefits are being paid under title XVI, or (B) with respect to
whom there is being paid a State supplementary payment and are
eligible for medical assistance equal in amount, duration, and
scope to the medical assistance made available to individuals
described in section 1902(a)(10)(A), and, except in the case of
individuals 65 years of age or older and disabled individuals
entitled to health insurance benefits under title XVIII who are
not enrolled under part B of title XVIII, other insurance
premiums for medical or any other type of remedial care or the
cost thereof. No service (including counseling) shall be
excluded from the definition of ``medical assistance'' solely
because it is provided as a treatment service for alcoholism or
drug dependency.
(b) Subject to subsections (y), (z), and (aa) and section
1933(d), the term ``Federal medical assistance percentage'' for
any State shall be 100 per centum less the State percentage;
and the State percentage shall be that percentage which bears
the same ratio to 45 per centum as the square of the per capita
income of such State bears to the square of the per capita
income of the continental United States (including Alaska) and
Hawaii; except that (1) the Federal medical assistance
percentage shall in no case be less than 50 per centum or more
than 83 per centum, (2) the Federal medical assistance
percentage for Puerto Rico, the Virgin Islands, Guam, the
Northern Mariana Islands, and American Samoa shall be 55
percent, (3) for purposes of this title and title XXI, the
Federal medical assistance percentage for the District of
Columbia shall be 70 percent, (4) the Federal medical
assistance percentage shall be equal to the enhanced FMAP
described in section 2105(b) with respect to medical assistance
provided to individuals who are eligible for such assistance
only on the basis of section 1902(a)(10)(A)(ii)(XVIII), and (5)
in the case of a State that provides medical assistance for
services and vaccines described in subparagraphs (A) and (B) of
subsection (a)(13), and prohibits cost-sharing for such
services and vaccines, the Federal medical assistance
percentage, as determined under this subsection and subsection
(y) (without regard to paragraph (1)(C) of such subsection),
shall be increased by 1 percentage point with respect to
medical assistance for such services and vaccines and for items
and services described in subsection (a)(4)(D). The Federal
medical assistance percentage for any State shall be determined
and promulgated in accordance with the provisions of section
1101(a)(8)(B). Notwithstanding the first sentence of this
section, the Federal medical assistance percentage shall be 100
per centum with respect to amounts expended as medical
assistance for services which are received through an Indian
Health Service facility whether operated by the Indian Health
Service or by an Indian tribe or tribal organization (as
defined in section 4 of the Indian Health Care Improvement
Act). Notwithstanding the first sentence of this subsection, in
the case of a State plan that meets the condition described in
subsection (u)(1), with respect to expenditures (other than
expenditures under section 1923) described in subsection
(u)(2)(A) or subsection (u)(3) for the State for a fiscal year,
and that do not exceed the amount of the State's available
allotment under section 2104, the Federal medical assistance
percentage is equal to the enhanced FMAP described in section
2105(b).
(c) For definition of the term ``nursing facility'', see
section 1919(a).
(d) The term ``intermediate care facility for the mentally
retarded'' means an institution (or distinct part thereof) for
the mentally retarded or persons with related conditions if--
(1) the primary purpose of such institution (or
distinct part thereof) is to provide health or
rehabilitative services for mentally retarded
individuals and the institution meets such standards as
may be prescribed by the Secretary;
(2) the mentally retarded individual with respect to
whom a request for payment is made under a plan
approved under this title is receiving active treatment
under such a program; and
(3) in the case of a public institution, the State or
political subdivision responsible for the operation of
such institution has agreed that the non-Federal
expenditures in any calendar quarter prior to January
1, 1975, with respect to services furnished to patients
in such institution (or distinct part thereof) in the
State will not, because of payments made under this
title, be reduced below the average amount expended for
such services in such institution in the four quarters
immediately preceding the quarter in which the State in
which such institution is located elected to make such
services available under its plan approved under this
title.
(e) In the case of any State the State plan of which (as
approved under this title)--
(1) does not provide for the payment of services
(other than services covered under section 1902(a)(12))
provided by an optometrist; but
(2) at a prior period did provide for the payment of
services referred to in paragraph (1);
the term ``physicians' services'' (as used in subsection
(a)(5)) shall include services of the type which an optometrist
is legally authorized to perform where the State plan
specifically provides that the term ``physicians' services'',
as employed in such plan, includes services of the type which
an optometrist is legally authorized to perform, and shall be
reimbursed whether furnished by a physician or an optometrist.
(f) For purposes of this title, the term ``nursing facility
services'' means services which are or were required to be
given an individual who needs or needed on a daily basis
nursing care (provided directly by or requiring the supervision
of nursing personnel) or other rehabilitation services which as
a practical matter can only be provided in a nursing facility
on an inpatient basis.
(g) If the State plan includes provision of chiropractors'
services, such services include only--
(1) services provided by a chiropractor (A) who is
licensed as such by the State and (B) who meets uniform
minimum standards promulgated by the Secretary under
section 1861(r)(5); and
(2) services which consist of treatment by means of
manual manipulation of the spine which the chiropractor
is legally authorized to perform by the State.
(h)(1) For purposes of paragraph (16) of subsection (a), the
term ``inpatient psychiatric hospital services for individuals
under age 21'' includes only--
(A) inpatient services which are provided in an
institution (or distinct part thereof) which is a
psychiatric hospital as defined in section 1861(f) or
in another inpatient setting that the Secretary has
specified in regulations;
(B) inpatient services which, in the case of any
individual (i) involve active treatment which meets
such standards as may be prescribed in regulations by
the Secretary, and (ii) a team, consisting of
physicians and other personnel qualified to make
determinations with respect to mental health conditions
and the treatment thereof, has determined are necessary
on an inpatient basis and can reasonably be expected to
improve the condition, by reason of which such services
are necessary, to the extent that eventually such
services will no longer be necessary; and
(C) inpatient services which, in the case of any
individual, are provided prior to (i) the date such
individual attains age 21, or (ii) in the case of an
individual who was receiving such services in the
period immediately preceding the date on which he
attained age 21, (I) the date such individual no longer
requires such services, or (II) if earlier, the date
such individual attains age 22;
(2) Such term does not include services provided during any
calendar quarter under the State plan of any State if the total
amount of the funds expended, during such quarter, by the State
(and the political subdivisions thereof) from non-Federal funds
for inpatient services included under paragraph (1), and for
active psychiatric care and treatment provided on an outpatient
basis for eligible mentally ill children, is less than the
average quarterly amount of the funds expended, during the 4-
quarter period ending December 31, 1971, by the State (and the
political subdivisions thereof) from non-Federal funds for such
services.
(i) The term ``institution for mental diseases'' means a
hospital, nursing facility, or other institution of more than
16 beds, that is primarily engaged in providing diagnosis,
treatment, or care of persons with mental diseases, including
medical attention, nursing care, and related services.
(j) The term ``State supplementary payment'' means any cash
payment made by a State on a regular basis to an individual who
is receiving supplemental security income benefits under title
XVI or who would but for his income be eligible to receive such
benefits, as assistance based on need in supplementation of
such benefits (as determined by the Commissioner of Social
Security), but only to the extent that such payments are made
with respect to an individual with respect to whom supplemental
security income benefits are payable under title XVI, or would
but for his income be payable under that title.
(k) Increased supplemental security income benefits payable
pursuant to section 211 of Public Law 93-66 shall not be
considered supplemental security income benefits payable under
title XVI.
(l)(1) The terms ``rural health clinic services'' and ``rural
health clinic'' have the meanings given such terms in section
1861(aa), except that (A) clause (ii) of section 1861(aa)(2)
shall not apply to such terms, and (B) the physician
arrangement required under section 1861(aa)(2)(B) shall only
apply with respect to rural health clinic services and, with
respect to other ambulatory care services, the physician
arrangement required shall be only such as may be required
under the State plan for those services.
(2)(A) The term ``Federally-qualified health center
services'' means services of the type described in
subparagraphs (A) through (C) of section 1861(aa)(1) when
furnished to an individual as an patient of a Federally-
qualified health center and, for this purpose, any reference to
a rural health clinic or a physician described in section
1861(aa)(2)(B) is deemed a reference to a Federally-qualified
health center or a physician at the center, respectively.
(B) The term ``Federally-qualified health center'' means an
entity which--
(i) is receiving a grant under section 330 of the
Public Health Service Act,
(ii)(I) is receiving funding from such a grant under
a contract with the recipient of such a grant, and
(II) meets the requirements to receive a grant under
section 330 of such Act,
(iii) based on the recommendation of the Health
Resources and Services Administration within the Public
Health Service, is determined by the Secretary to meet
the requirements for receiving such a grant, including
requirements of the Secretary that an entity may not be
owned, controlled, or operated by another entity, or
(iv) was treated by the Secretary, for purposes of
part B of title XVIII, as a comprehensive Federally
funded health center as of January 1, 1990;
and includes an outpatient health program or facility operated
by a tribe or tribal organization under the Indian Self-
Determination Act (Public Law 93-638) or by an urban Indian
organization receiving funds under title V of the Indian Health
Care Improvement Act for the provision of primary health
services. In applying clause (ii), the Secretary may waive any
requirement referred to in such clause for up to 2 years for
good cause shown.
(3)(A) The term ``freestanding birth center services'' means
services furnished to an individual at a freestanding birth
center (as defined in subparagraph (B)) at such center.
(B) The term ``freestanding birth center'' means a health
facility--
(i) that is not a hospital;
(ii) where childbirth is planned to occur away from
the pregnant woman's residence;
(iii) that is licensed or otherwise approved by the
State to provide prenatal labor and delivery or
postpartum care and other ambulatory services that are
included in the plan; and
(iv) that complies with such other requirements
relating to the health and safety of individuals
furnished services by the facility as the State shall
establish.
(C) A State shall provide separate payments to providers
administering prenatal labor and delivery or postpartum care in
a freestanding birth center (as defined in subparagraph (B)),
such as nurse midwives and other providers of services such as
birth attendants recognized under State law, as determined
appropriate by the Secretary. For purposes of the preceding
sentence, the term ``birth attendant'' means an individual who
is recognized or registered by the State involved to provide
health care at childbirth and who provides such care within the
scope of practice under which the individual is legally
authorized to perform such care under State law (or the State
regulatory mechanism provided by State law), regardless of
whether the individual is under the supervision of, or
associated with, a physician or other health care provider.
Nothing in this subparagraph shall be construed as changing
State law requirements applicable to a birth attendant.
(m)(1) Subject to paragraph (2), the term ``qualified family
member'' means an individual (other than a qualified pregnant
woman or child, as defined in subsection (n)) who is a member
of a family that would be receiving aid under the State plan
under part A of title IV pursuant to section 407 if the State
had not exercised the option under section 407(b)(2)(B)(i).
(2) No individual shall be a qualified family member for any
period after September 30, 1998.
(n) The term ``qualified pregnant woman or child'' means--
(1) a pregnant woman who--
(A) would be eligible for aid to families
with dependent children under part A of title
IV (or would be eligible for such aid if
coverage under the State plan under part A of
title IV included aid to families with
dependent children of unemployed parents
pursuant to section 407) if her child had been
born and was living with her in the month such
aid would be paid, and such pregnancy has been
medically verified;
(B) is a member of a family which would be
eligible for aid under the State plan under
part A of title IV pursuant to section 407 if
the plan required the payment of aid pursuant
to such section; or
(C) otherwise meets the income and resources
requirements of a State plan under part A of
title IV; and
(2) a child who has not attained the age of 19, who
was born after September 30, 1983 (or such earlier date
as the State may designate), and who meets the income
and resources requirements of the State plan under part
A of title IV.
(o)(1)(A) Subject to subparagraphs (B) and (C), the term
``hospice care'' means the care described in section
1861(dd)(1) furnished by a hospice program (as defined in
section 1861(dd)(2)) to a terminally ill individual who has
voluntarily elected (in accordance with paragraph (2)) to have
payment made for hospice care instead of having payment made
for certain benefits described in section 1812(d)(2)(A) and for
which payment may otherwise be made under title XVIII and
intermediate care facility services under the plan. For
purposes of such election, hospice care may be provided to an
individual while such individual is a resident of a skilled
nursing facility or intermediate care facility, but the only
payment made under the State plan shall be for the hospice
care.
(B) For purposes of this title, with respect to the
definition of hospice program under section 1861(dd)(2), the
Secretary may allow an agency or organization to make the
assurance under subparagraph (A)(iii) of such section without
taking into account any individual who is afflicted with
acquired immune deficiency syndrome (AIDS).
(C) A voluntary election to have payment made for hospice
care for a child (as defined by the State) shall not constitute
a waiver of any rights of the child to be provided with, or to
have payment made under this title for, services that are
related to the treatment of the child's condition for which a
diagnosis of terminal illness has been made.
(2) An individual's voluntary election under this subsection
--
(A) shall be made in accordance with procedures that
are established by the State and that are consistent
with the procedures established under section
1812(d)(2);
(B) shall be for such a period or periods (which need
not be the same periods described in section
1812(d)(1)) as the State may establish; and
(C) may be revoked at any time without a showing of
cause and may be modified so as to change the hospice
program with respect to which a previous election was
made.
(3) In the case of an individual--
(A) who is residing in a nursing facility or
intermediate care facility for the mentally retarded
and is receiving medical assistance for services in
such facility under the plan,
(B) who is entitled to benefits under part A of title
XVIII and has elected, under section 1812(d), to
receive hospice care under such part, and
(C) with respect to whom the hospice program under
such title and the nursing facility or intermediate
care facility for the mentally retarded have entered
into a written agreement under which the program takes
full responsibility for the professional management of
the individual's hospice care and the facility agrees
to provide room and board to the individual,
instead of any payment otherwise made under the plan with
respect to the facility's services, the State shall provide for
payment to the hospice program of an amount equal to the
additional amount determined in section 1902(a)(13)(B) and, if
the individual is an individual described in section
1902(a)(10)(A), shall provide for payment of any coinsurance
amounts imposed under section 1813(a)(4).
(p)(1) The term ``qualified medicare beneficiary'' means an
individual--
(A) who is entitled to hospital insurance benefits
under part A of title XVIII (including an individual
entitled to such benefits pursuant to an enrollment
under section 1818, but not including an individual
entitled to such benefits only pursuant to an
enrollment under section 1818A),
(B) whose income (as determined under section 1612
for purposes of the supplemental security income
program, except as provided in paragraph (2)(D)) does
not exceed an income level established by the State
consistent with paragraph (2), and
(C) whose resources (as determined under section 1613
for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual may have and obtain
benefits under that program or, effective beginning
with January 1, 2010, whose resources (as so
determined) do not exceed the maximum resource level
applied for the year under subparagraph (D) of section
1860D-14(a)(3) (determined without regard to the life
insurance policy exclusion provided under subparagraph
(G) of such section) applicable to an individual or to
the individual and the individual's spouse (as the case
may be).
(2)(A) The income level established under paragraph (1)(B)
shall be at least the percent provided under subparagraph (B)
(but not more than 100 percent) of the official poverty line
(as defined by the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a family of
the size involved.
(B) Except as provided in subparagraph (C), the percent
provided under this clause, with respect to eligibility for
medical assistance on or after--
(i) January 1, 1989, is 85 percent,
(ii) January 1, 1990, is 90 percent, and
(iii) January 1, 1991, is 100 percent.
(C) In the case of a State which has elected treatment under
section 1902(f) and which, as of January 1, 1987, used an
income standard for individuals age 65 or older which was more
restrictive than the income standard established under the
supplemental security income program under title XVI, the
percent provided under subparagraph (B), with respect to
eligibility for medical assistance on or after--
(i) January 1, 1989, is 80 percent,
(ii) January 1, 1990, is 85 percent,
(iii) January 1, 1991, is 95 percent, and
(iv) January 1, 1992, is 100 percent.
(D)(i) In determining under this subsection the income of an
individual who is entitled to monthly insurance benefits under
title II for a transition month (as defined in clause (ii)) in
a year, such income shall not include any amounts attributable
to an increase in the level of monthly insurance benefits
payable under such title which have occurred pursuant to
section 215(i) for benefits payable for months beginning with
December of the previous year.
(ii) For purposes of clause (i), the term ``transition
month'' means each month in a year through the month following
the month in which the annual revision of the official poverty
line, referred to in subparagraph (A), is published.
(3) The term ``medicare cost-sharing'' means (subject to
section 1902(n)(2)) the following costs incurred with respect
to a qualified medicare beneficiary, without regard to whether
the costs incurred were for items and services for which
medical assistance is otherwise available under the plan:
(A)(i) premiums under section 1818 or 1818A, and
(ii) premiums under section 1839,
(B) Coinsurance under title XVIII (including
coinsurance described in section 1813).
(C) Deductibles established under title XVIII
(including those described in section 1813 and section
1833(b)).
(D) The difference between the amount that is paid
under section 1833(a) and the amount that would be paid
under such section if any reference to ``80 percent''
therein were deemed a reference to ``100 percent''.
Such term also may include, at the option of a State, premiums
for enrollment of a qualified medicare beneficiary with an
eligible organization under section 1876.
(4) Notwithstanding any other provision of this title, in the
case of a State (other than the 50 States and the District of
Columbia)--
(A) the requirement stated in section 1902(a)(10)(E)
shall be optional, and
(B) for purposes of paragraph (2), the State may
substitute for the percent provided under subparagraph
(B) of such paragraph or 1902(a)(10)(E)(iii) any
percent.
In the case of any State which is providing medical assistance
to its residents under a waiver granted under section 1115, the
Secretary shall require the State to meet the requirement of
section 1902(a)(10)(E) in the same manner as the State would be
required to meet such requirement if the State had in effect a
plan approved under this title.
(5)(A) The Secretary shall develop and distribute to States a
simplified application form for use by individuals (including
both qualified medicare beneficiaries and specified low-income
medicare beneficiaries) in applying for medical assistance for
medicare cost-sharing under this title in the States which
elect to use such form. Such form shall be easily readable by
applicants and uniform nationally. The Secretary shall provide
for the translation of such application form into at least the
10 languages (other than English) that are most often used by
individuals applying for hospital insurance benefits under
section 226 or 226A and shall make the translated forms
available to the States and to the Commissioner of Social
Security.
(B) In developing such form, the Secretary shall consult with
beneficiary groups and the States.
(6) For provisions relating to outreach efforts to increase
awareness of the availability of medicare cost-sharing, see
section 1144.
(q) The term ``qualified severely impaired individual'' means
an individual under age 65--
(1) who for the month preceding the first month to
which this subsection applies to such individual--
(A) received (i) a payment of supplemental
security income benefits under section 1611(b)
on the basis of blindness or disability, (ii) a
supplementary payment under section 1616 of
this Act or under section 212 of Public Law 93-
66 on such basis, (iii) a payment of monthly
benefits under section 1619(a), or (iv) a
supplementary payment under section 1616(c)(3),
and
(B) was eligible for medical assistance under
the State plan approved under this title; and
(2) with respect to whom the Commissioner of Social
Security determines that--
(A) the individual continues to be blind or
continues to have the disabling physical or
mental impairment on the basis of which he was
found to be under a disability and, except for
his earnings, continues to meet all non-
disability-related requirements for eligibility
for benefits under title XVI,
(B) the income of such individual would not,
except for his earnings, be equal to or in
excess of the amount which would cause him to
be ineligible for payments under section
1611(b) (if he were otherwise eligible for such
payments),
(C) the lack of eligibility for benefits
under this title would seriously inhibit his
ability to continue or obtain employment, and
(D) the individual's earnings are not
sufficient to allow him to provide for himself
a reasonable equivalent of the benefits under
title XVI (including any federally administered
State supplementary payments), this title, and
publicly funded attendant care services
(including personal care assistance) that would
be available to him in the absence of such
earnings.
In the case of an individual who is eligible for
medical assistance pursuant to section 1619(b) in June,
1987, the individual shall be a qualified severely
impaired individual for so long as such individual
meets the requirements of paragraph (2).
(r) The term ``early and periodic screening, diagnostic, and
treatment services'' means the following items and services:
(1) Screening services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of medical and
dental practice, as determined by the
State after consultation with
recognized medical and dental
organizations involved in child health
care and, with respect to immunizations
under subparagraph (B)(iii), in
accordance with the schedule referred
to in section 1928(c)(2)(B)(i) for
pediatric vaccines, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of certain
physical or mental illnesses or
conditions; and
(B) which shall at a minimum include--
(i) a comprehensive health and
developmental history (including
assessment of both physical and mental
health development),
(ii) a comprehensive unclothed
physical exam,
(iii) appropriate immunizations
(according to the schedule referred to
in section 1928(c)(2)(B)(i) for
pediatric vaccines) according to age
and health history,
(iv) laboratory tests (including lead
blood level assessment appropriate for
age and risk factors), and
(v) health education (including
anticipatory guidance).
(2) Vision services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of medical
practice, as determined by the State
after consultation with recognized
medical organizations involved in child
health care, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of a suspected
illness or condition; and
(B) which shall at a minimum include
diagnosis and treatment for defects in vision,
including eyeglasses.
(3) Dental services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of dental
practice, as determined by the State
after consultation with recognized
dental organizations involved in child
health care, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of a suspected
illness or condition; and
(B) which shall at a minimum include relief
of pain and infections, restoration of teeth,
and maintenance of dental health.
(4) Hearing services--
(A) which are provided--
(i) at intervals which meet
reasonable standards of medical
practice, as determined by the State
after consultation with recognized
medical organizations involved in child
health care, and
(ii) at such other intervals,
indicated as medically necessary, to
determine the existence of a suspected
illness or condition; and
(B) which shall at a minimum include
diagnosis and treatment for defects in hearing,
including hearing aids.
(5) Such other necessary health care, diagnostic
services, treatment, and other measures described in
section 1905(a) to correct or ameliorate defects and
physical and mental illnesses and conditions discovered
by the screening services, whether or not such services
are covered under the State plan.
Nothing in this title shall be construed as limiting providers
of early and periodic screening, diagnostic, and treatment
services to providers who are qualified to provide all of the
items and services described in the previous sentence or as
preventing a provider that is qualified under the plan to
furnish one or more (but not all) of such items or services
from being qualified to provide such items and services as part
of early and periodic screening, diagnostic, and treatment
services. The Secretary shall, not later than July 1, 1990, and
every 12 months thereafter, develop and set annual
participation goals for each State for participation of
individuals who are covered under the State plan under this
title in early and periodic screening, diagnostic, and
treatment services.
(s) The term ``qualified disabled and working individual''
means an individual--
(1) who is entitled to enroll for hospital insurance
benefits under part A of title XVIII under section
1818A (as added by 6012 of the Omnibus Budget
Reconciliation Act of 1989);
(2) whose income (as determined under section 1612
for purposes of the supplemental security income
program) does not exceed 200 percent of the official
poverty line (as defined by the Office of Management
and Budget and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act
of 1981) applicable to a family of the size involved;
(3) whose resources (as determined under section 1613
for purposes of the supplemental security income
program) do not exceed twice the maximum amount of
resources that an individual or a couple (in the case
of an individual with a spouse) may have and obtain
benefits for supplemental security income benefits
under title XVI; and
(4) who is not otherwise eligible for medical
assistance under this title.
(t)(1) The term ``primary care case management services''
means case-management related services (including locating,
coordinating, and monitoring of health care services) provided
by a primary care case manager under a primary care case
management contract.
(2) The term ``primary care case manager'' means any of the
following that provides services of the type described in
paragraph (1) under a contract referred to in such paragraph:
(A) A physician, a physician group practice, or an
entity employing or having other arrangements with
physicians to provide such services.
(B) At State option--
(i) a nurse practitioner (as described in
section 1905(a)(21));
(ii) a certified nurse-midwife (as defined in
section 1861(gg)); or
(iii) a physician assistant (as defined in
section 1861(aa)(5)).
(3) The term ``primary care case management contract'' means
a contract between a primary care case manager and a State
under which the manager undertakes to locate, coordinate, and
monitor covered primary care (and such other covered services
as may be specified under the contract) to all individuals
enrolled with the manager, and which--
(A) provides for reasonable and adequate hours of
operation, including 24-hour availability of
information, referral, and treatment with respect to
medical emergencies;
(B) restricts enrollment to individuals residing
sufficiently near a service delivery site of the
manager to be able to reach that site within a
reasonable time using available and affordable modes of
transportation;
(C) provides for arrangements with, or referrals to,
sufficient numbers of physicians and other appropriate
health care professionals to ensure that services under
the contract can be furnished to enrollees promptly and
without compromise to quality of care;
(D) prohibits discrimination on the basis of health
status or requirements for health care services in
enrollment, disenrollment, or reenrollment of
individuals eligible for medical assistance under this
title;
(E) provides for a right for an enrollee to terminate
enrollment in accordance with section 1932(a)(4); and
(F) complies with the other applicable provisions of
section 1932.
(4) For purposes of this subsection, the term ``primary
care'' includes all health care services customarily provided
in accordance with State licensure and certification laws and
regulations, and all laboratory services customarily provided
by or through, a general practitioner, family medicine
physician, internal medicine physician, obstetrician/
gynecologist, or pediatrician.
(u)(1) The conditions described in this paragraph for a State
plan are as follows:
(A) The State is complying with the requirement of
section 2105(d)(1).
(B) The plan provides for such reporting of
information about expenditures and payments
attributable to the operation of this subsection as the
Secretary deems necessary in order to carry out the
fourth sentence of subsection (b).
(2)(A) For purposes of subsection (b), the expenditures
described in this subparagraph are expenditures for medical
assistance for optional targeted low-income children described
in subparagraph (B).
(B) For purposes of this paragraph, the term ``optional
targeted low-income child'' means a targeted low-income child
as defined in section 2110(b)(1) (determined without regard to
that portion of subparagraph (C) of such section concerning
eligibility for medical assistance under this title) who would
not qualify for medical assistance under the State plan under
this title as in effect on March 31, 1997 (but taking into
account the expansion of age of eligibility effected through
the operation of section 1902(l)(1)(D)). Such term excludes any
child eligible for medical assistance only by reason of section
1902(a)(10)(A)(ii)(XIX).
(3) For purposes of subsection (b), the expenditures
described in this paragraph are expenditures for medical
assistance for children who are born before October 1, 1983,
and who would be described in section 1902(l)(1)(D) if they had
been born on or after such date, and who are not eligible for
such assistance under the State plan under this title based on
such State plan as in effect as of March 31, 1997.
(4) The limitations on payment under subsections (f) and (g)
of section 1108 shall not apply to Federal payments made under
section 1903(a)(1) based on an enhanced FMAP described in
section 2105(b).
(v)(1) The term ``employed individual with a medically
improved disability'' means an individual who--
(A) is at least 16, but less than 65, years of age;
(B) is employed (as defined in paragraph (2));
(C) ceases to be eligible for medical assistance
under section 1902(a)(10)(A)(ii)(XV) because the
individual, by reason of medical improvement, is
determined at the time of a regularly scheduled
continuing disability review to no longer be eligible
for benefits under section 223(d) or 1614(a)(3); and
(D) continues to have a severe medically determinable
impairment, as determined under regulations of the
Secretary.
(2) For purposes of paragraph (1), an individual is
considered to be ``employed'' if the individual--
(A) is earning at least the applicable minimum wage
requirement under section 6 of the Fair Labor Standards
Act (29 U.S.C. 206) and working at least 40 hours per
month; or
(B) is engaged in a work effort that meets
substantial and reasonable threshold criteria for hours
of work, wages, or other measures, as defined by the
State and approved by the Secretary.'
(w)(1) For purposes of this title, the term ``independent
foster care adolescent'' means an individual--
(A) who is under 21 years of age;
(B) who, on the individual's 18th birthday, was in
foster care under the responsibility of a State; and
(C) whose assets, resources, and income do not exceed
such levels (if any) as the State may establish
consistent with paragraph (2).
(2) The levels established by a State under paragraph (1)(C)
may not be less than the corresponding levels applied by the
State under section 1931(b).
(3) A State may limit the eligibility of independent foster
care adolescents under section 1902(a)(10)(A)(ii)(XVII) to
those individuals with respect to whom foster care maintenance
payments or independent living services were furnished under a
program funded under part E of title IV before the date the
individuals attained 18 years of age.
(x) For purposes of subsection (a)(27), the strategies,
treatment, and services described in that subsection include
the following:
(1) Chronic blood transfusion (with deferoxamine
chelation) to prevent stroke in individuals with Sickle
Cell Disease who have been identified as being at high
risk for stroke.
(2) Genetic counseling and testing for individuals
with Sickle Cell Disease or the sickle cell trait to
allow health care professionals to treat such
individuals and to prevent symptoms of Sickle Cell
Disease.
(3) Other treatment and services to prevent
individuals who have Sickle Cell Disease and who have
had a stroke from having another stroke.
(y) Increased FMAP for Medical Assistance for Newly Eligible
Mandatory Individuals.--
(1) Amount of increase.--Notwithstanding subsection
(b), the Federal medical assistance percentage for a
State that is one of the 50 States or the District of
Columbia, [with respect to amounts expended by such
State for medical assistance for newly eligible
individuals described in subclause (VIII) of section
1902(a)(10)(A)(i), shall be] with respect to amounts
expended before January 1, 2020, by such State for
medical assistance for newly eligible individuals
described in subclause (VIII) of section
1902(a)(10)(A)(i) who are enrolled under the State plan
(or a waiver of the plan) before such date and with
respect to amounts expended after such date by such
State for medical assistance for individuals described
in such subclause who were enrolled under such plan (or
waiver of such plan) as of December 31, 2019, and who
do not have a break in eligibility for medical
assistance under such State plan (or waiver) for more
than one month after such date, shall be equal to--
(A) 100 percent for calendar quarters in
2014, 2015, and 2016;
(B) 95 percent for calendar quarters in 2017;
(C) 94 percent for calendar quarters in 2018;
(D) 93 percent for calendar quarters in 2019;
and
(E) 90 percent for calendar quarters in 2020
and each year thereafter.
(2) Definitions.--In this subsection:
(A) Newly eligible.--The term ``newly
eligible'' means, with respect to an individual
described in subclause (VIII) of section
1902(a)(10)(A)(i), an individual who is not
under 19 years of age (or such higher age as
the State may have elected) and who, as of
December 1, 2009, is not eligible under the
State plan or under a waiver of the plan for
full benefits or for benchmark coverage
described in subparagraph (A), (B), or (C) of
section 1937(b)(1) or benchmark equivalent
coverage described in section 1937(b)(2) that
has an aggregate actuarial value that is at
least actuarially equivalent to benchmark
coverage described in subparagraph (A), (B), or
(C) of section 1937(b)(1), or is eligible but
not enrolled (or is on a waiting list) for such
benefits or coverage through a waiver under the
plan that has a capped or limited enrollment
that is full.
(B) Full benefits.--The term ``full
benefits'' means, with respect to an
individual, medical assistance for all services
covered under the State plan under this title
that is not less in amount, duration, or scope,
or is determined by the Secretary to be
substantially equivalent, to the medical
assistance available for an individual
described in section 1902(a)(10)(A)(i).
(z) Equitable Support for Certain States.--
(1)(A) During the period that begins on January 1,
2014, and ends on December 31, 2015, notwithstanding
subsection (b), the Federal medical assistance
percentage otherwise determined under subsection (b)
with respect to a fiscal year occurring during that
period shall be increased by 2.2 percentage points for
any State described in subparagraph (B) for amounts
expended for medical assistance for individuals who are
not newly eligible (as defined in subsection (y)(2))
individuals described in subclause (VIII) of section
1902(a)(10)(A)(i).
(B) For purposes of subparagraph (A), a State
described in this subparagraph is a State that--
(i) is an expansion State described in
paragraph (3);
(ii) the Secretary determines will not
receive any payments under this title on the
basis of an increased Federal medical
assistance percentage under subsection (y) for
expenditures for medical assistance for newly
eligible individuals (as so defined); and
(iii) has not been approved by the Secretary
to divert a portion of the DSH allotment for a
State to the costs of providing medical
assistance or other health benefits coverage
under a waiver that is in effect on July 2009.
(2)(A) For calendar quarters in 2014 and each year
thereafter, the Federal medical assistance percentage
otherwise determined under subsection (b) for an
expansion State described in paragraph (3) with respect
to [medical assistance for individuals described in
section 1902(a)(10)(A)(i)(VIII) who are nonpregnant
childless adults with respect to whom the State may
require enrollment in benchmark coverage under section
1937 shall be] amounts expended before January 1, 2020,
by such State for medical assistance for individuals
described in section 1902(a)(10)(A)(i)(VIII) who are
nonpregnant childless adults with respect to whom the
State may require enrollment in benchmark coverage
under section 1937 and who are enrolled under the State
plan (or a waiver of the plan) before such date and
with respect to amounts expended after such date by
such State for medical assistance for individuals
described in such section, who are nonpregnant
childless adults with respect to whom the State may
require enrollment in benchmark coverage under section
1937, who were enrolled under such plan (or waiver of
such plan) as of December 31, 2019, and who do not have
a break in eligibility for medical assistance under
such State plan (or waiver) for more than one month
after such date, shall be equal to the percent
specified in subparagraph (B)(i) for such year.
(B)(i) The percent specified in this subparagraph for
a State for a year is equal to the Federal medical
assistance percentage (as defined in the first sentence
of subsection (b)) for the State increased by a number
of percentage points equal to the transition percentage
(specified in clause (ii) for the year) of the number
of percentage points by which--
(I) such Federal medical assistance
percentage for the State, is less than
(II) the percent specified in subsection
(y)(1) for the year.
(ii) The transition percentage specified in this
clause for--
(I) 2014 is 50 percent;
(II) 2015 is 60 percent;
(III) 2016 is 70 percent; and
[(IV) 2017 is 80 percent;
[(V) 2018 is 90 percent; and
[(VI) 2019 and each subsequent year is 100
percent.]
(IV) 2017 and each subsequent year is 80
percent.
(3) A State is an expansion State if, on the date of
the enactment of the Patient Protection and Affordable
Care Act, the State offers health benefits coverage
statewide to parents and nonpregnant, childless adults
whose income is at least 100 percent of the poverty
line, that includes inpatient hospital services, is not
dependent on access to employer coverage, employer
contribution, or employment and is not limited to
premium assistance, hospital-only benefits, a high
deductible health plan, or alternative benefits under a
demonstration program authorized under section 1938. A
State that offers health benefits coverage to only
parents or only nonpregnant childless adults described
in the preceding sentence shall not be considered to be
an expansion State.
(aa)(1) Notwithstanding subsection (b), beginning January 1,
2011, the Federal medical assistance percentage for a fiscal
year for a disaster-recovery FMAP adjustment State shall be
equal to the following:
(A) In the case of the first fiscal year (or part of
a fiscal year) for which this subsection applies to the
State, the State's regular FMAP shall be increased by
50 percent of the number of percentage points by which
the State's regular FMAP for such fiscal year is less
than the Federal medical assistance percentage
determined for the State for the preceding fiscal year
after the application of only subsection (a) of section
5001 of Public Law 111-5 (if applicable to the
preceding fiscal year) and without regard to this
subsection, subsections (y) and (z), and subsections
(b) and (c) of section 5001 of Public Law 111-5.
(B) In the case of the second or any succeeding
fiscal year for which this subsection applies to the
State, the State's regular FMAP for such fiscal year
shall be increased by 25 percent (or 50 percent in the
case of fiscal year 2013) of the number of percentage
points by which the State's regular FMAP for such
fiscal year is less than the Federal medical assistance
percentage received by the State during the preceding
fiscal year.
(2) In this subsection, the term ``disaster-recovery FMAP
adjustment State'' means a State that is one of the 50 States
or the District of Columbia, for which, at any time during the
preceding 7 fiscal years, the President has declared a major
disaster under section 401 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act and determined as a result
of such disaster that every county or parish in the State
warrant individual and public assistance or public assistance
from the Federal Government under such Act and for which--
(A) in the case of the first fiscal year (or part of
a fiscal year) for which this subsection applies to the
State, the State's regular FMAP for the fiscal year is
less than the Federal medical assistance percentage
determined for the State for the preceding fiscal year
after the application of only subsection (a) of section
5001 of Public Law 111-5 (if applicable to the
preceding fiscal year) and without regard to this
subsection, subsections (y) and (z), and subsections
(b) and (c) of section 5001 of Public Law 111-5, by at
least 3 percentage points; and
(B) in the case of the second or any succeeding
fiscal year for which this subsection applies to the
State, the State's regular FMAP for the fiscal year is
less than the Federal medical assistance percentage
determined for the State for the preceding fiscal year
under this subsection by at least 3 percentage points.
(3) In this subsection, the term ``regular FMAP'' means, for
each fiscal year for which this subsection applies to a State,
the Federal medical assistance percentage that would otherwise
apply to the State for the fiscal year, as determined under
subsection (b) and without regard to this subsection,
subsections (y) and (z), and section 10202 of the Patient
Protection and Affordable Care Act.
(4) The Federal medical assistance percentage determined for
a disaster-recovery FMAP adjustment State under paragraph (1)
shall apply for purposes of this title (other than with respect
to disproportionate share hospital payments described in
section 1923 and payments under this title that are based on
the enhanced FMAP described in 2105(b)) and shall not apply
with respect to payments under title IV (other than under part
E of title IV) or payments under title XXI.
(bb)(1) For purposes of this title, the term ``counseling and
pharmacotherapy for cessation of tobacco use by pregnant
women'' means diagnostic, therapy, and counseling services and
pharmacotherapy (including the coverage of prescription and
nonprescription tobacco cessation agents approved by the Food
and Drug Administration) for cessation of tobacco use by
pregnant women who use tobacco products or who are being
treated for tobacco use that is furnished--
(A) by or under the supervision of a physician; or
(B) by any other health care professional who--
(i) is legally authorized to furnish such
services under State law (or the State
regulatory mechanism provided by State law) of
the State in which the services are furnished;
and
(ii) is authorized to receive payment for
other services under this title or is
designated by the Secretary for this purpose.
(2) Subject to paragraph (3), such term is limited to--
(A) services recommended with respect to pregnant
women in ``Treating Tobacco Use and Dependence: 2008
Update: A Clinical Practice Guideline'', published by
the Public Health Service in May 2008, or any
subsequent modification of such Guideline; and
(B) such other services that the Secretary recognizes
to be effective for cessation of tobacco use by
pregnant women.
(3) Such term shall not include coverage for drugs or
biologicals that are not otherwise covered under this title.
(cc) Requirement for Certain States.--Notwithstanding
subsections (y), (z), and (aa), in the case of a State that
requires political subdivisions within the State to contribute
toward the non-Federal share of expenditures required under the
State plan under section 1902(a)(2), the State shall not be
eligible for an increase in its Federal medical assistance
percentage under such subsections if it requires that political
subdivisions pay a greater percentage of the non-Federal share
of such expenditures, or a greater percentage of the non-
Federal share of payments under section 1923, than the
respective percentages that would have been required by the
State under the State plan under this title, State law, or
both, as in effect on December 31, 2009, and without regard to
any such increase. Voluntary contributions by a political
subdivision to the non-Federal share of expenditures under the
State plan under this title or to the non-Federal share of
payments under section 1923, shall not be considered to be
required contributions for purposes of this subsection. The
treatment of voluntary contributions, and the treatment of
contributions required by a State under the State plan under
this title, or State law, as provided by this subsection, shall
also apply to the increases in the Federal medical assistance
percentage under section 5001 of the American Recovery and
Reinvestment Act of 2009.
(dd) Increased FMAP for Additional Expenditures for Primary
Care Services.--Notwithstanding subsection (b), with respect to
the portion of the amounts expended for medical assistance for
services described in section 1902(a)(13)(C) furnished on or
after January 1, 2013, and before January 1, 2015, that is
attributable to the amount by which the minimum payment rate
required under such section (or, by application, section
1932(f)) exceeds the payment rate applicable to such services
under the State plan as of July 1, 2009, the Federal medical
assistance percentage for a State that is one of the 50 States
or the District of Columbia shall be equal to 100 percent. The
preceding sentence does not prohibit the payment of Federal
financial participation based on the Federal medical assistance
percentage for amounts in excess of those specified in such
sentence.
* * * * * * *
PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN
REQUIREMENTS OF THIS TITLE
Sec. 1915. (a) A State shall not be deemed to be out of
compliance with the requirements of paragraphs (1), (10), or
(23) of section 1902(a) solely by reason of the fact that the
State (or any political subdivision thereof)--
(1) has entered into--
(A) a contract with an organization which has
agreed to provide care and services in addition
to those offered under the State plan to
individuals eligible for medical assistance who
reside in the geographic area served by such
organization and who elect to obtain such care
and services from such organization, or by
reason of the fact that the plan provides for
payment for rural health clinic services only
if those services are provided by a rural
health clinic; or
(B) arrangements through a competitive
bidding process or otherwise for the purchase
of laboratory services referred to in section
1905(a)(3) or medical devices if the Secretary
has found that--
(i) adequate services or devices will
be available under such arrangements,
and
(ii) any such laboratory services
will be provided only through
laboratories--
(I) which meet the applicable
requirements of section
1861(e)(9) or paragraphs (16)
and (17) of section 1861(s),
and such additional
requirements as the Secretary
may require, and
(II) no more than 75 percent
of whose charges for such
services are for services
provided to individuals who are
entitled to benefits under this
title or under part A or part B
of title XVIII; or
(2) restricts for a reasonable period of time the
provider or providers from which an individual
(eligible for medical assistance for items or services
under the State plan) can receive such items or
services, if--
(A) the State has found, after notice and
opportunity for a hearing (in accordance with
procedures established by the State), that the
individual has utilized such items or services
at a frequency or amount not medically
necessary (as determined in accordance with
utilization guidelines established by the
State), and
(B) under such restriction, individuals
eligible for medical assistance for such
services have reasonable access (taking into
account geographic location and reasonable
travel time) to such services of adequate
quality.
(b) The Secretary, to the extent he finds it to be cost-
effective and efficient and not inconsistent with the purposes
of this title, may waive such requirements of section 1902
(other than subsection (s)) (other than sections 1902(a)(15),
1902(bb), and 1902(a)(10)(A) insofar as it requires provision
of the care and services described in section 1905(a)(2)(C)) as
may be necessary for a State--
(1) to implement a primary care case-management
system or a specialty physician services arrangement
which restricts the provider from (or through) whom an
individual (eligible for medical assistance under this
title) can obtain medical care services (other than in
emergency circumstances), if such restriction does not
substantially impair access to such services of
adequate quality where medically necessary,
(2) to allow a locality to act as a central broker in
assisting individuals (eligible for medical assistance
under this title) in selecting among competing health
care plans, if such restriction does not substantially
impair access to services of adequate quality where
medically necessary,
(3) to share (through provision of additional
services) with recipients of medical assistance under
the State plan cost savings resulting from use by the
recipient of more cost-effective medical care, and
(4) to restrict the provider from (or through) whom
an individual (eligible for medical assistance under
this title) can obtain services (other than in
emergency circumstances) to providers or practitioners
who undertake to provide such services and who meet,
accept, and comply with the reimbursement, quality, and
utilization standards under the State plan, which
standards shall be consistent with the requirements of
section 1923 and are consistent with access, quality,
and efficient and economic provision of covered care
and services, if such restriction does not discriminate
among classes of providers on grounds unrelated to
their demonstrated effectiveness and efficiency in
providing those services and if providers under such
restriction are paid on a timely basis in the same
manner as health care practitioners must be paid under
section 1902(a)(37)(A).
No waiver under this subsection may restrict the choice of the
individual in receiving services under section 1905(a)(4)(C).
Subsection (h)(2) shall apply to a waiver under this
subsection.
(c)(1) The Secretary may by waiver provide that a State plan
approved under this title may include as ``medical assistance''
under such plan payment for part or all of the cost of home or
community-based services (other than room and board) approved
by the Secretary which are provided pursuant to a written plan
of care to individuals with respect to whom there has been a
determination that but for the provision of such services the
individuals would require the level of care provided in a
hospital or a nursing facility or intermediate care facility
for the mentally retarded the cost of which could be reimbursed
under the State plan. For purposes of this subsection, the term
``room and board'' shall not include an amount established
under a method determined by the State to reflect the portion
of costs of rent and food attributable to an unrelated personal
caregiver who is residing in the same household with an
individual who, but for the assistance of such caregiver, would
require admission to a hospital, nursing facility, or
intermediate care facility for the mentally retarded.
(2) A waiver shall not be granted under this subsection
unless the State provides assurances satisfactory to the
Secretary that--
(A) necessary safeguards (including adequate
standards for provider participation) have been taken
to protect the health and welfare of individuals
provided services under the waiver and to assure
financial accountability for funds expended with
respect to such services;
(B) the State will provide, with respect to
individuals who--
(i) are entitled to medical assistance for
inpatient hospital services, nursing facility
services, or services in an intermediate care
facility for the mentally retarded under the
State plan,
(ii) may require such services, and
(iii) may be eligible for such home or
community-based care under such waiver,
for an evaluation of the need for inpatient hospital
services, nursing facility services, or services in an
intermediate care facility for the mentally retarded;
(C) such individuals who are determined to be likely
to require the level of care provided in a hospital,
nursing facility, or intermediate care facility for the
mentally retarded are informed of the feasible
alternatives, if available under the waiver, at the
choice of such individuals, to the provision of
inpatient hospital services, nursing facility services,
or services in an intermediate care facility for the
mentally retarded;
(D) under such waiver the average per capita
expenditure estimated by the State in any fiscal year
for medical assistance provided with respect to such
individuals does not exceed 100 percent of the average
per capita expenditure that the State reasonably
estimates would have been made in that fiscal year for
expenditures under the State plan for such individuals
if the waiver had not been granted; and
(E) the State will provide to the Secretary annually,
consistent with a data collection plan designed by the
Secretary, information on the impact of the waiver
granted under this subsection on the type and amount of
medical assistance provided under the State plan and on
the health and welfare of recipients.
(3) A waiver granted under this subsection may include a
waiver of the requirements of section 1902(a)(1) (relating to
statewideness), section 1902(a)(10)(B) (relating to
comparability), and section 1902(a)(10)(C)(i)(III) (relating to
income and resource rules applicable in the community). A
waiver under this subsection (other than a waiver described in
subsection (h)(2)) shall be for an initial term of three years
and, upon the request of a State, shall be extended for
additional five-year periods unless the Secretary determines
that for the previous waiver period the assurances provided
under paragraph (2) have not been met. A waiver may provide,
with respect to post-eligibility treatment of income of all
individuals receiving services under that waiver, that the
maximum amount of the individual's income which may be
disregarded for any month for the maintenance needs of the
individual may be an amount greater than the maximum allowed
for that purpose under regulations in effect on July 1, 1985.
(4) A waiver granted under this subsection may, consistent
with paragraph (2)--
(A) limit the individuals provided benefits under
such waiver to individuals with respect to whom the
State has determined that there is a reasonable
expectation that the amount of medical assistance
provided with respect to the individual under such
waiver will not exceed the amount of such medical
assistance provided for such individual if the waiver
did not apply, and
(B) provide medical assistance to individuals (to the
extent consistent with written plans of care, which are
subject to the approval of the State) for case
management services, homemaker/home health aide
services and personal care services, adult day health
services, habilitation services, respite care, and such
other services requested by the State as the Secretary
may approve and for day treatment or other partial
hospitalization services, psychosocial rehabilitation
services, and clinic services (whether or not furnished
in a facility) for individuals with chronic mental
illness.
Except as provided under paragraph (2)(D), the Secretary may
not restrict the number of hours or days of respite care in any
period which a State may provide under a waiver under this
subsection.
(5) For purposes of paragraph (4)(B), the term ``habilitation
services''--
(A) means services designed to assist individuals in
acquiring, retaining, and improving the self-help,
socialization, and adaptive skills necessary to reside
successfully in home and community based settings; and
(B) includes (except as provided in subparagraph (C))
prevocational, educational, and supported employment
services; but
(C) does not include--
(i) special education and related services
(as such terms are defined in section 602 of
the Individuals with Disabilities Education Act
(20 U.S.C. 1401)) which otherwise are available
to the individual through a local educational
agency; and
(ii) vocational rehabilitation services which
otherwise are available to the individual
through a program funded under section 110 of
the Rehabilitation Act of 1973 (29 U.S.C. 730).
(6) The Secretary may not require, as a condition of approval
of a waiver under this section under paragraph (2)(D), that the
actual total expenditures for home and community-based services
under the waiver (and a claim for Federal financial
participation in expenditures for the services) cannot exceed
the approved estimates for these services. The Secretary may
not deny Federal financial payment with respect to services
under such a waiver on the ground that, in order to comply with
paragraph (2)(D), a State has failed to comply with such a
requirement.
(7)(A) In making estimates under paragraph (2)(D) in the case
of a waiver that applies only to individuals with a particular
illness or condition who are inpatients in, or who would
require the level of care provided in, hospitals, nursing
facilities, or intermediate care facilities for the mentally
retarded, the State may determine the average per capita
expenditure that would have been made in a fiscal year for
those individuals under the State plan separately from the
expenditures for other individuals who are inpatients in, or
who would require the level of care provided in, those
respective facilities.
(B) In making estimates under paragraph (2)(D) in the case of
a waiver that applies only to individuals with developmental
disabilities who are inpatients in a nursing facility and whom
the State has determined, on the basis of an evaluation under
paragraph (2)(B), to need the level of services provided by an
intermediate care facility for the mentally retarded, the State
may determine the average per capita expenditures that would
have been made in a fiscal year for those individuals under the
State plan on the basis of the average per capita expenditures
under the State plan for services to individuals who are
inpatients in an intermediate care facility for the mentally
retarded, without regard to the availability of beds for such
inpatients.
(C) In making estimates under paragraph (2)(D) in the case of
a waiver to the extent that it applies to individuals with
mental retardation or a related condition who are resident in
an intermediate care facility for the mentally retarded the
participation of which under the State plan is terminated, the
State may determine the average per capita expenditures that
would have been made in a fiscal year for those individuals
without regard to any such termination.
(8) The State agency administering the plan under this title
may, whenever appropriate, enter into cooperative arrangements
with the State agency responsible for administering the program
for children with special health care needs under title V in
order to assure improved access to coordinated services to meet
the needs of such children.
(9) In the case of any waiver under this subsection which
contains a limit on the number of individuals who shall receive
home or community-based services, the State may substitute
additional individuals to receive such services to replace any
individuals who die or become ineligible for services under the
State plan.
(10) The Secretary shall not limit to fewer than 200 the
number of individuals in the State who may receive home and
community-based services under a waiver under this subsection.
(d)(1) Subject to paragraph (2), the Secretary shall grant a
waiver to provide that a State plan approved under this title
shall include as ``medical assistance'' under such plan payment
for part or all of the cost of home or community-based services
(other than room and board) which are provided pursuant to a
written plan of care to individuals 65 years of age or older
with respect to whom there has been a determination that but
for the provision of such services the individuals would be
likely to require the level of care provided in a skilled
nursing facility or intermediate care facility the cost of
which could be reimbursed under the State plan. For purposes of
this subsection, the term ``room and board'' shall not include
an amount established under a method determined by the State to
reflect the portion of costs of rent and food attributable to
an unrelated personal caregiver who is residing in the same
household with an individual who, but for the assistance of
such caregiver, would require admission to a hospital, nursing
facility, or intermediate care facility for the mentally
retarded.
(2) A waiver shall not be granted under this subsection
unless the State provides assurances satisfactory to the
Secretary that--
(A) necessary safeguards (including adequate
standards for provider participation) have been taken
to protect the health and welfare of individuals
provided services under the waiver and to assure
financial accountability for funds expended with
respect to such services;
(B) with respect to individuals 65 years of age or
older who--
(i) are entitled to medical assistance for
skilled nursing or intermediate care facility
services under the State plan,
(ii) may require such services, and
(iii) may be eligible for such home or
community-based services under such waiver,
the State will provide for an evaluation of the need
for such skilled nursing facility or intermediate care
facility services; and
(C) such individuals who are determined to be likely
to require the level of care provided in a skilled
nursing facility or intermediate care facility are
informed of the feasible alternatives to the provision
of skilled nursing facility or intermediate care
facility services, which such individuals may choose if
available under the waiver.
Each State with a waiver under this subsection shall provide to
the Secretary annually, consistent with a reasonable data
collection plan designed by the Secretary, information on the
impact of the waiver granted under this subsection on the type
and amount of medical assistance provided under the State plan
and on the health and welfare of recipients.
(3) A waiver granted under this subsection may include a
waiver of the requirements of section 1902(a)(1) (relating to
statewideness), section 1902(a)(10)(B) (relating to
comparability), and section 1902(a)(10)(C)(i)(III) (relating to
income and resource rules applicable in the community). Subject
to a termination by the State (with notice to the Secretary) at
any time, a waiver under this subsection (other than a waiver
described in subsection (h)(2)) shall be for an initial term of
3 years and, upon the request of a State, shall be extended for
additional 5-year periods unless the Secretary determines that
for the previous waiver period the assurances provided under
paragraph (2) have not been met. A waiver may provide, with
respect to post-eligibility treatment of income of all
individuals receiving services under the waiver, that the
maximum amount of the individual's income which may be
disregarded for any month is equal to the amount that may be
allowed for that purpose under a waiver under subsection (c).
(4) A waiver under this subsection may, consistent with
paragraph (2), provide medical assistance to individuals for
case management services, homemaker/home health aide services
and personal care services, adult day health services, respite
care, and other medical and social services that can contribute
to the health and well-being of individuals and their ability
to reside in a community-based care setting.
(5)(A) In the case of a State having a waiver approved under
this subsection, notwithstanding any other provision of section
1903 to the contrary, the total amount expended by the State
for medical assistance with respect to skilled nursing facility
services, intermediate care facility services, and home and
community-based services under the State plan for individuals
65 years of age or older during a waiver year under this
subsection may not exceed the projected amount determined under
subparagraph (B).
(B) For purposes of subparagraph (A), the projected amount
under this subparagraph is the sum of the following:
(i) The aggregate amount of the State's medical
assistance under this title for skilled nursing
facility services and intermediate care facility
services furnished to individuals who have attained the
age of 65 for the base year increased by a percentage
which is equal to the lesser of 7 percent times the
number of years (rounded to the nearest quarter of a
year) beginning after the base year and ending at the
end of the waiver year involved or the sum of--
(I) the percentage increase (based on an
appropriate market-basket index representing
the costs of elements of such services) between
the beginning of the base year and the
beginning of the waiver year involved, plus
(II) the percentage increase between the
beginning of the base year and the beginning of
the waiver year involved in the number of
residents in the State who have attained the
age of 65, plus
(III) 2 percent for each year (rounded to the
nearest quarter of a year) beginning after the
base year and ending at the end of the waiver
year.
(ii) The aggregate amount of the State's medical
assistance under this title for home and community-
based services for individuals who have attained the
age of 65 for the base year increased by a percentage
which is equal to the lesser of 7 percent times the
number of years (rounded to the nearest quarter of a
year) beginning after the base year and ending at the
end of the waiver year involved or the sum of--
(I) the percentage increase (based on an
appropriate market-basket index representing
the costs of elements of such services) between
the beginning of the base year and the
beginning of the waiver year involved, plus
(II) the percentage increase between the
beginning of the base year and the beginning of
the waiver year involved in the number of
residents in the State who have attained the
age of 65, plus
(III) 2 percent for each year (rounded to the
nearest quarter of a year) beginning after the
base year and ending at the end of the waiver
year.
(iii) The Secretary shall develop and promulgate by
regulation (by not later than October 1, 1989)--
(I) a method, based on an index of appropriately
weighted indicators of changes in the wages and prices
of the mix of goods and services which comprise both
skilled nursing facility services and intermediate care
facility services (regardless of the source of payment
for such services), for projecting the percentage
increase for purposes of clause (i)(I);
(II) a method, based on an index of appropriately
weighted indicators of changes in the wages and prices
of the mix of goods and services which comprise home
and community-based services (regardless of the source
of payment for such services), for projecting the
percentage increase for purposes of clause (ii)(I); and
(III) a method for projecting, on a State specific
basis, the percentage increase in the number of
residents in each State who are over 65 years of age
for any period.
The Secretary shall develop (by not later than October 1, 1989)
a method for projecting, on a State-specific basis, the
percentage increase in the number of residents in each State
who are over 65 years of age for any period. Effective on and
after the date the Secretary promulgates the regulation under
clause (iii), any reference in this subparagraph to the
``lesser of 7 percent'' shall be deemed to be a reference to
the ``greater of 7 percent''.
(iv) If there is enacted after December 22, 1987, an Act
which amends this title whose provisions become effective on or
after such date and which results in an increase in the
aggregate amount of medical assistance under this title for
nursing facility services and home and community-based services
for individuals who have attained the age of 65 years, the
Secretary, at the request of a State with a waiver under this
subsection for a waiver year or years and in close consultation
with the State, shall adjust the projected amount computed
under this subparagraph for the waiver year or years to take
into account such increase.
(C) In this paragraph:
(i) The term ``home and community-based services''
includes services described in sections 1905(a)(7) and
1905(a)(8), services described in subsection (c)(4)(B),
services described in paragraph (4), and personal care
services.
(ii)(I) Subject to subclause (II), the term ``base
year'' means the most recent year (ending before the
date of the enactment of this subsection) for which
actual final expenditures under this title have been
reported to, and accepted by, the Secretary.
(II) For purposes of subparagraph (C), in the case of
a State that does not report expenditures on the basis
of the age categories described in such subparagraph
for a year ending before the date of the enactment of
this subsection, the term ``base year'' means fiscal
year 1989.
(iii) The term ``intermediate care facility
services'' does not include services furnished in an
institution certified in accordance with section
1905(d).
(6)(A) A determination by the Secretary to deny a request for
a waiver (or extension of waiver) under this subsection shall
be subject to review to the extent provided under section
1116(b).
(B) Notwithstanding any other provision of this Act, if the
Secretary denies a request of the State for an extension of a
waiver under this subsection, any waiver under this subsection
in effect on the date such request is made shall remain in
effect for a period of not less than 90 days after the date on
which the Secretary denies such request (or, if the State seeks
review of such determination in accordance with subparagraph
(A), the date on which a final determination is made with
respect to such review).
(e)(1)(A) Subject to paragraph (2), the Secretary shall grant
a waiver to provide that a State plan approved under this title
shall include as ``medical assistance'' under such plan payment
for part or all of the cost of nursing care, respite care,
physicians' services, prescribed drugs, medical devices and
supplies, transportation services, and such other services
requested by the State as the Secretary may approve which are
provided pursuant to a written plan of care to a child
described in subparagraph (B) with respect to whom there has
been a determination that but for the provision of such
services the infants would be likely to require the level of
care provided in a hospital or nursing facility the cost of
which could be reimbursed under the State plan.
(B) Children described in this subparagraph are individuals
under 5 years of age who--
(i) at the time of birth were infected with (or
tested positively for) the etiologic agent for acquired
immune deficiency syndrome (AIDS),
(ii) have such syndrome, or
(iii) at the time of birth were dependent on heroin,
cocaine, or phencyclidine,
and with respect to whom adoption or foster care assistance is
(or will be) made available under part E of title IV.
(2) A waiver shall not be granted under this subsection
unless the State provides assurances satisfactory to the
Secretary that--
(A) necessary safeguards (including adequate
standards for provider participation) have been taken
to protect the health and welfare of individuals
provided services under the waiver and to assure
financial accountability for funds expended with
respect to such services;
(B) under such waiver the average per capita
expenditure estimated by the State in any fiscal year
for medical assistance provided with respect to such
individuals does not exceed 100 percent of the average
per capita expenditure that the State reasonably
estimates would have been made in that fiscal year for
expenditures under the State plan for such individuals
if the waiver had not been granted; and
(C) the State will provide to the Secretary annually,
consistent with a data collection plan designed by the
Secretary, information on the impact of the waiver
granted under this subsection on the type and amount of
medical assistance provided under the State plan and on
the health and welfare of recipients.
(3) A waiver granted under this subsection may include a
waiver of the requirements of section 1902(a)(1) (relating to
statewideness) and section 1902(a)(10)(B) (relating to
comparability). A waiver under this subsection shall be for an
initial term of 3 years and, upon the request of a State, shall
be extended for additional five-year periods unless the
Secretary determines that for the previous waiver period the
assurances provided under paragraph (2) have not been met.
(4) The provisions of paragraph (6) of subsection (d) shall
apply to this subsection in the same manner as it applies to
subsection (d).
(f)(1) The Secretary shall monitor the implementation of
waivers granted under this section to assure that the
requirements for such waiver are being met and shall, after
notice and opportunity for a hearing, terminate any such waiver
where he finds noncompliance has occurred.
(2) A request to the Secretary from a State for approval of a
proposed State plan or plan amendment or a waiver of a
requirement of this title submitted by the State pursuant to a
provision of this title shall be deemed granted unless the
Secretary, within 90 days after the date of its submission to
the Secretary, either denies such request in writing or informs
the State agency in writing with respect to any additional
information which is needed in order to make a final
determination with respect to the request. After the date the
Secretary receives such additional information, the request
shall be deemed granted unless the Secretary, within 90 days of
such date, denies such request.
(g)(1) A State may provide, as medical assistance, case
management services under the plan without regard to the
requirements of section 1902(a)(1) and section 1902(a)(10)(B).
The provision of case management services under this subsection
shall not restrict the choice of the individual to receive
medical assistance in violation of section 1902(a)(23). A State
may limit the provision of case management services under this
subsection to individuals with acquired immune deficiency
syndrome (AIDS), or with AIDS-related conditions, or with
either, or to individuals described in section 1902(z)(1)(A)
and a State may limit the provision of case management services
under this subsection to individuals with chronic mental
illness. The State may limit the case managers available with
respect to case management services for eligible individuals
with developmental disabilities or with chronic mental illness
in order to ensure that the case managers for such individuals
are capable of ensuring that such individuals receive needed
services.
(2) For purposes of this subsection:
(A)(i) The term ``case management services'' means
services which will assist individuals eligible under
the plan in gaining access to needed medical, social,
educational, and other services.
(ii) Such term includes the following:
(I) Assessment of an eligible individual to
determine service needs, including activities
that focus on needs identification, to
determine the need for any medical,
educational, social, or other services. Such
assessment activities include the following:
(aa) Taking client history.
(bb) Identifying the needs of the
individual, and completing related
documentation.
(cc) Gathering information from other
sources such as family members, medical
providers, social workers, and
educators, if necessary, to form a
complete assessment of the eligible
individual.
(II) Development of a specific care plan
based on the information collected through an
assessment, that specifies the goals and
actions to address the medical, social,
educational, and other services needed by the
eligible individual, including activities such
as ensuring the active participation of the
eligible individual and working with the
individual (or the individual's authorized
health care decision maker) and others to
develop such goals and identify a course of
action to respond to the assessed needs of the
eligible individual.
(III) Referral and related activities to help
an individual obtain needed services, including
activities that help link eligible individuals
with medical, social, educational providers or
other programs and services that are capable of
providing needed services, such as making
referrals to providers for needed services and
scheduling appointments for the individual.
(IV) Monitoring and followup activities,
including activities and contacts that are
necessary to ensure the care plan is
effectively implemented and adequately
addressing the needs of the eligible
individual, and which may be with the
individual, family members, providers, or other
entities and conducted as frequently as
necessary to help determine such matters as--
(aa) whether services are being
furnished in accordance with an
individual's care plan;
(bb) whether the services in the care
plan are adequate; and
(cc) whether there are changes in the
needs or status of the eligible
individual, and if so, making necessary
adjustments in the care plan and
service arrangements with providers.
(iii) Such term does not include the direct delivery
of an underlying medical, educational, social, or other
service to which an eligible individual has been
referred, including, with respect to the direct
delivery of foster care services, services such as (but
not limited to) the following:
(I) Research gathering and completion of
documentation required by the foster care
program.
(II) Assessing adoption placements.
(III) Recruiting or interviewing potential
foster care parents.
(IV) Serving legal papers.
(V) Home investigations.
(VI) Providing transportation.
(VII) Administering foster care subsidies.
(VIII) Making placement arrangements.
(B) The term ``targeted case management services''
are case management services that are furnished without
regard to the requirements of section 1902(a)(1) and
section 1902(a)(10)(B) to specific classes of
individuals or to individuals who reside in specified
areas.
(3) With respect to contacts with individuals who are not
eligible for medical assistance under the State plan or, in the
case of targeted case management services, individuals who are
eligible for such assistance but are not part of the target
population specified in the State plan, such contacts--
(A) are considered an allowable case management
activity, when the purpose of the contact is directly
related to the management of the eligible individual's
care; and
(B) are not considered an allowable case management
activity if such contacts relate directly to the
identification and management of the noneligible or
nontargeted individual's needs and care.
(4)(A) In accordance with section 1902(a)(25), Federal
financial participation only is available under this title for
case management services or targeted case management services
if there are no other third parties liable to pay for such
services, including as reimbursement under a medical, social,
educational, or other program.
(B) A State shall allocate the costs of any part of such
services which are reimbursable under another federally funded
program in accordance with OMB Circular A-87 (or any related or
successor guidance or regulations regarding allocation of costs
among federally funded programs) under an approved cost
allocation program.
(5) Nothing in this subsection shall be construed as
affecting the application of rules with respect to third party
liability under programs, or activities carried out under title
XXVI of the Public Health Service Act or by the Indian Health
Service.
(h)(1) No waiver under this section (other than a waiver
under subsection (c), (d), or (e), or a waiver described in
paragraph (2)) may extend over a period of longer than two
years unless the State requests continuation of such waiver,
and such request shall be deemed granted unless the Secretary,
within 90 days after the date of its submission to the
Secretary, either denies such request in writing or informs the
State agency in writing with respect to any additional
information which is needed in order to make a final
determination with respect to the request. After the date the
Secretary receives such additional information, the request
shall be deemed granted unless the Secretary, within 90 days of
such date, denies such request.
(2)(A) Notwithstanding subsections (c)(3) and (d) (3), any
waiver under subsection (b), (c), or (d), or a waiver under
section 1115, that provides medical assistance for dual
eligible individuals (including any such waivers under which
non dual eligible individuals may be enrolled in addition to
dual eligible individuals) may be conducted for a period of 5
years and, upon the request of the State, may be extended for
additional 5-year periods unless the Secretary determines that
for the previous waiver period the conditions for the waiver
have not been met or it would no longer be cost-effective and
efficient, or consistent with the purposes of this title, to
extend the waiver.
(B) In this paragraph, the term ``dual eligible individual''
means an individual who is entitled to, or enrolled for,
benefits under part A of title XVIII, or enrolled for benefits
under part B of title XVIII, and is eligible for medical
assistance under the State plan under this title or under a
waiver of such plan.
(i) State Plan Amendment Option To Provide Home and
Community-Based Services for Elderly and Disabled
Individuals.--
(1) In general.--Subject to the succeeding provisions
of this subsection, a State may provide through a State
plan amendment for the provision of medical assistance
for home and community-based services (within the scope
of services described in paragraph (4)(B) of subsection
(c) for which the Secretary has the authority to
approve a waiver and not including room and board) for
individuals eligible for medical assistance under the
State plan whose income does not exceed 150 percent of
the poverty line (as defined in section 2110(c)(5)),
without determining that but for the provision of such
services the individuals would require the level of
care provided in a hospital or a nursing facility or
intermediate care facility for the mentally retarded,
but only if the State meets the following requirements:
(A) Needs-based criteria for eligibility for,
and receipt of, home and community-based
services.--The State establishes needs-based
criteria for determining an individual's
eligibility under the State plan for medical
assistance for such home and community-based
services, and if the individual is eligible for
such services, the specific home and community-
based services that the individual will
receive.
(B) Establishment of more stringent needs-
based eligibility criteria for
institutionalized care.--The State establishes
needs-based criteria for determining whether an
individual requires the level of care provided
in a hospital, a nursing facility, or an
intermediate care facility for the mentally
retarded under the State plan or under any
waiver of such plan that are more stringent
than the needs-based criteria established under
subparagraph (A) for determining eligibility
for home and community-based services.
(C) Projection of number of individuals to be
provided home and community-based services.--
The State submits to the Secretary, in such
form and manner, and upon such frequency as the
Secretary shall specify, the projected number
of individuals to be provided home and
community-based services.
(D) Criteria based on individual
assessment.--
(i) In general.--The criteria
established by the State for purposes
of subparagraphs (A) and (B) requires
an assessment of an individual's
support needs and capabilities, and may
take into account the inability of the
individual to perform 2 or more
activities of daily living (as defined
in section 7702B(c)(2)(B) of the
Internal Revenue Code of 1986) or the
need for significant assistance to
perform such activities, and such other
risk factors as the State determines to
be appropriate.
(ii) Adjustment authority.--The State
plan amendment provides the State with
the option to modify the criteria
established under subparagraph (A)
(without having to obtain prior
approval from the Secretary) in the
event that the enrollment of
individuals eligible for home and
community-based services exceeds the
projected enrollment submitted for
purposes of subparagraph (C), but only
if--
(I) the State provides at
least 60 days notice to the
Secretary and the public of the
proposed modification;
(II) the State deems an
individual receiving home and
community-based services on the
basis of the most recent
version of the criteria in
effect prior to the effective
date of the modification to
continue to be eligible for
such services after the
effective date of the
modification and until such
time as the individual no
longer meets the standard for
receipt of such services under
such pre-modified criteria; and
(III) after the effective
date of such modification, the
State, at a minimum, applies
the criteria for determining
whether an individual requires
the level of care provided in a
hospital, a nursing facility,
or an intermediate care
facility for the mentally
retarded under the State plan
or under any waiver of such
plan which applied prior to the
application of the more
stringent criteria developed
under subparagraph (B).
(E) Independent evaluation and assessment.--
(i) Eligibility determination.--The
State uses an independent evaluation
for making the determinations described
in subparagraphs (A) and (B).
(ii) Assessment.--In the case of an
individual who is determined to be
eligible for home and community-based
services, the State uses an independent
assessment, based on the needs of the
individual to--
(I) determine a necessary
level of services and supports
to be provided, consistent with
an individual's physical and
mental capacity;
(II) prevent the provision of
unnecessary or inappropriate
care; and
(III) establish an
individualized care plan for
the individual in accordance
with subparagraph (G).
(F) Assessment.--The independent assessment
required under subparagraph (E)(ii) shall
include the following:
(i) An objective evaluation of an
individual's inability to perform 2 or
more activities of daily living (as
defined in section 7702B(c)(2)(B) of
the Internal Revenue Code of 1986) or
the need for significant assistance to
perform such activities.
(ii) A face-to-face evaluation of the
individual by an individual trained in
the assessment and evaluation of
individuals whose physical or mental
conditions trigger a potential need for
home and community-based services.
(iii) Where appropriate, consultation
with the individual's family, spouse,
guardian, or other responsible
individual.
(iv) Consultation with appropriate
treating and consulting health and
support professionals caring for the
individual.
(v) An examination of the
individual's relevant history, medical
records, and care and support needs,
guided by best practices and research
on effective strategies that result in
improved health and quality of life
outcomes.
(vi) If the State offers individuals
the option to self-direct the purchase
of, or control the receipt of, home and
community-based service, an evaluation
of the ability of the individual or the
individual's representative to self-
direct the purchase of, or control the
receipt of, such services if the
individual so elects.
(G) Individualized care plan.--
(i) In general.--In the case of an
individual who is determined to be
eligible for home and community-based
services, the State uses the
independent assessment required under
subparagraph (E)(ii) to establish a
written individualized care plan for
the individual.
(ii) Plan requirements.--The State
ensures that the individualized care
plan for an individual--
(I) is developed--
(aa) in consultation
with the individual,
the individual's
treating physician,
health care or support
professional, or other
appropriate
individuals, as defined
by the State, and,
where appropriate the
individual's family,
caregiver, or
representative; and
(bb) taking into
account the extent of,
and need for, any
family or other
supports for the
individual;
(II) identifies the necessary
home and community-based
services to be furnished to the
individual (or, if the
individual elects to self-
direct the purchase of, or
control the receipt of, such
services, funded for the
individual); and
(III) is reviewed at least
annually and as needed when
there is a significant change
in the individual's
circumstances.
(iii) state option to offer election
for self-directed services.--
(I) Individual choice.--At
the option of the State, the
State may allow an individual
or the individual's
representative to elect to
receive self-directed home and
community-based services in a
manner which gives them the
most control over such services
consistent with the
individual's abilities and the
requirements of subclauses (II)
and (III).
(II) Self-directed
services.--The term ``self-
directed'' means, with respect
to the home and community-based
services offered under the
State plan amendment, such
services for the individual
which are planned and purchased
under the direction and control
of such individual or the
individual's authorized
representative, including the
amount, duration, scope,
provider, and location of such
services, under the State plan
consistent with the following
requirements:
(aa) Assessment.--
There is an assessment
of the needs,
capabilities, and
preferences of the
individual with respect
to such services.
(bb) Service plan.--
Based on such
assessment, there is
developed jointly with
such individual or the
individual's authorized
representative a plan
for such services for
such individual that is
approved by the State
and that satisfies the
requirements of
subclause (III).
(III) Plan requirements.--For
purposes of subclause (II)(bb),
the requirements of this
subclause are that the plan--
(aa) specifies those
services which the
individual or the
individual's authorized
representative would be
responsible for
directing;
(bb) identifies the
methods by which the
individual or the
individual's authorized
representative will
select, manage, and
dismiss providers of
such services;
(cc) specifies the
role of family members
and others whose
participation is sought
by the individual or
the individual's
authorized
representative with
respect to such
services;
(dd) is developed
through a person-
centered process that
is directed by the
individual or the
individual's authorized
representative, builds
upon the individual's
capacity to engage in
activities that promote
community life and that
respects the
individual's
preferences, choices,
and abilities, and
involves families,
friends, and
professionals as
desired or required by
the individual or the
individual's authorized
representative;
(ee) includes
appropriate risk
management techniques
that recognize the
roles and sharing of
responsibilities in
obtaining services in a
self-directed manner
and assure the
appropriateness of such
plan based upon the
resources and
capabilities of the
individual or the
individual's authorized
representative; and
(ff) may include an
individualized budget
which identifies the
dollar value of the
services and supports
under the control and
direction of the
individual or the
individual's authorized
representative.
(IV) Budget process.--With
respect to individualized
budgets described in subclause
(III)(ff), the State plan
amendment--
(aa) describes the
method for calculating
the dollar values in
such budgets based on
reliable costs and
service utilization;
(bb) defines a
process for making
adjustments in such
dollar values to
reflect changes in
individual assessments
and service plans; and
(cc) provides a
procedure to evaluate
expenditures under such
budgets.
(H) Quality assurance; conflict of interest
standards.--
(i) Quality assurance.--The State
ensures that the provision of home and
community-based services meets Federal
and State guidelines for quality
assurance.
(ii) Conflict of interest
standards.--The State establishes
standards for the conduct of the
independent evaluation and the
independent assessment to safeguard
against conflicts of interest.
(I) Redeterminations and appeals.--The State
allows for at least annual redeterminations of
eligibility, and appeals in accordance with the
frequency of, and manner in which,
redeterminations and appeals of eligibility are
made under the State plan.
(J) Presumptive eligibility for assessment.--
The State, at its option, elects to provide for
a period of presumptive eligibility (not to
exceed a period of 60 days) only for those
individuals that the State has reason to
believe may be eligible for home and community-
based services. Such presumptive eligibility
shall be limited to medical assistance for
carrying out the independent evaluation and
assessment under subparagraph (E) to determine
an individual's eligibility for such services
and if the individual is so eligible, the
specific home and community-based services that
the individual will receive.
(2) Definition of individual's representative.--In
this section, the term ``individual's representative''
means, with respect to an individual, a parent, a
family member, or a guardian of the individual, an
advocate for the individual, or any other individual
who is authorized to represent the individual.
(3) Nonapplication.--A State may elect in the State
plan amendment approved under this section to not
comply with the requirements of section 1902(a)(10)(B)
(relating to comparability) and section
1902(a)(10)(C)(i)(III) (relating to income and resource
rules applicable in the community), but only for
purposes of provided home and community-based services
in accordance with such amendment. Any such election
shall not be construed to apply to the provision of
services to an individual receiving medical assistance
in an institutionalized setting as a result of a
determination that the individual requires the level of
care provided in a hospital or a nursing facility or
intermediate care facility for the mentally retarded.
(4) No effect on other waiver authority.--Nothing in
this subsection shall be construed as affecting the
option of a State to offer home and community-based
services under a waiver under subsections (c) or (d) of
this section or under section 1115.
(5) Continuation of federal financial participation
for medical assistance provided to individuals as of
effective date of state plan amendment.--
Notwithstanding paragraph (1)(B), Federal financial
participation shall continue to be available for an
individual who is receiving medical assistance in an
institutionalized setting, or home and community-based
services provided under a waiver under this section or
section 1115 that is in effect as of the effective date
of the State plan amendment submitted under this
subsection, as a result of a determination that the
individual requires the level of care provided in a
hospital or a nursing facility or intermediate care
facility for the mentally retarded, without regard to
whether such individuals satisfy the more stringent
eligibility criteria established under that paragraph,
until such time as the individual is discharged from
the institution or waiver program or no longer requires
such level of care.
(6) State option to provide home and community-based
services to individuals eligible for services under a
waiver.--
(A) In general.--A State that provides home
and community-based services in accordance with
this subsection to individuals who satisfy the
needs-based criteria for the receipt of such
services established under paragraph (1)(A)
may, in addition to continuing to provide such
services to such individuals, elect to provide
home and community-based services in accordance
with the requirements of this paragraph to
individuals who are eligible for home and
community-based services under a waiver
approved for the State under subsection (c),
(d), or (e) or under section 1115 to provide
such services, but only for those individuals
whose income does not exceed 300 percent of the
supplemental security income benefit rate
established by section 1611(b)(1).
(B) Application of same requirements for
individuals satisfying needs-based criteria.--
Subject to subparagraph (C), a State shall
provide home and community-based services to
individuals under this paragraph in the same
manner and subject to the same requirements as
apply under the other paragraphs of this
subsection to the provision of home and
community-based services to individuals who
satisfy the needs-based criteria established
under paragraph (1)(A).
(C) Authority to offer different type,
amount, duration, or scope of home and
community-based services.--A State may offer
home and community-based services to
individuals under this paragraph that differ in
type, amount, duration, or scope from the home
and community-based services offered for
individuals who satisfy the needs-based
criteria established under paragraph (1)(A), so
long as such services are within the scope of
services described in paragraph (4)(B) of
subsection (c) for which the Secretary has the
authority to approve a waiver and do not
include room or board.
(7) State option to offer home and community-based
services to specific, targeted populations.--
(A) In general.--A State may elect in a State
plan amendment under this subsection to target
the provision of home and community-based
services under this subsection to specific
populations and to differ the type, amount,
duration, or scope of such services to such
specific populations.
(B) 5-year term.--
(i) In general.--An election by a
State under this paragraph shall be for
a period of 5 years.
(ii) Phase-in of services and
eligibility permitted during initial 5-
year period.--A State making an
election under this paragraph may,
during the first 5-year period for
which the election is made, phase-in
the enrollment of eligible individuals,
or the provision of services to such
individuals, or both, so long as all
eligible individuals in the State for
such services are enrolled, and all
such services are provided, before the
end of the initial 5-year period.
(C) Renewal.--An election by a State under
this paragraph may be renewed for additional 5-
year terms if the Secretary determines, prior
to beginning of each such renewal period, that
the State has--
(i) adhered to the requirements of
this subsection and paragraph in
providing services under such an
election; and
(ii) met the State's objectives with
respect to quality improvement and
beneficiary outcomes.
(j)(1) A State may provide, as ``medical assistance'',
payment for part or all of the cost of self-directed personal
assistance services (other than room and board) under the plan
which are provided pursuant to a written plan of care to
individuals with respect to whom there has been a determination
that, but for the provision of such services, the individuals
would require and receive personal care services under the
plan, or home and community-based services provided pursuant to
a waiver under subsection (c). Self-directed personal
assistance services may not be provided under this subsection
to individuals who reside in a home or property that is owned,
operated, or controlled by a provider of services, not related
by blood or marriage.
(2) The Secretary shall not grant approval for a State self-
directed personal assistance services program under this
section unless the State provides assurances satisfactory to
the Secretary of the following:
(A) Necessary safeguards have been taken to protect
the health and welfare of individuals provided services
under the program, and to assure financial
accountability for funds expended with respect to such
services.
(B) The State will provide, with respect to
individuals who--
(i) are entitled to medical assistance for
personal care services under the plan, or
receive home and community-based services under
a waiver granted under subsection (c);
(ii) may require self-directed personal
assistance services; and
(iii) may be eligible for self-directed
personal assistance services,
an evaluation of the need for personal care under the
plan, or personal services under a waiver granted under
subsection (c).
(C) Such individuals who are determined to be likely
to require personal care under the plan, or home and
community-based services under a waiver granted under
subsection (c) are informed of the feasible
alternatives, if available under the State's self-
directed personal assistance services program, at the
choice of such individuals, to the provision of
personal care services under the plan, or personal
assistance services under a waiver granted under
subsection (c).
(D) The State will provide for a support system that
ensures participants in the self-directed personal
assistance services program are appropriately assessed
and counseled prior to enrollment and are able to
manage their budgets. Additional counseling and
management support may be provided at the request of
the participant.
(E) The State will provide to the Secretary an annual
report on the number of individuals served and total
expenditures on their behalf in the aggregate. The
State shall also provide an evaluation of overall
impact on the health and welfare of participating
individuals compared to non-participants every three
years.
(3) A State may provide self-directed personal assistance
services under the State plan without regard to the
requirements of section 1902(a)(1) and may limit the population
eligible to receive these services and limit the number of
persons served without regard to section 1902(a)(10)(B).
(4)(A) For purposes of this subsection, the term ``self-
directed personal assistance services'' means personal care and
related services, or home and community-based services
otherwise available under the plan under this title or
subsection (c), that are provided to an eligible participant
under a self-directed personal assistance services program
under this section, under which individuals, within an approved
self-directed services plan and budget, purchase personal
assistance and related services, and permits participants to
hire, fire, supervise, and manage the individuals providing
such services.
(B) At the election of the State--
(i) a participant may choose to use any individual
capable of providing the assigned tasks including
legally liable relatives as paid providers of the
services; and
(ii) the individual may use the individual's budget
to acquire items that increase independence or
substitute (such as a microwave oven or an
accessibility ramp) for human assistance, to the extent
that expenditures would otherwise be made for the human
assistance.
(5) For purpose of this section, the term ``approved self-
directed services plan and budget'' means, with respect to a
participant, the establishment of a plan and budget for the
provision of self-directed personal assistance services,
consistent with the following requirements:
(A) Self-direction.--The participant (or in the case
of a participant who is a minor child, the
participant's parent or guardian, or in the case of an
incapacitated adult, another individual recognized by
State law to act on behalf of the participant)
exercises choice and control over the budget, planning,
and purchase of self-directed personal assistance
services, including the amount, duration, scope,
provider, and location of service provision.
(B) Assessment of needs.--There is an assessment of
the needs, strengths, and preferences of the
participants for such services.
(C) Service plan.--A plan for such services (and
supports for such services) for the participant has
been developed and approved by the State based on such
assessment through a person-centered process that--
(i) builds upon the participant's capacity to
engage in activities that promote community
life and that respects the participant's
preferences, choices, and abilities; and
(ii) involves families, friends, and
professionals in the planning or delivery of
services or supports as desired or required by
the participant.
(D) Service budget.--A budget for such services and
supports for the participant has been developed and
approved by the State based on such assessment and plan
and on a methodology that uses valid, reliable cost
data, is open to public inspection, and includes a
calculation of the expected cost of such services if
those services were not self-directed. The budget may
not restrict access to other medically necessary care
and services furnished under the plan and approved by
the State but not included in the budget.
(E) Application of quality assurance and risk
management.--There are appropriate quality assurance
and risk management techniques used in establishing and
implementing such plan and budget that recognize the
roles and responsibilities in obtaining services in a
self-directed manner and assure the appropriateness of
such plan and budget based upon the participant's
resources and capabilities.
(6) A State may employ a financial management entity to make
payments to providers, track costs, and make reports under the
program. Payment for the activities of the financial management
entity shall be at the administrative rate established in
section 1903(a).
(k) State Plan Option To Provide Home and Community-based
Attendant Services and Supports.--
(1) In general.--Subject to the succeeding provisions
of this subsection, beginning October 1, 2011, a State
may provide through a State plan amendment for the
provision of medical assistance for home and community-
based attendant services and supports for individuals
who are eligible for medical assistance under the State
plan whose income does not exceed 150 percent of the
poverty line (as defined in section 2110(c)(5)) or, if
greater, the income level applicable for an individual
who has been determined to require an institutional
level of care to be eligible for nursing facility
services under the State plan and with respect to whom
there has been a determination that, but for the
provision of such services, the individuals would
require the level of care provided in a hospital, a
nursing facility, an intermediate care facility for the
mentally retarded, or an institution for mental
diseases, the cost of which could be reimbursed under
the State plan, but only if the individual chooses to
receive such home and community-based attendant
services and supports, and only if the State meets the
following requirements:
(A) Availability.--The State shall make
available home and community-based attendant
services and supports to eligible individuals,
as needed, to assist in accomplishing
activities of daily living, instrumental
activities of daily living, and health-related
tasks through hands-on assistance, supervision,
or cueing--
(i) under a person-centered plan of
services and supports that is based on
an assessment of functional need and
that is agreed to in writing by the
individual or, as appropriate, the
individual's representative;
(ii) in a home or community setting,
which does not include a nursing
facility, institution for mental
diseases, or an intermediate care
facility for the mentally retarded;
(iii) under an agency-provider model
or other model (as defined in paragraph
(6)(C)); and
(iv) the furnishing of which--
(I) is selected, managed, and
dismissed by the individual,
or, as appropriate, with
assistance from the
individual's representative;
(II) is controlled, to the
maximum extent possible, by the
individual or where
appropriate, the individual's
representative, regardless of
who may act as the employer of
record; and
(III) provided by an
individual who is qualified to
provide such services,
including family members (as
defined by the Secretary).
(B) Included services and supports.--In
addition to assistance in accomplishing
activities of daily living, instrumental
activities of daily living, and health related
tasks, the home and community-based attendant
services and supports made available include--
(i) the acquisition, maintenance, and
enhancement of skills necessary for the
individual to accomplish activities of
daily living, instrumental activities
of daily living, and health related
tasks;
(ii) back-up systems or mechanisms
(such as the use of beepers or other
electronic devices) to ensure
continuity of services and supports;
and
(iii) voluntary training on how to
select, manage, and dismiss attendants.
(C) Excluded services and supports.--Subject
to subparagraph (D), the home and community-
based attendant services and supports made
available do not include--
(i) room and board costs for the
individual;
(ii) special education and related
services provided under the Individuals
with Disabilities Education Act and
vocational rehabilitation services
provided under the Rehabilitation Act
of 1973;
(iii) assistive technology devices
and assistive technology services other
than those under (1)(B)(ii);
(iv) medical supplies and equipment;
or
(v) home modifications.
(D) Permissible services and supports.--The
home and community-based attendant services and
supports may include--
(i) expenditures for transition costs
such as rent and utility deposits,
first month's rent and utilities,
bedding, basic kitchen supplies, and
other necessities required for an
individual to make the transition from
a nursing facility, institution for
mental diseases, or intermediate care
facility for the mentally retarded to a
community-based home setting where the
individual resides; and
(ii) expenditures relating to a need
identified in an individual's person-
centered plan of services that increase
independence or substitute for human
assistance, to the extent that
expenditures would otherwise be made
for the human assistance.
(2) Increased federal financial participation.--For
purposes of payments to a State under section
1903(a)(1), with respect to amounts expended by the
State to provide medical assistance under the State
plan for home and community-based attendant services
and supports to eligible individuals in accordance with
this subsection during a fiscal year quarter occurring
[during the period described in paragraph (1)] on or
after the date referred to in paragraph (1) and before
January 1, 2020, the Federal medical assistance
percentage applicable to the State (as determined under
section 1905(b)) shall be increased by 6 percentage
points.
(3) State requirements.--In order for a State plan
amendment to be approved under this subsection, the
State shall--
(A) develop and implement such amendment in
collaboration with a Development and
Implementation Council established by the State
that includes a majority of members with
disabilities, elderly individuals, and their
representatives and consults and collaborates
with such individuals;
(B) provide consumer controlled home and
community-based attendant services and supports
to individuals on a statewide basis, in a
manner that provides such services and supports
in the most integrated setting appropriate to
the individual's needs, and without regard to
the individual's age, type or nature of
disability, severity of disability, or the form
of home and community-based attendant services
and supports that the individual requires in
order to lead an independent life;
(C) with respect to expenditures during the
first full fiscal year in which the State plan
amendment is implemented, maintain or exceed
the level of State expenditures for medical
assistance that is provided under section
1905(a), section 1915, section 1115, or
otherwise to individuals with disabilities or
elderly individuals attributable to the
preceding fiscal year;
(D) establish and maintain a comprehensive,
continuous quality assurance system with
respect to community- based attendant services
and supports that--
(i) includes standards for agency-
based and other delivery models with
respect to training, appeals for
denials and reconsideration procedures
of an individual plan, and other
factors as determined by the Secretary;
(ii) incorporates feedback from
consumers and their representatives,
disability organizations, providers,
families of disabled or elderly
individuals, members of the community,
and others and maximizes consumer
independence and consumer control;
(iii) monitors the health and well-
being of each individual who receives
home and community-based attendant
services and supports, including a
process for the mandatory reporting,
investigation, and resolution of
allegations of neglect, abuse, or
exploitation in connection with the
provision of such services and
supports; and
(iv) provides information about the
provisions of the quality assurance
required under clauses (i) through
(iii) to each individual receiving such
services; and
(E) collect and report information, as
determined necessary by the Secretary, for the
purposes of approving the State plan amendment,
providing Federal oversight, and conducting an
evaluation under paragraph (5)(A), including
data regarding how the State provides home and
community-based attendant services and supports
and other home and community-based services,
the cost of such services and supports, and how
the State provides individuals with
disabilities who otherwise qualify for
institutional care under the State plan or
under a waiver the choice to instead receive
home and community-based services in lieu of
institutional care.
(4) Compliance with certain laws.--A State shall
ensure that, regardless of whether the State uses an
agency-provider model or other models to provide home
and community-based attendant services and supports
under a State plan amendment under this subsection,
such services and supports are provided in accordance
with the requirements of the Fair Labor Standards Act
of 1938 and applicable Federal and State laws
regarding--
(A) withholding and payment of Federal and
State income and payroll taxes;
(B) the provision of unemployment and workers
compensation insurance;
(C) maintenance of general liability
insurance; and
(D) occupational health and safety.
(5) Evaluation, data collection, and report to
congress.--
(A) Evaluation.--The Secretary shall conduct
an evaluation of the provision of home and
community-based attendant services and supports
under this subsection in order to determine the
effectiveness of the provision of such services
and supports in allowing the individuals
receiving such services and supports to lead an
independent life to the maximum extent
possible; the impact on the physical and
emotional health of the individuals who receive
such services; and an comparative analysis of
the costs of services provided under the State
plan amendment under this subsection and those
provided under institutional care in a nursing
facility, institution for mental diseases, or
an intermediate care facility for the mentally
retarded.
(B) Data collection.--The State shall provide
the Secretary with the following information
regarding the provision of home and community-
based attendant services and supports under
this subsection for each fiscal year for which
such services and supports are provided:
(i) The number of individuals who are
estimated to receive home and
community-based attendant services and
supports under this subsection during
the fiscal year.
(ii) The number of individuals that
received such services and supports
during the preceding fiscal year.
(iii) The specific number of
individuals served by type of
disability, age, gender, education
level, and employment status.
(iv) Whether the specific individuals
have been previously served under any
other home and community based services
program under the State plan or under a
waiver.
(C) Reports.--Not later than--
(i) December 31, 2013, the Secretary
shall submit to Congress and make
available to the public an interim
report on the findings of the
evaluation under subparagraph (A); and
(ii) December 31, 2015, the Secretary
shall submit to Congress and make
available to the public a final report
on the findings of the evaluation under
subparagraph (A).
(6) Definitions.--In this subsection:
(A) Activities of daily living.--The term
``activities of daily living'' includes tasks
such as eating, toileting, grooming, dressing,
bathing, and transferring.
(B) Consumer controlled.--The term ``consumer
controlled'' means a method of selecting and
providing services and supports that allow the
individual, or where appropriate, the
individual's representative, maximum control of
the home and community-based attendant services
and supports, regardless of who acts as the
employer of record.
(C) Delivery models.--
(i) Agency-provider model.--The term
``agency-provider model'' means, with
respect to the provision of home and
community-based attendant services and
supports for an individual, subject to
paragraph (4), a method of providing
consumer controlled services and
supports under which entities contract
for the provision of such services and
supports.
(ii) Other models.--The term ``other
models'' means, subject to paragraph
(4), methods, other than an agency-
provider model, for the provision of
consumer controlled services and
supports. Such models may include the
provision of vouchers, direct cash
payments, or use of a fiscal agent to
assist in obtaining services.
(D) Health-related tasks.--The term ``health-
related tasks'' means specific tasks related to
the needs of an individual, which can be
delegated or assigned by licensed health-care
professionals under State law to be performed
by an attendant.
(E) Individual's representative.--The term
``individual's representative'' means a parent,
family member, guardian, advocate, or other
authorized representative of an individual
(F) Instrumental activities of daily
living.--The term ``instrumental activities of
daily living'' includes (but is not limited to)
meal planning and preparation, managing
finances, shopping for food, clothing, and
other essential items, performing essential
household chores, communicating by phone or
other media, and traveling around and
participating in the community.
* * * * * * *
liens, adjustments and recoveries, and transfers of assets
Sec. 1917. (a)(1) No lien may be imposed against the property
of any individual prior to his death on account of medical
assistance paid or to be paid on his behalf under the State
plan, except--
(A) pursuant to--
(i) the judgment of a court on account of
benefits incorrectly paid on behalf of such
individual, or
(ii) rights acquired by or assigned to the
State in accordance with section 1902(a)(25)(H)
or section 1912(a)(1)(A), or
(B) in the case of the real property of an
individual--
(i) who is an inpatient in a nursing
facility, intermediate care facility for the
mentally retarded, or other medical
institution, if such individual is required, as
a condition of receiving services in such
institution under the State plan, to spend for
costs of medical care all but a minimal amount
of his income required for personal needs, and
(ii) with respect to whom the State
determines, after notice and opportunity for a
hearing (in accordance with procedures
established by the State), that he cannot
reasonably be expected to be discharged from
the medical institution and to return home,
except as provided in paragraph (2).
(2) No lien may be imposed under paragraph (1)(B) on such
individual's home if--
(A) the spouse of such individual,
(B) such individual's child who is under age 21, or
(with respect to States eligible to participate in the
State program established under title XVI) is blind or
permanently and totally disabled, or (with respect to
States which are not eligible to participate in such
program) is blind or disabled as defined in section
1614, or
(C) a sibling of such individual (who has an equity
interest in such home and who was residing in such
individual's home for a period of at least one year
immediately before the date of the individual's
admission to the medical institution),
is lawfully residing in such home.
(3) Any lien imposed with respect to an individual pursuant
to paragraph (1)(B) shall dissolve upon that individual's
discharge from the medical institution and return home.
(b)(1) No adjustment or recovery of any medical assistance
correctly paid on behalf of an individual under the State plan
may be made, except that the State shall seek adjustment or
recovery of any medical assistance correctly paid on behalf of
an individual under the State plan in the case of the following
individuals:
(A) In the case of an individual described in
subsection (a)(1)(B), the State shall seek adjustment
or recovery from the individual's estate or upon sale
of the property subject to a lien imposed on account of
medical assistance paid on behalf of the individual.
(B) In the case of an individual who was 55 years of
age or older when the individual received such medical
assistance, the State shall seek adjustment or recovery
from the individual's estate, but only for medical
assistance consisting of--
(i) nursing facility services, home and
community-based services, and related hospital
and prescription drug services, or
(ii) at the option of the State, any items or
services under the State plan (but not
including medical assistance for medicare cost-
sharing or for benefits described in section
1902(a)(10)(E)).
(C)(i) In the case of an individual who has received
(or is entitled to receive) benefits under a long-term
care insurance policy in connection with which assets
or resources are disregarded in the manner described in
clause (ii), except as provided in such clause, the
State shall seek adjustment or recovery from the
individual's estate on account of medical assistance
paid on behalf of the individual for nursing facility
and other long-term care services.
(ii) Clause (i) shall not apply in the case of an
individual who received medical assistance under a
State plan of a State which had a State plan amendment
approved as of May 14, 1993, and which satisfies clause
(iv), or which has a State plan amendment that provides
for a qualified State long-term care insurance
partnership (as defined in clause (iii)) which provided
for the disregard of any assets or resources--
(I) to the extent that payments are made
under a long-term care insurance policy; or
(II) because an individual has received (or
is entitled to receive) benefits under a long-
term care insurance policy.
(iii) For purposes of this paragraph, the term
``qualified State long-term care insurance
partnership'' means an approved State plan amendment
under this title that provides for the disregard of any
assets or resources in an amount equal to the insurance
benefit payments that are made to or on behalf of an
individual who is a beneficiary under a long-term care
insurance policy if the following requirements are met:
(I) The policy covers an insured who was a
resident of such State when coverage first
became effective under the policy.
(II) The policy is a qualified long-term care
insurance policy (as defined in section
7702B(b) of the Internal Revenue Code of 1986)
issued not earlier than the effective date of
the State plan amendment.
(III) The policy meets the model regulations
and the requirements of the model Act specified
in paragraph (5).
(IV) If the policy is sold to an individual
who--
(aa) has not attained age 61 as of
the date of purchase, the policy
provides compound annual inflation
protection;
(bb) has attained age 61 but has not
attained age 76 as of such date, the
policy provides some level of inflation
protection; and
(cc) has attained age 76 as of such
date, the policy may (but is not
required to) provide some level of
inflation protection.
(V) The State Medicaid agency under section
1902(a)(5) provides information and technical
assistance to the State insurance department on
the insurance department's role of assuring
that any individual who sells a long-term care
insurance policy under the partnership receives
training and demonstrates evidence of an
understanding of such policies and how they
relate to other public and private coverage of
long-term care.
(VI) The issuer of the policy provides
regular reports to the Secretary, in accordance
with regulations of the Secretary, that include
notification regarding when benefits provided
under the policy have been paid and the amount
of such benefits paid, notification regarding
when the policy otherwise terminates, and such
other information as the Secretary determines
may be appropriate to the administration of
such partnerships.
(VII) The State does not impose any
requirement affecting the terms or benefits of
such a policy unless the State imposes such
requirement on long-term care insurance
policies without regard to whether the policy
is covered under the partnership or is offered
in connection with such a partnership.
In the case of a long-term care insurance policy which
is exchanged for another such policy, subclause (I)
shall be applied based on the coverage of the first
such policy that was exchanged. For purposes of this
clause and paragraph (5), the term ``long-term care
insurance policy'' includes a certificate issued under
a group insurance contract.
(iv) With respect to a State which had a State plan
amendment approved as of May 14, 1993, such a State
satisfies this clause for purposes of clause (ii) if
the Secretary determines that the State plan amendment
provides for consumer protection standards which are no
less stringent than the consumer protection standards
which applied under such State plan amendment as of
December 31, 2005.
(v) The regulations of the Secretary required under
clause (iii)(VI) shall be promulgated after
consultation with the National Association of Insurance
Commissioners, issuers of long-term care insurance
policies, States with experience with long-term care
insurance partnership plans, other States, and
representatives of consumers of long-term care
insurance policies, and shall specify the type and
format of the data and information to be reported and
the frequency with which such reports are to be made.
The Secretary, as appropriate, shall provide copies of
the reports provided in accordance with that clause to
the State involved.
(vi) The Secretary, in consultation with other
appropriate Federal agencies, issuers of long-term care
insurance, the National Association of Insurance
Commissioners, State insurance commissioners, States
with experience with long-term care insurance
partnership plans, other States, and representatives of
consumers of long-term care insurance policies, shall
develop recommendations for Congress to authorize and
fund a uniform minimum data set to be reported
electronically by all issuers of long-term care
insurance policies under qualified State long-term care
insurance partnerships to a secure, centralized
electronic query and report-generating mechanism that
the State, the Secretary, and other Federal agencies
can access.
(2) Any adjustment or recovery under paragraph (1) may be
made only after the death of the individual's surviving spouse,
if any, and only at a time--
(A) when he has no surviving child who is under age
21, or (with respect to States eligible to participate
in the State program established under title XVI) is
blind or permanently and totally disabled, or (with
respect to States which are not eligible to participate
in such program) is blind or disabled as defined in
section 1614; and
(B) in the case of a lien on an individual's home
under subsection (a)(1)(B), when--
(i) no sibling of the individual (who was
residing in the individual's home for a period
of at least one year immediately before the
date of the individual's admission to the
medical institution), and
(ii) no son or daughter of the individual
(who was residing in the individual's home for
a period of at least two years immediately
before the date of the individual's admission
to the medical institution, and who establishes
to the satisfaction of the State that he or she
provided care to such individual which
permitted such individual to reside at home
rather than in an institution),
is lawfully residing in such home who has lawfully
resided in such home on a continuous basis since the
date of the individual's admission to the medical
institution.
(3)(A) The State agency shall establish procedures (in
accordance with standards specified by the Secretary) under
which the agency shall waive the application of this subsection
(other than paragraph (1)(C)) if such application would work an
undue hardship as determined on the basis of criteria
established by the Secretary.
(B) The standards specified by the Secretary under
subparagraph (A) shall require that the procedures established
by the State agency under subparagraph (A) exempt income,
resources, and property that are exempt from the application of
this subsection as of April 1, 2003, under manual instructions
issued to carry out this subsection (as in effect on such date)
because of the Federal responsibility for Indian Tribes and
Alaska Native Villages. Nothing in this subparagraph shall be
construed as preventing the Secretary from providing additional
estate recovery exemptions under this title for Indians.
(4) For purposes of this subsection, the term ``estate'',
with respect to a deceased individual--
(A) shall include all real and personal property and
other assets included within the individual's estate,
as defined for purposes of State probate law; and
(B) may include, at the option of the State (and
shall include, in the case of an individual to whom
paragraph (1)(C)(i) applies), any other real and
personal property and other assets in which the
individual had any legal title or interest at the time
of death (to the extent of such interest), including
such assets conveyed to a survivor, heir, or assign of
the deceased individual through joint tenancy, tenancy
in common, survivorship, life estate, living trust, or
other arrangement.
(5)(A) For purposes of clause (iii)(III), the model
regulations and the requirements of the model Act specified in
this paragraph are:
(i) In the case of the model regulation, the
following requirements:
(I) Section 6A (relating to guaranteed
renewal or noncancellability), other than
paragraph (5) thereof, and the requirements of
section 6B of the model Act relating to such
section 6A.
(II) Section 6B (relating to prohibitions on
limitations and exclusions) other than
paragraph (7) thereof.
(III) Section 6C (relating to extension of
benefits).
(IV) Section 6D (relating to continuation or
conversion of coverage).
(V) Section 6E (relating to discontinuance
and replacement of policies).
(VI) Section 7 (relating to unintentional
lapse).
(VII) Section 8 (relating to disclosure),
other than sections 8F, 8G, 8H, and 8I thereof.
(VIII) Section 9 (relating to required
disclosure of rating practices to consumer).
(IX) Section 11 (relating to prohibitions
against post-claims underwriting).
(X) Section 12 (relating to minimum
standards).
(XI) Section 14 (relating to application
forms and replacement coverage).
(XII) Section 15 (relating to reporting
requirements).
(XIII) Section 22 (relating to filing
requirements for marketing).
(XIV) Section 23 (relating to standards for
marketing), including inaccurate completion of
medical histories, other than paragraphs (1),
(6), and (9) of section 23C.
(XV) Section 24 (relating to suitability).
(XVI) Section 25 (relating to prohibition
against preexisting conditions and probationary
periods in replacement policies or
certificates).
(XVII) The provisions of section 26 relating
to contingent nonforfeiture benefits, if the
policyholder declines the offer of a
nonforfeiture provision described in paragraph
(4).
(XVIII) Section 29 (relating to standard
format outline of coverage).
(XIX) Section 30 (relating to requirement to
deliver shopper's guide).
(ii) In the case of the model Act, the following:
(I) Section 6C (relating to preexisting
conditions).
(II) Section 6D (relating to prior
hospitalization).
(III) The provisions of section 8 relating to
contingent nonforfeiture benefits.
(IV) Section 6F (relating to right to
return).
(V) Section 6G (relating to outline of
coverage).
(VI) Section 6H (relating to requirements for
certificates under group plans).
(VII) Section 6J (relating to policy
summary).
(VIII) Section 6K (relating to monthly
reports on accelerated death benefits).
(IX) Section 7 (relating to incontestability
period).
(B) For purposes of this paragraph and paragraph (1)(C)--
(i) the terms ``model regulation'' and ``model Act''
mean the long-term care insurance model regulation, and
the long-term care insurance model Act, respectively,
promulgated by the National Association of Insurance
Commissioners (as adopted as of October 2000);
(ii) any provision of the model regulation or model
Act listed under subparagraph (A) shall be treated as
including any other provision of such regulation or Act
necessary to implement the provision; and
(iii) with respect to a long-term care insurance
policy issued in a State, the policy shall be deemed to
meet applicable requirements of the model regulation or
the model Act if the State plan amendment under
paragraph (1)(C)(iii) provides that the State insurance
commissioner for the State certifies (in a manner
satisfactory to the Secretary) that the policy meets
such requirements.
(C) Not later than 12 months after the National Association
of Insurance Commissioners issues a revision, update, or other
modification of a model regulation or model Act provision
specified in subparagraph (A), or of any provision of such
regulation or Act that is substantively related to a provision
specified in such subparagraph, the Secretary shall review the
changes made to the provision, determine whether incorporating
such changes into the corresponding provision specified in such
subparagraph would improve qualified State long-term care
insurance partnerships, and if so, shall incorporate the
changes into such provision.
(c)(1)(A) In order to meet the requirements of this
subsection for purposes of section 1902(a)(18), the State plan
must provide that if an institutionalized individual or the
spouse of such an individual (or, at the option of a State, a
noninstitutionalized individual or the spouse of such an
individual) disposes of assets for less than fair market value
on or after the look-back date specified in subparagraph
(B)(i), the individual is ineligible for medical assistance for
services described in subparagraph (C)(i) (or, in the case of a
noninstitutionalized individual, for the services described in
subparagraph (C)(ii)) during the period beginning on the date
specified in subparagraph (D) and equal to the number of months
specified in subparagraph (E).
(B)(i) The look-back date specified in this subparagraph is a
date that is 36 months (or, in the case of payments from a
trust or portions of a trust that are treated as assets
disposed of by the individual pursuant to paragraph (3)(A)(iii)
or (3)(B)(ii) of subsection (d) or in the case of any other
disposal of assets made on or after the date of the enactment
of the Deficit Reduction Act of 2005, 60 months) before the
date specified in clause (ii).
(ii) The date specified in this clause, with respect to--
(I) an institutionalized individual is the first date
as of which the individual both is an institutionalized
individual and has applied for medical assistance under
the State plan, or
(II) a noninstitutionalized individual is the date on
which the individual applies for medical assistance
under the State plan or, if later, the date on which
the individual disposes of assets for less than fair
market value.
(C)(i) The services described in this subparagraph with
respect to an institutionalized individual are the following:
(I) Nursing facility services.
(II) A level of care in any institution equivalent to
that of nursing facility services.
(III) Home or community-based services furnished
under a waiver granted under subsection (c) or (d) of
section 1915.
(ii) The services described in this subparagraph with respect
to a noninstitutionalized individual are services (not
including any services described in clause (i)) that are
described in paragraph (7), (22), or (24) of section 1905(a),
and, at the option of a State, other long-term care services
for which medical assistance is otherwise available under the
State plan to individuals requiring long-term care.
(D)(i) In the case of a transfer of asset made before the
date of the enactment of the Deficit Reduction Act of 2005, the
date specified in this subparagraph is the first day of the
first month during or after which assets have been transferred
for less than fair market value and which does not occur in any
other periods of ineligibility under this subsection.
(ii) In the case of a transfer of asset made on or after the
date of the enactment of the Deficit Reduction Act of 2005, the
date specified in this subparagraph is the first day of a month
during or after which assets have been transferred for less
than fair market value, or the date on which the individual is
eligible for medical assistance under the State plan and would
otherwise be receiving institutional level care described in
subparagraph (C) based on an approved application for such care
but for the application of the penalty period, whichever is
later, and which does not occur during any other period of
ineligibility under this subsection.
(E)(i) With respect to an institutionalized individual, the
number of months of ineligibility under this subparagraph for
an individual shall be equal to--
(I) the total, cumulative uncompensated value of all
assets transferred by the individual (or individual's
spouse) on or after the look-back date specified in
subparagraph (B)(i), divided by
(II) the average monthly cost to a private patient of
nursing facility services in the State (or, at the
option of the State, in the community in which the
individual is institutionalized) at the time of
application.
(ii) With respect to a noninstitutionalized individual, the
number of months of ineligibility under this subparagraph for
an individual shall not be greater than a number equal to--
(I) the total, cumulative uncompensated value of all
assets transferred by the individual (or individual's
spouse) on or after the look-back date specified in
subparagraph (B)(i), divided by
(II) the average monthly cost to a private patient of
nursing facility services in the State (or, at the
option of the State, in the community in which the
individual is institutionalized) at the time of
application.
(iii) The number of months of ineligibility otherwise
determined under clause (i) or (ii) with respect to the
disposal of an asset shall be reduced--
(I) in the case of periods of ineligibility
determined under clause (i), by the number of months of
ineligibility applicable to the individual under clause
(ii) as a result of such disposal, and
(II) in the case of periods of ineligibility
determined under clause (ii), by the number of months
of ineligibility applicable to the individual under
clause (i) as a result of such disposal.
(iv) A State shall not round down, or otherwise disregard any
fractional period of ineligibility determined under clause (i)
or (ii) with respect to the disposal of assets.
(F) For purposes of this paragraph, the purchase of an
annuity shall be treated as the disposal of an asset for less
than fair market value unless--
(i) the State is named as the remainder beneficiary
in the first position for at least the total amount of
medical assistance paid on behalf of the
institutionalized individual under this title; or
(ii) the State is named as such a beneficiary in the
second position after the community spouse or minor or
disabled child and is named in the first position if
such spouse or a representative of such child disposes
of any such remainder for less than fair market value.
(G) For purposes of this paragraph with respect to a transfer
of assets, the term ``assets'' includes an annuity purchased by
or on behalf of an annuitant who has applied for medical
assistance with respect to nursing facility services or other
long-term care services under this title unless--
(i) the annuity is--
(I) an annuity described in subsection (b) or
(q) of section 408 of the Internal Revenue Code
of 1986; or
(II) purchased with proceeds from--
(aa) an account or trust described in
subsection (a), (c), or (p) of section
408 of such Code;
(bb) a simplified employee pension
(within the meaning of section 408(k)
of such Code); or
(cc) a Roth IRA described in section
408A of such Code; or
(ii) the annuity--
(I) is irrevocable and nonassignable;
(II) is actuarially sound (as determined in
accordance with actuarial publications of the
Office of the Chief Actuary of the Social
Security Administration); and
(III) provides for payments in equal amounts
during the term of the annuity, with no
deferral and no balloon payments made.
(H) Notwithstanding the preceding provisions of this
paragraph, in the case of an individual (or individual's
spouse) who makes multiple fractional transfers of assets in
more than 1 month for less than fair market value on or after
the applicable look-back date specified in subparagraph (B), a
State may determine the period of ineligibility applicable to
such individual under this paragraph by--
(i) treating the total, cumulative uncompensated
value of all assets transferred by the individual (or
individual's spouse) during all months on or after the
look-back date specified in subparagraph (B) as 1
transfer for purposes of clause (i) or (ii) (as the
case may be) of subparagraph (E); and
(ii) beginning such period on the earliest date which
would apply under subparagraph (D) to any of such
transfers.
(I) For purposes of this paragraph with respect to a transfer
of assets, the term ``assets'' includes funds used to purchase
a promissory note, loan, or mortgage unless such note, loan, or
mortgage--
(i) has a repayment term that is actuarially sound
(as determined in accordance with actuarial
publications of the Office of the Chief Actuary of the
Social Security Administration);
(ii) provides for payments to be made in equal
amounts during the term of the loan, with no deferral
and no balloon payments made; and
(iii) prohibits the cancellation of the balance upon
the death of the lender.
In the case of a promissory note, loan, or mortgage that does
not satisfy the requirements of clauses (i) through (iii), the
value of such note, loan, or mortgage shall be the outstanding
balance due as of the date of the individual's application for
medical assistance for services described in subparagraph (C).
(J) For purposes of this paragraph with respect to a transfer
of assets, the term ``assets'' includes the purchase of a life
estate interest in another individual's home unless the
purchaser resides in the home for a period of at least 1 year
after the date of the purchase.
(2) An individual shall not be ineligible for medical
assistance by reason of paragraph (1) to the extent that--
(A) the assets transferred were a home and title to
the home was transferred to--
(i) the spouse of such individual;
(ii) a child of such individual who (I) is
under age 21, or (II) (with respect to States
eligible to participate in the State program
established under title XVI) is blind or
permanently and totally disabled, or (with
respect to States which are not eligible to
participate in such program) is blind or
disabled as defined in section 1614;
(iii) a sibling of such individual who has an
equity interest in such home and who was
residing in such individual's home for a period
of at least one year immediately before the
date the individual becomes an
institutionalized individual; or
(iv) a son or daughter of such individual
(other than a child described in clause (ii))
who was residing in such individual's home for
a period of at least two years immediately
before the date the individual becomes an
institutionalized individual, and who (as
determined by the State) provided care to such
individual which permitted such individual to
reside at home rather than in such an
institution or facility;
(B) the assets--
(i) were transferred to the individual's
spouse or to another for the sole benefit of
the individual's spouse,
(ii) were transferred from the individual's
spouse to another for the sole benefit of the
individual's spouse,
(iii) were transferred to, or to a trust
(including a trust described in subsection
(d)(4)) established solely for the benefit of,
the individual's child described in
subparagraph (A)(ii)(II), or
(iv) were transferred to a trust (including a
trust described in subsection (d)(4))
established solely for the benefit of an
individual under 65 years of age who is
disabled (as defined in section 1614(a)(3));
(C) a satisfactory showing is made to the State (in
accordance with regulations promulgated by the
Secretary) that (i) the individual intended to dispose
of the assets either at fair market value, or for other
valuable consideration, (ii) the assets were
transferred exclusively for a purpose other than to
qualify for medical assistance, or (iii) all assets
transferred for less than fair market value have been
returned to the individual; or
(D) the State determines, under procedures
established by the State (in accordance with standards
specified by the Secretary), that the denial of
eligibility would work an undue hardship as determined
on the basis of criteria established by the Secretary.
The procedures established under subparagraph (D) shall
permit the facility in which the institutionalized
individual is residing to file an undue hardship waiver
application on behalf of the individual with the
consent of the individual or the personal
representative of the individual. While an application
for an undue hardship waiver is pending under
subparagraph (D) in the case of an individual who is a
resident of a nursing facility, if the application
meets such criteria as the Secretary specifies, the
State may provide for payments for nursing facility
services in order to hold the bed for the individual at
the facility, but not in excess of payments for 30
days.
(3) For purposes of this subsection, in the case of an asset
held by an individual in common with another person or persons
in a joint tenancy, tenancy in common, or similar arrangement,
the asset (or the affected portion of such asset) shall be
considered to be transferred by such individual when any action
is taken, either by such individual or by any other person,
that reduces or eliminates such individual's ownership or
control of such asset.
(4) A State (including a State which has elected treatment
under section 1902(f)) may not provide for any period of
ineligibility for an individual due to transfer of resources
for less than fair market value except in accordance with this
subsection. In the case of a transfer by the spouse of an
individual which results in a period of ineligibility for
medical assistance under a State plan for such individual, a
State shall, using a reasonable methodology (as specified by
the Secretary), apportion such period of ineligibility (or any
portion of such period) among the individual and the
individual's spouse if the spouse otherwise becomes eligible
for medical assistance under the State plan.
(5) In this subsection, the term ``resources'' has the
meaning given such term in section 1613, without regard to the
exclusion described in subsection (a)(1) thereof.
(d)(1) For purposes of determining an individual's
eligibility for, or amount of, benefits under a State plan
under this title, subject to paragraph (4), the rules specified
in paragraph (3) shall apply to a trust established by such
individual.
(2)(A) For purposes of this subsection, an individual shall
be considered to have established a trust if assets of the
individual were used to form all or part of the corpus of the
trust and if any of the following individuals established such
trust other than by will:
(i) The individual.
(ii) The individual's spouse.
(iii) A person, including a court or administrative
body, with legal authority to act in place of or on
behalf of the individual or the individual's spouse.
(iv) A person, including any court or administrative
body, acting at the direction or upon the request of
the individual or the individual's spouse.
(B) In the case of a trust the corpus of which includes
assets of an individual (as determined under subparagraph (A))
and assets of any other person or persons, the provisions of
this subsection shall apply to the portion of the trust
attributable to the assets of the individual.
(C) Subject to paragraph (4), this subsection shall apply
without regard to--
(i) the purposes for which a trust is established,
(ii) whether the trustees have or exercise any
discretion under the trust,
(iii) any restrictions on when or whether
distributions may be made from the trust, or
(iv) any restrictions on the use of distributions
from the trust.
(3)(A) In the case of a revocable trust--
(i) the corpus of the trust shall be considered
resources available to the individual,
(ii) payments from the trust to or for the benefit of
the individual shall be considered income of the
individual, and
(iii) any other payments from the trust shall be
considered assets disposed of by the individual for
purposes of subsection (c).
(B) In the case of an irrevocable trust--
(i) if there are any circumstances under which
payment from the trust could be made to or for the
benefit of the individual, the portion of the corpus
from which, or the income on the corpus from which,
payment to the individual could be made shall be
considered resources available to the individual, and
payments from that portion of the corpus or income--
(I) to or for the benefit of the individual,
shall be considered income of the individual,
and
(II) for any other purpose, shall be
considered a transfer of assets by the
individual subject to subsection (c); and
(ii) any portion of the trust from which, or any
income on the corpus from which, no payment could under
any circumstances be made to the individual shall be
considered, as of the date of establishment of the
trust (or, if later, the date on which payment to the
individual was foreclosed) to be assets disposed by the
individual for purposes of subsection (c), and the
value of the trust shall be determined for purposes of
such subsection by including the amount of any payments
made from such portion of the trust after such date.
(4) This subsection shall not apply to any of the following
trusts:
(A) A trust containing the assets of an individual
under age 65 who is disabled (as defined in section
1614(a)(3)) and which is established for the benefit of
such individual by the individual, a parent,
grandparent, legal guardian of the individual, or a
court if the State will receive all amounts remaining
in the trust upon the death of such individual up to an
amount equal to the total medical assistance paid on
behalf of the individual under a State plan under this
title.
(B) A trust established in a State for the benefit of
an individual if--
(i) the trust is composed only of pension,
Social Security, and other income to the
individual (and accumulated income in the
trust),
(ii) the State will receive all amounts
remaining in the trust upon the death of such
individual up to an amount equal to the total
medical assistance paid on behalf of the
individual under a State plan under this title,
and
(iii) the State makes medical assistance
available to individuals described in section
1902(a)(10)(A)(ii)(V), but does not make such
assistance available to individuals for nursing
facility services under section 1902(a)(10)(C).
(C) A trust containing the assets of an individual
who is disabled (as defined in section 1614(a)(3)) that
meets the following conditions:
(i) The trust is established and managed by a
nonprofit association.
(ii) A separate account is maintained for
each beneficiary of the trust, but, for
purposes of investment and management of funds,
the trust pools these accounts.
(iii) Accounts in the trust are established
solely for the benefit of individuals who are
disabled (as defined in section 1614(a)(3)) by
the parent, grandparent, or legal guardian of
such individuals, by such individuals, or by a
court.
(iv) To the extent that amounts remaining in
the beneficiary's account upon the death of the
beneficiary are not retained by the trust, the
trust pays to the State from such remaining
amounts in the account an amount equal to the
total amount of medical assistance paid on
behalf of the beneficiary under the State plan
under this title.
(5) The State agency shall establish procedures (in
accordance with standards specified by the Secretary) under
which the agency waives the application of this subsection with
respect to an individual if the individual establishes that
such application would work an undue hardship on the individual
as determined on the basis of criteria established by the
Secretary.
(6) The term ``trust'' includes any legal instrument or
device that is similar to a trust but includes an annuity only
to such extent and in such manner as the Secretary specifies.
(e)(1) In order to meet the requirements of this section for
purposes of section 1902(a)(18), a State shall require, as a
condition for the provision of medical assistance for services
described in subsection (c)(1)(C)(i) (relating to long-term
care services) for an individual, the application of the
individual for such assistance (including any recertification
of eligibility for such assistance) shall disclose a
description of any interest the individual or community spouse
has in an annuity (or similar financial instrument, as may be
specified by the Secretary), regardless of whether the annuity
is irrevocable or is treated as an asset. Such application or
recertification form shall include a statement that under
paragraph (2) the State becomes a remainder beneficiary under
such an annuity or similar financial instrument by virtue of
the provision of such medical assistance.
(2)(A) In the case of disclosure concerning an annuity under
subsection (c)(1)(F), the State shall notify the issuer of the
annuity of the right of the State under such subsection as a
preferred remainder beneficiary in the annuity for medical
assistance furnished to the individual. Nothing in this
paragraph shall be construed as preventing such an issuer from
notifying persons with any other remainder interest of the
State's remainder interest under such subsection.
(B) In the case of such an issuer receiving notice under
subparagraph (A), the State may require the issuer to notify
the State when there is a change in the amount of income or
principal being withdrawn from the amount that was being
withdrawn at the time of the most recent disclosure described
in paragraph (1). A State shall take such information into
account in determining the amount of the State's obligations
for medical assistance or in the individual's eligibility for
such assistance.
(3) The Secretary may provide guidance to States on
categories of transactions that may be treated as a transfer of
asset for less than fair market value.
(4) Nothing in this subsection shall be construed as
preventing a State from denying eligibility for medical
assistance for an individual based on the income or resources
derived from an annuity described in paragraph (1).
(f)(1)(A) Notwithstanding any other provision of this title,
subject to [subparagraphs (B) and (C)] subparagraph (B) of this
paragraph and paragraph (2), in determining eligibility of an
individual for medical assistance with respect to nursing
facility services or other long-term care services, the
individual shall not be eligible for such assistance if the
individual's equity interest in the individual's home exceeds
$500,000.
[(B) A State may elect, without regard to the requirements of
section 1902(a)(1) (relating to statewideness) and section
1902(a)(10)(B) (relating to comparability), to apply
subparagraph (A) by substituting for ``$500,000'', an amount
that exceeds such amount, but does not exceed $750,000.]
[(C)] (B) The [dollar amounts specified in this paragraph]
dollar amount specified in subparagraph (A) shall be increased,
beginning with 2011, from year to year based on the percentage
increase in the consumer price index for all urban consumers
(all items; United States city average), rounded to the nearest
$1,000.
(2) Paragraph (1) shall not apply with respect to an
individual if--
(A) the spouse of such individual, or
(B) such individual's child who is under age 21, or
(with respect to States eligible to participate in the
State program established under title XVI) is blind or
permanently and totally disabled, or (with respect to
States which are not eligible to participate in such
program) is blind or disabled as defined in section
1614,
is lawfully residing in the individual's home.
(3) Nothing in this subsection shall be construed as
preventing an individual from using a reverse mortgage or home
equity loan to reduce the individual's total equity interest in
the home.
(4) The Secretary shall establish a process whereby paragraph
(1) is waived in the case of a demonstrated hardship.
(g) Treatment of Entrance Fees of Individuals Residing in
Continuing Care Retirement Communities.--
(1) In general.--For purposes of determining an
individual's eligibility for, or amount of, benefits
under a State plan under this title, the rules
specified in paragraph (2) shall apply to individuals
residing in continuing care retirement communities or
life care communities that collect an entrance fee on
admission from such individuals.
(2) Treatment of entrance fee.--For purposes of this
subsection, an individual's entrance fee in a
continuing care retirement community or life care
community shall be considered a resource available to
the individual to the extent that--
(A) the individual has the ability to use the
entrance fee, or the contract provides that the
entrance fee may be used, to pay for care
should other resources or income of the
individual be insufficient to pay for such
care;
(B) the individual is eligible for a refund
of any remaining entrance fee when the
individual dies or terminates the continuing
care retirement community or life care
community contract and leaves the community;
and
(C) the entrance fee does not confer an
ownership interest in the continuing care
retirement community or life care community.
(h) In this section, the following definitions shall apply:
(1) The term ``assets'', with respect to an
individual, includes all income and resources of the
individual and of the individual's spouse, including
any income or resources which the individual or such
individual's spouse is entitled to but does not receive
because of action--
(A) by the individual or such individual's
spouse,
(B) by a person, including a court or
administrative body, with legal authority to
act in place of or on behalf of the individual
or such individual's spouse, or
(C) by any person, including any court or
administrative body, acting at the direction or
upon the request of the individual or such
individual's spouse.
(2) The term ``income'' has the meaning given such
term in section 1612.
(3) The term ``institutionalized individual'' means
an individual who is an inpatient in a nursing
facility, who is an inpatient in a medical institution
and with respect to whom payment is made based on a
level of care provided in a nursing facility, or who is
described in section 1902(a)(10)(A)(ii)(VI).
(4) The term ``noninstitutionalized individual''
means an individual receiving any of the services
specified in subsection (c)(1)(C)(ii).
(5) The term ``resources'' has the meaning given such
term in section 1613, without regard (in the case of an
institutionalized individual) to the exclusion
described in subsection (a)(1) of such section.
* * * * * * *
PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN
Sec. 1920. (a) A State plan approved under section 1902 may
provide for making ambulatory prenatal care available to a
pregnant woman during a presumptive eligibility period.
(b) For purposes of this section--
(1) the term ``presumptive eligibility period''
means, with respect to a pregnant woman, the period
that--
(A) begins with the date on which a qualified
provider determines, on the basis of
preliminary information, that the family income
of the woman does not exceed the applicable
income level of eligibility under the State
plan, and
(B) ends with (and includes) the earlier of--
(i) the day on which a determination
is made with respect to the eligibility
of the woman for medical assistance
under the State plan, or
(ii) in the case of a woman who does
not file an application by the last day
of the month following the month during
which the provider makes the
determination referred to in
subparagraph (A), such last day; and
(2) the term ``qualified provider'' means any
provider that--
(A) is eligible for payments under a State
plan approved under this title,
(B) provides services of the type described
in subparagraph (A) or (B) of section
1905(a)(2) or in section 1905(a)(9),
(C) is determined by the State agency to be
capable of making determinations of the type
described in paragraph (1)(A), and
(D)(i) receives funds under--
(I) section 330 or 330A of the Public
Health Service Act,
(II) title V of this Act, or
(III) title V of the Indian Health
Care Improvement Act;
(ii) participates in a program established
under--
(I) section 17 of the Child Nutrition
Act of 1966, or
(II) section 4(a) of the Agriculture
and Consumer Protection Act of 1973;
(iii) participates in a State perinatal
program; or
(iv) is the Indian Health Service or is a
health program or facility operated by a tribe
or tribal organization under the Indian Self-
Determination Act (Public Law 93-638).
The term ``qualified provider'' also includes a qualified
entity, as defined in section 1920A(b)(3).
(c)(1) The State agency shall provide qualified providers
with--
(A) such forms as are necessary for a pregnant woman
to make application for medical assistance under the
State plan, and
(B) information on how to assist such women in
completing and filing such forms.
(2) A qualified provider that determines under subsection
(b)(1)(A) that a pregnant woman is presumptively eligible for
medical assistance under a State plan shall--
(A) notify the State agency of the determination
within 5 working days after the date on which
determination is made, and
(B) inform the woman at the time the determination is
made that she is required to make application for
medical assistance under the State plan by not later
than the last day of the month following the month
during which the determination is made.
(3) A pregnant woman who is determined by a qualified
provider to be presumptively eligible for medical assistance
under a State plan shall make application for medical
assistance under such plan by not later than the last day of
the month following the month during which the determination is
made, which application may be the application used for the
receipt of medical assistance by individuals described in
section 1902(l)(1)(A).
(d) Notwithstanding any other provision of this title,
ambulatory prenatal care that--
(1) is furnished to a pregnant woman--
(A) during a presumptive eligibility period,
(B) by a provider that is eligible for
payments under the State plan; and
(2) is included in the care and services covered by a
State plan;
shall be treated as medical assistance provided by such plan
for purposes of section 1903.
(e) If the State has elected the option to provide a
presumptive eligibility period under this section or section
1920A, the State may elect to provide a presumptive eligibility
period (as defined in subsection (b)(1)) for individuals who
are eligible for medical assistance [under clause (i)(VIII),
clause (i)(IX), or clause (ii)(XX) of subsection (a)(10)(A)]
under clause (i)(VIII) or clause (ii)(XX) of section
1902(a)(10)(A) before January 1, 2020, section
1902(a)(10)(A)(i)(IX), or section 1931 in the same manner as
the State provides for such a period under this section or
section 1920A, subject to such guidance as the Secretary shall
establish.
* * * * * * *
ADJUSTMENT IN PAYMENT FOR INPATIENT HOSPITAL SERVICES FURNISHED BY
DISPROPORTIONATE SHARE HOSPITALS
Sec. 1923. (a) Implementation of Requirement.--
(1) A State plan under this title shall not be
considered to meet the requirement of section
1902(a)(13)(A)(iv) (insofar as it requires payments to
hospitals to take into account the situation of
hospitals which serve a disproportionate number of low
income patients with special needs), as of July 1,
1988, unless the State has submitted to the Secretary,
by not later than such date, an amendment to such plan
that--
(A) specifically defines the hospitals so
described (and includes in such definition any
disproportionate share hospital described in
subsection (b)(1) which meets the requirements
of subsection (d)), and
(B) provides, effective for inpatient
hospital services provided not later than July
1, 1988, for an appropriate increase in the
rate or amount of payment for such services
provided by such hospitals, consistent with
subsection (c).
(2)(A) In order to be considered to have met such
requirement of section 1902(a)(13)(A) as of July 1,
1989, the State must submit to the Secretary by not
later than April 1, 1989, the State plan amendment
described in paragraph (1), consistent with subsection
(c), effective for inpatient hospital services provided
on or after July 1, 1989.
(B) In order to be considered to have met such
requirement of section 1902(a)(13)(A) as of July 1,
1990, the State must submit to the Secretary by not
later than April 1, 1990, the State plan amendment
described in paragraph (1), consistent with subsections
(c) and (f), effective for inpatient hospital services
provided on or after July 1, 1990.
(C) If a State plan under this title provides for
payments for inpatient hospital services on a
prospective basis (whether per diem, per case, or
otherwise), in order for the plan to be considered to
have met such requirement of section 1902(a)(13)(A) as
of July 1, 1989, the State must submit to the Secretary
by not later than April 1, 1989, a State plan amendment
that provides, in the case of hospitals defined by the
State as disproportionate share hospitals under
paragraph (1)(A), for an outlier adjustment in payment
amounts for medically necessary inpatient hospital
services provided on or after July 1, 1989, involving
exceptionally high costs or exceptionally long lengths
of stay for individuals under one year of age.
(D) A State plan under this title shall not be
considered to meet the requirements of section
1902(a)(13)(A)(iv) (insofar as it requires payments to
hospitals to take into account the situation of
hospitals that serve a disproportionate number of low-
income patients with special needs), as of October 1,
1998, unless the State has submitted to the Secretary
by such date a description of the methodology used by
the State to identify and to make payments to
disproportionate share hospitals, including children's
hospitals, on the basis of the proportion of low-income
and medicaid patients (including such patients who
receive benefits through a managed care entity) served
by such hospitals. The State shall provide an annual
report to the Secretary describing the disproportionate
share payments to each such disproportionate share
hospital.
(3) The Secretary shall, not later than 90 days after
the date a State submits an amendment under this
subsection, review each such amendment for compliance
with such requirement and by such date shall approve or
disapprove each such amendment. If the Secretary
disapproves such an amendment, the State shall
immediately submit a revised amendment which meets such
requirement.
(4) The requirement of this subsection may not be
waived under section 1915(b)(4).
(b) Hospitals Deemed Disproportionate Share.--
(1) For purposes of subsection (a)(1), a hospital
which meets the requirements of subsection (d) is
deemed to be a disproportionate share hospital if--
(A) the hospital's medicaid inpatient
utilization rate (as defined in paragraph (2))
is at least one standard deviation above the
mean medicaid inpatient utilization rate for
hospitals receiving medicaid payments in the
State; or
(B) the hospital's low-income utilization
rate (as defined in paragraph (3)) exceeds 25
percent.
(2) For purposes of paragraph (1)(A), the term
``medicaid inpatient utilization rate'' means, for a
hospital, a fraction (expressed as a percentage), the
numerator of which is the hospital's number of
inpatient days attributable to patients who (for such
days) were eligible for medical assistance under a
State plan approved under this title in a period
(regardless of whether such patients receive medical
assistance on a fee-for-service basis or through a
managed care entity), and the denominator of which is
the total number of the hospital's inpatient days in
that period. In this paragraph, the term ``inpatient
day'' includes each day in which an individual
(including a newborn) is an inpatient in the hospital,
whether or not the individual is in a specialized ward
and whether or not the individual remains in the
hospital for lack of suitable placement elsewhere.
(3) For purposes of paragraph (1)(B), the term ``low-
income utilization rate'' means, for a hospital, the
sum of--
(A) the fraction (expressed as a
percentage)--
(i) the numerator of which is the sum
(for a period) of (I) the total
revenues paid the hospital for patient
services under a State plan under this
title (regardless of whether the
services were furnished on a fee-for-
service basis or through a managed care
entity) and (II) the amount of the cash
subsidies for patient services received
directly from State and local
governments, and
(ii) the denominator of which is the
total amount of revenues of the
hospital for patient services
(including the amount of such cash
subsidies) in the period; and
(B) a fraction (expressed as a percentage)--
(i) the numerator of which is the
total amount of the hospital's charges
for inpatient hospital services which
are attributable to charity care in a
period, less the portion of any cash
subsidies described in clause (i)(II)
of subparagraph (A) in the period
reasonably attributable to inpatient
hospital services, and
(ii) the denominator of which is the
total amount of the hospital's charges
for inpatient hospital services in the
hospital in the period.
The numerator under subparagraph (B)(i) shall not
include contractual allowances and discounts (other
than for indigent patients not eligible for medical
assistance under a State plan approved under this
title).
(4) The Secretary may not restrict a State's
authority to designate hospitals as disproportionate
share hospitals under this section. The previous
sentence shall not be construed to affect the authority
of the Secretary to reduce payments pursuant to section
1903(w)(1)(A)(iii) if the Secretary determines that, as
a result of such designations, there is in effect a
hold harmless provision described in section
1903(w)(4).
(c) Payment adjustment.--Subject to subsections (f) and (g),
in order to be consistent with this subsection, a payment
adjustment for a disproportionate share hospital must either--
(1) be in an amount equal to at least the product of
(A) the amount paid under the State plan to the
hospital for operating costs for inpatient hospital
services (of the kind described in section 1886(a)(4)),
and (B) the hospital's disproportionate share
adjustment percentage (established under section
1886(d)(5)(F)(iv));
(2) provide for a minimum specified additional
payment amount (or increased percentage payment) and
(without regard to whether the hospital is described in
subparagraph (A) or (B) of subsection (b)(1)) for an
increase in such a payment amount (or percentage
payment) in proportion to the percentage by which the
hospital's medicaid utilization rate (as defined in
subsection (b)(2)) exceeds one standard deviation above
the mean medicaid inpatient utilization rate for
hospitals receiving medicaid payments in the State or
the hospital's low-income utilization rate (as defined
in paragraph (b)(3)); or
(3) provide for a minimum specified additional
payment amount (or increased percentage payment) that
varies according to type of hospital under a
methodology that--
(A) applies equally to all hospitals of each
type; and
(B) results in an adjustment for each type of
hospital that is reasonably related to the
costs, volume, or proportion of services
provided to patients eligible for medical
assistance under a State plan approved under
this title or to low-income patients,
except that, for purposes of paragraphs (1)(B) and
(2)(A) of subsection (a), the payment adjustment for a
disproportionate share hospital is consistent with this
subsection if the appropriate increase in the rate or
amount of payment is equal to at least one-third of the
increase otherwise applicable under this subsection (in
the case of such paragraph (1)(B)) and at least two-
thirds of such increase (in the case of such paragraph
(2)(A)). In the case of a hospital described in
subsection (d)(2)(A)(i) (relating to children's
hospitals), in computing the hospital's
disproportionate share adjustment percentage for
purposes of paragraph (1)(B) of this subsection, the
disproportionate patient percentage (defined in section
1886(d)(5)(F)(vi)) shall be computed by substituting
for the fraction described in subclause (I) of such
section the fraction described in subclause (II) of
that section. If a State elects in a State plan
amendment under subsection (a) to provide the payment
adjustment described in paragraph (2), the State must
include in the amendment a detailed description of the
specific methodology to be used in determining the
specified additional payment amount (or increased
percentage payment) to be made to each hospital
qualifying for such a payment adjustment and must
publish at least annually the name of each hospital
qualifying for such a payment adjustment and the amount
of such payment adjustment made for each such hospital.
(d) Requirements To Qualify as Disproportionate Share
Hospital.--
(1) Except as provided in paragraph (2), no hospital
may be defined or deemed as a disproportionate share
hospital under a State plan under this title or under
subsection (b) of this section unless the hospital has
at least 2 obstetricians who have staff privileges at
the hospital and who have agreed to provide obstetric
services to individuals who are entitled to medical
assistance for such services under such State plan.
(2)(A) Paragraph (1) shall not apply to a hospital--
(i) the inpatients of which are predominantly
individuals under 18 years of age; or
(ii) which does not offer nonemergency
obstetric services to the general population as
of the date of the enactment of this Act.
(B) In the case of a hospital located in a rural area
(as defined for purposes of section 1886), in paragraph
(1) the term ``obstetrician'' includes any physician
with staff privileges at the hospital to perform
nonemergency obstetric procedures.
(3) No hospital may be defined or deemed as a
disproportionate share hospital under a State plan
under this title or under subsection (b) or (e) of this
section unless the hospital has a medicaid inpatient
utilization rate (as defined in subsection (b)(2)) of
not less than 1 percent.
(e) Special Rule.--(1) A State plan shall be considered to
meet the requirement of section 1902(a)(13)(A)(iv) (insofar as
it requires payments to hospitals to take into account the
situation of hospitals which serve a disproportionate number of
low income patients with special needs) without regard to the
requirement of subsection (a) if (A)(i) the plan provided for
payment adjustments based on a pooling arrangement involving a
majority of the hospitals participating under the plan for
disproportionate share hospitals as of January 1, 1984, or (ii)
the plan as of January 1, 1987, provided for payment
adjustments based on a statewide pooling arrangement involving
all acute care hospitals and the arrangement provides for
reimbursement of the total amount of uncompensated care
provided by each participating hospital, (B) the aggregate
amount of the payment adjustments under the plan for such
hospitals is not less than the aggregate amount of such
adjustments otherwise required to be made under such
subsection, and (C) the plan meets the requirement of
subsection (d)(3) and such payment adjustments are made
consistent with the last sentence of subsection (c).
(2) In the case of a State that used a health insuring
organization before January 1, 1986, to administer a portion of
its plan on a state-wide basis, beginning on July 1, 1988--
(A) the requirements of subsections (b) and (c)
(other than the last sentence of subsection (c)) shall
not apply if the aggregate amount of the payment
adjustments under the plan for disproportionate share
hospitals (as defined under the State plan) is not less
than the aggregate amount of payment adjustments
otherwise required to be made if such subsections
applied,
(B) subsection (d)(2)(B) shall apply to hospitals
located in urban areas, as well as in rural areas,
(C) subsection (d)(3) shall apply, and
(D) subsection (g) shall apply.
(f) Limitation on Federal Financial Participation.--
(1) In general.--Payment under section 1903(a) shall
not be made to a State with respect to any payment
adjustment made under this section for hospitals in a
State for quarters in a fiscal year in excess of the
disproportionate share hospital (in this subsection
referred to as ``DSH'') allotment for the State for the
fiscal year, as specified in paragraphs (2), (3), and
(7).
(2) State dsh allotments for fiscal years 1998
through 2002.--Subject to paragraph (4), the DSH
allotment for a State for each fiscal year during the
period beginning with fiscal year 1998 and ending with
fiscal year 2002 is determined in accordance with the
following table:
----------------------------------------------------------------------------------------------------------------
DSH Allotment (in millions of dollars)
State or District -------------------------------------------------
FY 98 FY 99 FY 00 FY 01 FY 02
----------------------------------------------------------------------------------------------------------------
Alabama 293 269 248 246 246
Alaska 10 10 10 9 9
Arizona 81 81 81 81 81
Arkansas 2 2 2 2 2
California 1,085 1,068 986 931 877
Colorado 93 85 79 74 74
Connecticut 200 194 164 160 160
Delaware 4 4 4 4 4
District of Columbia 23 23 49 49 49
Florida 207 203 197 188 160
Georgia 253 248 241 228 215
Hawaii 0 0 0 0 0
Idaho 1 1 1 1 1
Illinois 203 199 193 182 172
Indiana 201 197 191 181 171
Iowa 8 8 8 8 8
Kansas 51 49 42 36 33
Kentucky 137 134 130 123 116
Louisiana 880 795 713 658 631
Maine 103 99 84 84 84
Maryland 72 70 68 64 61
Massachusetts 288 282 273 259 244
Michigan 249 244 237 224 212
Minnesota 16 \1\16 33 33 33
Mississippi 143 141 136 129 122
Missouri 436 423 379 379 379
Montana 0.2 0.2 0.2 0.2 0.2
Nebraska 5 5 5 5 5
Nevada 37 37 37 37 37
New Hampshire 140 136 130 130 130
New Jersey 600 582 515 515 515
New Mexico 5 \2\5 9 9 9
New York 1,512 1,482 1,436 1,361 1,285
North Carolina 278 272 264 250 236
North Dakota 1 1 1 1 1
Ohio 382 374 363 344 325
Oklahoma 16 16 16 16 16
Oregon 20 20 20 20 20
Pennsylvania 529 518 502 476 449
Rhode Island 62 60 58 55 52
South Carolina 313 303 262 262 262
South Dakota 1 1 1 1 1
Tennessee 0 0 0 0 0
Texas 979 950 806 765 765
Utah 3 3 3 3 3
Vermont 18 18 18 18 18
Virginia 70 68 66 63 59
Washington 174 171 166 157 148
West Virginia 64 63 61 58 54
Wisconsin 7 7 7 7 7
Wyoming 0 \3\0 0.1 0.1 0.1
----------------------------------------------------------------------------------------------------------------
\1\The DSH allotment for fiscal year 1999 shall be deemed to be $33,000,000 as provided for by section 702 of
Public Law 105-277 (112 Stat. 2681-389).
\2\The DSH allotment for fiscal year 1999 shall be deemed to be $9,000,000 as provided for by section 703 of
Public Law 105-277 (112 Stat. 2681-389).
\1\The DSH allotment for fiscal year 1999 shall be deemed to be $95,000 as provided for by section 704 of Public
Law 105-277 (112 Stat. 2681-389).
(3) State dsh allotments for fiscal year 2003 and
thereafter.--
(A) In general.--Except as provided in
paragraphs (6), (7), and (8) and subparagraph
(E), the DSH allotment for any State for fiscal
year 2003 and each succeeding fiscal year is
equal to the DSH allotment for the State for
the preceding fiscal year under paragraph (2)
or this paragraph, increased, subject to
subparagraphs (B) and (C) and paragraph (5), by
the percentage change in the consumer price
index for all urban consumers (all items; U.S.
city average), for the previous fiscal year.
(B) Limitation.--The DSH allotment for a
State shall not be increased under subparagraph
(A) for a fiscal year to the extent that such
an increase would result in the DSH allotment
for the year exceeding the greater of--
(i) the DSH allotment for the
previous year, or
(ii) 12 percent of the total amount
of expenditures under the State plan
for medical assistance during the
fiscal year.
(C) Special, temporary increase in allotments
on a one-time, non-cumulative basis.--The DSH
allotment for any State (other than a State
with a DSH allotment determined under paragraph
(5))--
(i) for fiscal year 2004 is equal to
116 percent of the DSH allotment for
the State for fiscal year 2003 under
this paragraph, notwithstanding
subparagraph (B); and
(ii) for each succeeding fiscal year
is equal to the DSH allotment for the
State for fiscal year 2004 or, in the
case of fiscal years beginning with the
fiscal year specified in subparagraph
(D) for that State, the DSH allotment
for the State for the previous fiscal
year increased by the percentage change
in the consumer price index for all
urban consumers (all items; U.S. city
average), for the previous fiscal year.
(D) Fiscal year specified.--For purposes of
subparagraph (C)(ii), the fiscal year specified
in this subparagraph for a State is the first
fiscal year for which the Secretary estimates
that the DSH allotment for that State will
equal (or no longer exceed) the DSH allotment
for that State under the law as in effect
before the date of the enactment of this
subparagraph.
(E) Temporary increase in allotments during
recession.--
(i) In general.--Subject to clause
(ii), the DSH allotment for any State--
(I) for fiscal year 2009 is
equal to 102.5 percent of the
DSH allotment that would be
determined under this paragraph
for the State for fiscal year
2009 without application of
this subparagraph,
notwithstanding subparagraphs
(B) and (C);
(II) for fiscal year 2010 is
equal to 102.5 percent of the
DSH allotment for the State for
fiscal year 2009, as determined
under subclause (I); and
(III) for each succeeding
fiscal year is equal to the DSH
allotment for the State under
this paragraph determined
without applying subclauses (I)
and (II).
(ii) Application.--Clause (i) shall
not apply to a State for a year in the
case that the DSH allotment for such
State for such year under this
paragraph determined without applying
clause (i) would grow higher than the
DSH allotment specified under clause
(i) for the State for such year.
(4) Special rule for fiscal years 2001 and 2002.--
(A) In general.--Notwithstanding paragraph
(2), the DSH allotment for any State for--
(i) fiscal year 2001, shall be the
DSH allotment determined under
paragraph (2) for fiscal year 2000
increased, subject to subparagraph (B)
and paragraph (5), by the percentage
change in the consumer price index for
all urban consumers (all items; U.S.
city average) for fiscal year 2000; and
(ii) fiscal year 2002, shall be the
DSH allotment determined under clause
(i) increased, subject to subparagraph
(B) and paragraph (5), by the
percentage change in the consumer price
index for all urban consumers (all
items; U.S. city average) for fiscal
year 2001.
(B) Limitation.--Subparagraph (B) of
paragraph (3) shall apply to subparagraph (A)
of this paragraph in the same manner as that
subparagraph (B) applies to paragraph (3)(A).
(C) No application to allotments after fiscal
year 2002.--The DSH allotment for any State for
fiscal year 2003 or any succeeding fiscal year
shall be determined under paragraph (3) without
regard to the DSH allotments determined under
subparagraph (A) of this paragraph.
(5) Special rule for low dsh states.--
(A) For fiscal years 2001 through 2003 for
extremely low dsh states.--In the case of a
State in which the total expenditures under the
State plan (including Federal and State shares)
for disproportionate share hospital adjustments
under this section for fiscal year 1999, as
reported to the Administrator of the Health
Care Financing Administration as of August 31,
2000, is greater than 0 but less than 1 percent
of the State's total amount of expenditures
under the State plan for medical assistance
during the fiscal year, the DSH allotment for
fiscal year 2001 shall be increased to 1
percent of the State's total amount of
expenditures under such plan for such
assistance during such fiscal year. In
subsequent fiscal years before fiscal year
2004, such increased allotment is subject to an
increase for inflation as provided in paragraph
(3)(A).
(B) For fiscal year 2004 and subsequent
fiscal years.--In the case of a State in which
the total expenditures under the State plan
(including Federal and State shares) for
disproportionate share hospital adjustments
under this section for fiscal year 2000, as
reported to the Administrator of the Centers
for Medicare & Medicaid Services as of August
31, 2003, is greater than 0 but less than 3
percent of the State's total amount of
expenditures under the State plan for medical
assistance during the fiscal year, the DSH
allotment for the State with respect to--
(i) fiscal year 2004 shall be the DSH
allotment for the State for fiscal year
2003 increased by 16 percent;
(ii) each succeeding fiscal year
before fiscal year 2009 shall be the
DSH allotment for the State for the
previous fiscal year increased by 16
percent; and
(iii) fiscal year 2009 and any
subsequent fiscal year, shall be the
DSH allotment for the State for the
previous year subject to an increase
for inflation as provided in paragraph
(3)(A).
(6) Allotment adjustments.--
(A) Tennessee.--
(i) In general.--Only with respect to
fiscal year 2007, the DSH allotment for
Tennessee for such fiscal year,
notwithstanding the table set forth in
paragraph (2) or the terms of the
TennCare Demonstration Project in
effect for the State, shall be the
greater of--
(I) the amount that the
Secretary determines is equal
to the Federal medical
assistance percentage component
attributable to
disproportionate share hospital
payment adjustments for the
demonstration year ending in
2006 that is reflected in the
budget neutrality provision of
the TennCare Demonstration
Project; and
(II) $280,000,000.
Only with respect to fiscal years 2008,
2009, 2010, and 2011, the DSH allotment
for Tennessee for the fiscal year,
notwithstanding such table or terms,
shall be the amount specified in the
previous sentence for fiscal year 2007.
Only with respect to fiscal year 2012
for the period ending on December 31,
2011, the DSH allotment for Tennessee
for such portion of the fiscal year,
notwithstanding such table or terms,
shall be \1/4\ of the amount specified
in the first sentence for fiscal year
2007.
(ii) Limitation on amount of payment
adjustments eligible for federal
financial participation.--Payment under
section 1903(a) shall not be made to
Tennessee with respect to the aggregate
amount of any payment adjustments made
under this section for hospitals in the
State for fiscal year 2007, 2008, 2009,
2010, 2011, or for period in fiscal
year 2012 described in clause (i) that
is in excess of 30 percent of the DSH
allotment for the State for such fiscal
year or period determined pursuant to
clause (i).
(iii) State plan amendment.--The
Secretary shall permit Tennessee to
submit an amendment to its State plan
under this title that describes the
methodology to be used by the State to
identify and make payments to
disproportionate share hospitals,
including children's hospitals and
institutions for mental diseases or
other mental health facilities. The
Secretary may not approve such plan
amendment unless the methodology
described in the amendment is
consistent with the requirements under
this section for making payment
adjustments to disproportionate share
hospitals. For purposes of
demonstrating budget neutrality under
the TennCare Demonstration Project,
payment adjustments made pursuant to a
State plan amendment approved in
accordance with this subparagraph shall
be considered expenditures under such
project.
(iv) Offset of federal share of
payment adjustments for fiscal years
2007 through 2011 and the first
calendar quarter of fiscal year 2012
against essential access hospital
supplemental pool payments under the
tenncare demonstration project.--
(I) The total amount of
Essential Access Hospital
supplemental pool payments that
may be made under the TennCare
Demonstration Project for
fiscal year 2007, 2008, 2009,
2010, 2011, or for a period in
fiscal year 2012 described in
clause (i) shall be reduced on
a dollar for dollar basis by
the amount of any payments made
under section 1903(a) to
Tennessee with respect to
payment adjustments made under
this section for hospitals in
the State for such fiscal year
or period.
(II) The sum of the total
amount of payments made under
section 1903(a) to Tennessee
with respect to payment
adjustments made under this
section for hospitals in the
State for fiscal year 2007,
2008, 2009, 2010, 2011, or for
a period in fiscal year 2012
described in clause (i) and the
total amount of Essential
Access Hospital supplemental
pool payments made under the
TennCare Demonstration Project
for such fiscal year or period
shall not exceed the State's
DSH allotment for such fiscal
or period year established
under clause (i).
(v) Allotment for 2d, 3rd, and 4th
quarters of fiscal year 2012 and for
fiscal year 2013.--Notwithstanding the
table set forth in paragraph (2):
(I) 2d, 3rd, and 4th quarters
of fiscal year 2012.--In the
case of a State that has a DSH
allotment of $0 for the 2d,
3rd, and 4th quarters of fiscal
year 2012, the DSH allotment
shall be $47,200,000 for such
quarters.
(II) Fiscal year 2013.--In
the case of a State that has a
DSH allotment of $0 for fiscal
year 2013, the DSH allotment
shall be $53,100,000 for such
fiscal year.
(vi) Allotment for fiscal years 2015
through 2025.--Notwithstanding any
other provision of this subsection, any
other provision of law, or the terms of
the TennCare Demonstration Project in
effect for the State, the DSH allotment
for Tennessee for fiscal year 2015, and
for each fiscal year thereafter through
fiscal year 2025, shall be $53,100,000
for each such fiscal year.
(B) Hawaii.--
(i) In general.--Only with respect to
each of fiscal years 2007 through 2011,
the DSH allotment for Hawaii for such
fiscal year, notwithstanding the table
set forth in paragraph (2), shall be
$10,000,000. Only with respect to
fiscal year 2012 for the period ending
on December 31, 2011, the DSH allotment
for Hawaii for such portion of the
fiscal year, notwithstanding the table
set forth in paragraph (2), shall be
$2,500,000.
(ii) State plan amendment.--The
Secretary shall permit Hawaii to submit
an amendment to its State plan under
this title that describes the
methodology to be used by the State to
identify and make payments to
disproportionate share hospitals,
including children's hospitals and
institutions for mental diseases or
other mental health facilities. The
Secretary may not approve such plan
amendment unless the methodology
described in the amendment is
consistent with the requirements under
this section for making payment
adjustments to disproportionate share
hospitals.
(iii) Allotment for 2d, 3rd, and 4th
quarter of fiscal year 2012, fiscal
year 2013, and succeeding fiscal
years.--Notwithstanding the table set
forth in paragraph (2):
(I) 2d, 3rd, and 4th quarter
of fiscal year 2012.--The DSH
allotment for Hawaii for the
2d, 3rd, and 4th quarters of
fiscal year 2012 shall be
$7,500,000.
(II) Treatment as a low-dsh
state for fiscal year 2013 and
succeeding fiscal years.--With
respect to fiscal year 2013,
and each fiscal year
thereafter, the DSH allotment
for Hawaii shall be increased
in the same manner as
allotments for low DSH States
are increased for such fiscal
year under clause (iii) of
paragraph (5)(B).
(III) Certain hospital
payments.--The Secretary may
not impose a limitation on the
total amount of payments made
to hospitals under the QUEST
section 1115 Demonstration
Project except to the extent
that such limitation is
necessary to ensure that a
hospital does not receive
payments in excess of the
amounts described in subsection
(g), or as necessary to ensure
that such payments under the
waiver and such payments
pursuant to the allotment
provided in this clause do not,
in the aggregate in any year,
exceed the amount that the
Secretary determines is equal
to the Federal medical
assistance percentage component
attributable to
disproportionate share hospital
payment adjustments for such
year that is reflected in the
budget neutrality provision of
the QUEST Demonstration
Project.
(7) Medicaid dsh reductions.--
(A) Reductions.--
(i) In general.--For each of fiscal
years 2018 through [2025] 2019 the
Secretary shall effect the following
reductions:
(I) Reduction in dsh
allotments.--The Secretary
shall reduce DSH allotments to
States in the amount specified
under the DSH health reform
methodology under subparagraph
(B) for the State for the
fiscal year.
(II) Reductions in
payments.--The Secretary shall
reduce payments to States under
section 1903(a) for each
calendar quarter in the fiscal
year, in the manner specified
in clause (iii), in an amount
equal to \1/4\ of the DSH
allotment reduction under
subclause (I) for the State for
the fiscal year.
(ii) Aggregate reductions.--The
aggregate reductions in DSH allotments
for all States under clause (i)(I)
shall be equal to--
(I) $2,000,000,000 for fiscal
year 2018; and
(II) $3,000,000,000 for
fiscal year 2019[;].
[(III) $4,000,000,000 for
fiscal year 2020;
[(IV) $5,000,000,000 for
fiscal year 2021;
[(V) $6,000,000,000 for
fiscal year 2022;
[(VI) $7,000,000,000 for
fiscal year 2023;
[(VII) $8,000,000,000 for
fiscal year 2024; and
[(VIII) $8,000,000,000 for
fiscal year 2025.]
(iii) Manner of payment reduction.--
The amount of the payment reduction
under clause (i)(II) for a State for a
quarter shall be deemed an overpayment
to the State under this title to be
disallowed against the State's regular
quarterly draw for all spending under
section 1903(d)(2). Such a disallowance
is not subject to a reconsideration
under subsections (d) and (e) of
section 1116.
(iv) Definition.--In this paragraph,
the term ``State'' means the 50 States
and the District of Columbia.
(v) Distribution of aggregate
reductions.--The Secretary shall
distribute the aggregate reductions
under clause (ii) among States in
accordance with subparagraph (B).
(B) DSH health reform methodology.--The
Secretary shall carry out subparagraph (A)
through use of a DSH Health Reform methodology
that meets the following requirements:
(i) The methodology imposes the
largest percentage reductions on the
States that--
(I) have the lowest
percentages of uninsured
individuals (determined on the
basis of data from the Bureau
of the Census, audited hospital
cost reports, and other
information likely to yield
accurate data) during the most
recent year for which such data
are available; or
(II) do not target their DSH
payments on--
(aa) hospitals with
high volumes of
Medicaid inpatients (as
defined in subsection
(b)(1)(A)); and
(bb) hospitals that
have high levels of
uncompensated care
(excluding bad debt).
(ii) The methodology imposes a
smaller percentage reduction on low DSH
States described in paragraph (5)(B).
(iii) The methodology takes into
account the extent to which the DSH
allotment for a State was included in
the budget neutrality calculation for a
coverage expansion approved under
section 1115 as of July 31, 2009.
(C) Exemption from exemption for non-
expansion states.--
(i) In general.--In the case of a
State that is a non-expansion State for
a fiscal year, subparagraph (A)(i)
shall not apply to the DSH allotment
for such State and fiscal year.
(ii) No change in reduction for
expansion states.--In the case of a
State that is an expansion State for a
fiscal year, the DSH allotment for such
State and fiscal year shall be
determined as if clause (i) did not
apply.
(iii) Non-expansion and expansion
state defined.--
(I) The term ``expansion
State'' means with respect to a
fiscal year, a State that, as
of July 1 of the preceding
fiscal year, provides for
eligibility under clause
(i)(VIII) or (ii)(XX) of
section 1902(a)(10)(A) for
medical assistance under this
title (or a waiver of the State
plan approved under section
1115).
(II) The term ``non-expansion
State'' means, with respect to
a fiscal year, a State that is
not an expansion State.
(8) Calculation of DSH allotments after reductions
period.--The DSH allotment for a State for fiscal years
after [fiscal year 2025] fiscal year 2019 shall be
calculated under paragraph (3) without regard to
paragraph (7).
(9) Definition of state.--In this subsection, the
term ``State'' means the 50 States and the District of
Columbia.
(g) Limit on Amount of Payment to Hospital.--
(1) Amount of adjustment subject to uncompensated
costs.--
(A) In general.--A payment adjustment during
a fiscal year shall not be considered to be
consistent with subsection (c) with respect to
a hospital if the payment adjustment exceeds
the costs incurred during the year of
furnishing hospital services (as determined by
the Secretary and net of payments under this
title, other than under this section, and by
uninsured patients) by the hospital to
individuals who either are eligible for medical
assistance under the State plan or have no
health insurance (or other source of third
party coverage) for services provided during
the year. For purposes of the preceding
sentence, payments made to a hospital for
services provided to indigent patients made by
a State or a unit of local government within a
State shall not be considered to be a source of
third party payment.
(B) Limit to public hospitals during
transition period.--With respect to payment
adjustments during a State fiscal year that
begins before January 1, 1995, subparagraph (A)
shall apply only to hospitals owned or operated
by a State (or by an instrumentality or a unit
of government within a State).
(C) Modifications for private hospitals.--
With respect to hospitals that are not owned or
operated by a State (or by an instrumentality
or a unit of government within a State), the
Secretary may make such modifications to the
manner in which the limitation on payment
adjustments is applied to such hospitals as the
Secretary considers appropriate.
(2) Additional amount during transition period for
certain hospitals with high disproportionate share.--
(A) In general.--In the case of a hospital
with high disproportionate share (as defined in
subparagraph (B)), a payment adjustment during
a State fiscal year that begins before January
1, 1995, shall be considered consistent with
subsection (c) if the payment adjustment does
not exceed 200 percent of the costs of
furnishing hospital services described in
paragraph (1)(A) during the year, but only if
the Governor of the State certifies to the
satisfaction of the Secretary that the
hospital's applicable minimum amount is used
for health services during the year. In
determining the amount that is used for such
services during a year, there shall be excluded
any amounts received under the Public Health
Service Act, title V, title XVIII, or from
third party payors (not including the State
plan under this title) that are used for
providing such services during the year.
(B) Hospitals with high disproportionate
share defined.--In subparagraph (A), a hospital
is a ``hospital with high disproportionate
share'' if--
(i) the hospital is owned or operated
by a State (or by an instrumentality or
a unit of government within a State);
and
(ii) the hospital--
(I) meets the requirement
described in subsection
(b)(1)(A), or
(II) has the largest number
of inpatient days attributable
to individuals entitled to
benefits under the State plan
of any hospital in such State
for the previous State fiscal
year.
(C) Applicable minimum amount defined.--In
subparagraph (A), the ``applicable minimum
amount'' for a hospital for a fiscal year is
equal to the difference between the amount of
the hospital's payment adjustment for the
fiscal year and the costs to the hospital of
furnishing hospital services described in
paragraph (1)(A) during the fiscal year.
(h) Limitation on Certain State DSH Expenditures.--
(1) In general.--Payment under section 1903(a) shall
not be made to a State with respect to any payment
adjustments made under this section for quarters in a
fiscal year (beginning with fiscal year 1998) to
institutions for mental diseases or other mental health
facilities, to the extent the aggregate of such
adjustments in the fiscal year exceeds the lesser of
the following:
(A) 1995 imd dsh payment adjustments.--The
total State DSH expenditures that are
attributable to fiscal year 1995 for payments
to institutions for mental diseases and other
mental health facilities (based on reporting
data specified by the State on HCFA Form 64 as
mental health DSH, and as approved by the
Secretary).
(B) Applicable percentage of 1995 total dsh
payment allotment.--The amount of such payment
adjustments which are equal to the applicable
percentage of the Federal share of payment
adjustments made to hospitals in the State
under subsection (c) that are attributable to
the 1995 DSH allotment for the State for
payments to institutions for mental diseases
and other mental health facilities (based on
reporting data specified by the State on HCFA
Form 64 as mental health DSH, and as approved
by the Secretary).
(2) Applicable percentage.--
(A) In general.--For purposes of paragraph
(1), the applicable percentage with respect
to--
(i) each of fiscal years 1998, 1999,
and 2000, is the percentage determined
under subparagraph (B); or
(ii) a succeeding fiscal year is the
lesser of the percentage determined
under subparagraph (B) or the following
percentage:
(I) For fiscal year 2001, 50
percent.
(II) For fiscal year 2002, 40
percent.
(III) For each succeeding
fiscal year, 33 percent.
(B) 1995 percentage.--The percentage
determined under this subparagraph is the ratio
(determined as a percentage) of--
(i) the Federal share of payment
adjustments made to hospitals in the
State under subsection (c) that are
attributable to the 1995 DSH allotment
for the State (as reported by the State
not later than January 1, 1997, on HCFA
Form 64, and as approved by the
Secretary) for payments to institutions
for mental diseases and other mental
health facilities, to
(ii) the State 1995 DSH spending
amount.
(C) State 1995 dsh spending amount.--For
purposes of subparagraph (B)(ii), the ``State
1995 DSH spending amount'', with respect to a
State, is the Federal medical assistance
percentage (for fiscal year 1995) of the
payment adjustments made under subsection (c)
under the State plan that are attributable to
the fiscal year 1995 DSH allotment for the
State (as reported by the State not later than
January 1, 1997, on HCFA Form 64, and as
approved by the Secretary).
(i) Requirement for Direct Payment.--
(1) In general.--No payment may be made under section
1903(a)(1) with respect to a payment adjustment made
under this section, for services furnished by a
hospital on or after October 1, 1997, with respect to
individuals eligible for medical assistance under the
State plan who are enrolled with a managed care entity
(as defined in section 1932(a)(1)(B)) or under any
other managed care arrangement unless a payment, equal
to the amount of the payment adjustment--
(A) is made directly to the hospital by the
State; and
(B) is not used to determine the amount of a
prepaid capitation payment under the State plan
to the entity or arrangement with respect to
such individuals.
(2) Exception for current arrangements.--Paragraph
(1) shall not apply to a payment adjustment provided
pursuant to a payment arrangement in effect on July 1,
1997.
(j) Annual Reports and Other Requirements Regarding Payment
Adjustments.--With respect to fiscal year 2004 and each fiscal
year thereafter, the Secretary shall require a State, as a
condition of receiving a payment under section 1903(a)(1) with
respect to a payment adjustment made under this section, to do
the following:
(1) Report.--The State shall submit an annual report
that includes the following:
(A) An identification of each
disproportionate share hospital that received a
payment adjustment under this section for the
preceding fiscal year and the amount of the
payment adjustment made to such hospital for
the preceding fiscal year.
(B) Such other information as the Secretary
determines necessary to ensure the
appropriateness of the payment adjustments made
under this section for the preceding fiscal
year.
(2) Independent certified audit.--The State shall
annually submit to the Secretary an independent
certified audit that verifies each of the following:
(A) The extent to which hospitals in the
State have reduced their uncompensated care
costs to reflect the total amount of claimed
expenditures made under this section.
(B) Payments under this section to hospitals
that comply with the requirements of subsection
(g).
(C) Only the uncompensated care costs of
providing inpatient hospital and outpatient
hospital services to individuals described in
paragraph (1)(A) of such subsection are
included in the calculation of the hospital-
specific limits under such subsection.
(D) The State included all payments under
this title, including supplemental payments, in
the calculation of such hospital-specific
limits.
(E) The State has separately documented and
retained a record of all of its costs under
this title, claimed expenditures under this
title, uninsured costs in determining payment
adjustments under this section, and any
payments made on behalf of the uninsured from
payment adjustments under this section.
ADJUSTMENT IN PAYMENT FOR SERVICES OF SAFETY NET PROVIDERS IN NON-
EXPANSION STATES
Sec. 1923A. (a) In General.--Subject to the limitations of
this section, for each year during the period beginning with
2018 and ending with 2021, each State that is one of the 50
States or the District of Columbia and that, as of July 1 of
the preceding year, did not provide for eligibility under
clause (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for
medical assistance under this title (or a waiver of the State
plan approved under section 1115) (each such State or District
referred to in this section for the year as a ``non-expansion
State'') may adjust the payment amounts otherwise provided
under the State plan under this title (or a waiver of such
plan) to health care providers that provide health care
services to individuals enrolled under this title (in this
section referred to as ``eligible providers'').
(b) Increase in Applicable FMAP.--Notwithstanding section
1905(b), the Federal medical assistance percentage applicable
with respect to expenditures attributable to a payment
adjustment under subsection (a) for which payment is permitted
under subsection (c) shall be equal to--
(1) 100 percent for calendar quarters in calendar
years 2018, 2019, 2020, and 2021; and
(2) 95 percent for calendar quarters in calendar year
2022.
(c) Limitations; Disqualification of States.--
(1) Annual allotment limitation.--Payment under
section 1903(a) shall not be made to a State with
respect to any payment adjustment made under this
section for all calendar quarters in a year in excess
of the $2,000,000,000 multiplied by the ratio of--
(A) the population of the State with income
below 138 percent of the poverty line in 2015
(as determined based the table entitled
``Health Insurance Coverage Status and Type by
Ratio of Income to Poverty Level in the Past 12
Months by Age'' for the universe of the
civilian noninstitutionalized population for
whom poverty status is determined based on the
2015 American Community Survey 1-Year
Estimates, as published by the Bureau of the
Census), to
(B) the sum of the populations under
subparagraph (A) for all non-expansion States.
(2) Limitation on payment adjustment amount for
individual providers.--The amount of a payment
adjustment under subsection (a) for an eligible
provider may not exceed theprovider's costs incurred in
furnishing health care services (as determined by the
Secretary and net of payments under this title, other
than under this section, and by uninsured patients) to
individuals who either are eligible for medical
assistance under the State plan (or under a waiver of
such plan) or have no health insurance or health plan
coverage for such services.
(d) Disqualification in Case of State Coverage Expansion.--If
a State is a non-expansion for a year and provides eligibility
for medical assistance described in subsection (a) during the
year, the State shall no longer be treated as a non-expansion
State under this section for any subsequent years.
* * * * * * *
state flexibility in benefit packages
Sec. 1937. (a) State Option of Providing Benchmark
Benefits.--
(1) Authority.--
(A) In general.--Notwithstanding section
1902(a)(1) (relating to statewideness), section
1902(a)(10)(B) (relating to comparability) and
any other provision of this title which would
be directly contrary to the authority under
this section and subject to subsection (E), a
State, at its option as a State plan amendment,
may provide for medical assistance under this
title to individuals within one or more groups
of individuals specified by the State through
coverage that--
(i) provides benchmark coverage
described in subsection (b)(1) or
benchmark equivalent coverage described
in subsection (b)(2); and
(ii) for any individual described in
section 1905(a)(4)(B) who is eligible
under the State plan in accordance with
paragraphs (10) and (17) of section
1902(a), consists of the items and
services described in section
1905(a)(4)(B) (relating to early and
periodic screening, diagnostic, and
treatment services defined in section
1905(r)) and provided in accordance
with the requirements of section
1902(a)(43).
(B) Limitation.--The State may only exercise
the option under subparagraph (A) for an
individual eligible under subclause (VIII) of
section 1902(a)(10)(A)(i) or under an
eligibility category that had been established
under the State plan on or before the date of
the enactment of this section.
(C) Option of additional benefits.--In the
case of coverage described in subparagraph (A),
a State, at its option, may provide such
additional benefits as the State may specify.
(D) Treatment as medical assistance.--Payment
of premiums for such coverage under this
subsection shall be treated as payment of other
insurance premiums described in the third
sentence of section 1905(a).
(E) Rule of construction.--Nothing in this
paragraph shall be construed as--
(i) requiring a State to offer all or
any of the items and services required
by subparagraph (A)(ii) through an
issuer of benchmark coverage described
in subsection (b)(1) or benchmark
equivalent coverage described in
subsection (b)(2);
(ii) preventing a State from offering
all or any of the items and services
required by subparagraph (A)(ii)
through an issuer of benchmark coverage
described in subsection (b)(1) or
benchmark equivalent coverage described
in subsection (b)(2); or
(iii) affecting a child's entitlement
to care and services described in
subsections (a)(4)(B) and (r) of
section 1905 and provided in accordance
with section 1902(a)(43) whether
provided through benchmark coverage,
benchmark equivalent coverage, or
otherwise.
(2) Application.--
(A) In general.--Except as provided in
subparagraph (B), a State may require that a
full-benefit eligible individual (as defined in
subparagraph (C)) within a group obtain
benefits under this title through enrollment in
coverage described in paragraph (1)(A). A State
may apply the previous sentence to individuals
within 1 or more groups of such individuals.
(B) Limitation on application.--A State may
not require under subparagraph (A) an
individual to obtain benefits through
enrollment described in paragraph (1)(A) if the
individual is within one of the following
categories of individuals:
(i) Mandatory pregnant women.--The
individual is a pregnant woman who is
required to be covered under the State
plan under section 1902(a)(10)(A)(i).
(ii) Blind or disabled individuals.--
The individual qualifies for medical
assistance under the State plan on the
basis of being blind or disabled (or
being treated as being blind or
disabled) without regard to whether the
individual is eligible for supplemental
security income benefits under title
XVI on the basis of being blind or
disabled and including an individual
who is eligible for medical assistance
on the basis of section 1902(e)(3).
(iii) Dual eligibles.--The individual
is entitled to benefits under any part
of title XVIII.
(iv) Terminally ill hospice
patients.--The individual is terminally
ill and is receiving benefits for
hospice care under this title.
(v) Eligible on basis of
institutionalization.--The individual
is an inpatient in a hospital, nursing
facility, intermediate care facility
for the mentally retarded, or other
medical institution, and is required,
as a condition of receiving services in
such institution under the State plan,
to spend for costs of medical care all
but a minimal amount of the
individual's income required for
personal needs.
(vi) Medically frail and special
medical needs individuals.--The
individual is medically frail or
otherwise an individual with special
medical needs (as identified in
accordance with regulations of the
Secretary).
(vii) Beneficiaries qualifying for
long-term care services.--The
individual qualifies based on medical
condition for medical assistance for
long-term care services described in
section 1917(c)(1)(C).
(viii) Children in foster care
receiving child welfare services and
children receiving foster care or
adoption assistance.--The individual is
an individual with respect to whom
child welfare services are made
available under part B of title IV on
the basis of being a child in foster
care or with respect to whom adoption
or foster care assistance is made
available under part E of such title,
without regard to age, or the
individual qualifies for medical
assistance on the basis of section
1902(a)(10)(A)(i)(IX).
(ix) TANF and section 1931 parents.--
The individual qualifies for medical
assistance on the basis of eligibility
to receive assistance under a State
plan funded under part A of title IV
(as in effect on or after the welfare
reform effective date defined in
section 1931(i)).
(x) Women in the breast or cervical
cancer program.--The individual is a
woman who is receiving medical
assistance by virtue of the application
of sections 1902(a)(10)(A)(ii)(XVIII)
and 1902(aa).
(xi) Limited services
beneficiaries.--The individual--
(I) qualifies for medical
assistance on the basis of
section
1902(a)(10)(A)(ii)(XII); or
(II) is not a qualified alien
(as defined in section 431 of
the Personal Responsibility and
Work Opportunity Reconciliation
Act of 1996) and receives care
and services necessary for the
treatment of an emergency
medical condition in accordance
with section 1903(v).
(C) Full-benefit eligible individuals.--
(i) In general.--For purposes of this
paragraph, subject to clause (ii), the
term ``full-benefit eligible
individual'' means for a State for a
month an individual who is determined
eligible by the State for medical
assistance for all services defined in
section 1905(a) which are covered under
the State plan under this title for
such month under section 1902(a)(10)(A)
or under any other category of
eligibility for medical assistance for
all such services under this title, as
determined by the Secretary.
(ii) Exclusion of medically needy and
spend-down populations.--Such term
shall not include an individual
determined to be eligible by the State
for medical assistance under section
1902(a)(10)(C) or by reason of section
1902(f) or otherwise eligible based on
a reduction of income based on costs
incurred for medical or other remedial
care.
(b) Benchmark Benefit Packages.--
(1) In general.--For purposes of subsection (a)(1),
subject to paragraphs (5) and (6), each of the
following coverages shall be considered to be benchmark
coverage:
(A) FEHBP-equivalent health insurance
coverage.--The standard Blue Cross/Blue Shield
preferred provider option service benefit plan,
described in and offered under section 8903(1)
of title 5, United States Code.
(B) State employee coverage.--A health
benefits coverage plan that is offered and
generally available to State employees in the
State involved.
(C) Coverage offered through hmo.--The health
insurance coverage plan that--
(i) is offered by a health
maintenance organization (as defined in
section 2791(b)(3) of the Public Health
Service Act), and
(ii) has the largest insured
commercial, non-medicaid enrollment of
covered lives of such coverage plans
offered by such a health maintenance
organization in the State involved.
(D) Secretary-approved coverage.--Any other
health benefits coverage that the Secretary
determines, upon application by a State,
provides appropriate coverage for the
population proposed to be provided such
coverage.
(2) Benchmark-equivalent coverage.--For purposes of
subsection (a)(1), subject to paragraphs (5) and (6)
coverage that meets the following requirement shall be
considered to be benchmark-equivalent coverage:
(A) Inclusion of basic services.--The
coverage includes benefits for items and
services within each of the following
categories of basic services:
(i) Inpatient and outpatient hospital
services.
(ii) Physicians' surgical and medical
services.
(iii) Laboratory and x-ray services.
(iv) Coverage of prescription drugs.
(v) Mental health services.
(vi) Well-baby and well-child care,
including age-appropriate
immunizations.
(vii) Other appropriate preventive
services, as designated by the
Secretary.
(B) Aggregate actuarial value equivalent to
benchmark package.--The coverage has an
aggregate actuarial value that is at least
actuarially equivalent to one of the benchmark
benefit packages described in paragraph (1).
(C) Substantial actuarial value for
additional services included in benchmark
package.--With respect to each of the following
categories of additional services for which
coverage is provided under the benchmark
benefit package used under subparagraph (B),
the coverage has an actuarial value that is
equal to at least 75 percent of the actuarial
value of the coverage of that category of
services in such package:
(i) Vision services.
(ii) Hearing services.
(3) Determination of actuarial value.--The actuarial
value of coverage of benchmark benefit packages shall
be set forth in an actuarial opinion in an actuarial
report that has been prepared--
(A) by an individual who is a member of the
American Academy of Actuaries;
(B) using generally accepted actuarial
principles and methodologies;
(C) using a standardized set of utilization
and price factors;
(D) using a standardized population that is
representative of the population involved;
(E) applying the same principles and factors
in comparing the value of different coverage
(or categories of services);
(F) without taking into account any
differences in coverage based on the method of
delivery or means of cost control or
utilization used; and
(G) taking into account the ability of a
State to reduce benefits by taking into account
the increase in actuarial value of benefits
coverage offered under this title that results
from the limitations on cost sharing under such
coverage.
The actuary preparing the opinion shall select and
specify in the memorandum the standardized set and
population to be used under subparagraphs (C) and (D).
(4) Coverage of rural health clinic and fqhc
services.--Notwithstanding the previous provisions of
this section, a State may not provide for medical
assistance through enrollment of an individual with
benchmark coverage or benchmark equivalent coverage
under this section unless--
(A) the individual has access, through such
coverage or otherwise, to services described in
subparagraphs (B) and (C) of section
1905(a)(2); and
(B) payment for such services is made in
accordance with the requirements of section
1902(bb).
(5) Minimum standards.--Effective January 1, 2014,
any benchmark benefit package under paragraph (1) or
benchmark equivalent coverage under paragraph (2) must
provide at least essential health benefits as described
in section 1302(b) of the Patient Protection and
Affordable Care Act. This paragraph shall not apply
after December 31, 2019.
(6) Mental health services parity.--
(A) In general.--In the case of any benchmark
benefit package under paragraph (1) or
benchmark equivalent coverage under paragraph
(2) that is offered by an entity that is not a
medicaid managed care organization and that
provides both medical and surgical benefits and
mental health or substance use disorder
benefits, the entity shall ensure that the
financial requirements and treatment
limitations applicable to such mental health or
substance use disorder benefits comply with the
requirements of section 2705(a) of the Public
Health Service Act in the same manner as such
requirements apply to a group health plan.
(B) Deemed compliance.--Coverage provided
with respect to an individual described in
section 1905(a)(4)(B) and covered under the
State plan under section 1902(a)(10)(A) of the
services described in section 1905(a)(4)(B)
(relating to early and periodic screening,
diagnostic, and treatment services defined in
section 1905(r)) and provided in accordance
with section 1902(a)(43), shall be deemed to
satisfy the requirements of subparagraph (A).
(7) Coverage of family planning services and
supplies.--Notwithstanding the previous provisions of
this section, a State may not provide for medical
assistance through enrollment of an individual with
benchmark coverage or benchmark-equivalent coverage
under this section unless such coverage includes for
any individual described in section 1905(a)(4)(C),
medical assistance for family planning services and
supplies in accordance with such section.
(c) Publication of Provisions Affected.--With respect to a
State plan amendment to provide benchmark benefits in
accordance with subsections (a) and (b) that is approved by the
Secretary, the Secretary shall publish on the Internet website
of the Centers for Medicare & Medicaid Services, a list of the
provisions of this title that the Secretary has determined do
not apply in order to enable the State to carry out the plan
amendment and the reason for each such determination on the
date such approval is made, and shall publish such list in the
Federal Register and not later than 30 days after such date of
approval.
* * * * * * *
TITLE XXII--PATIENT AND STATE STABILITY FUND
SEC. 2201. ESTABLISHMENT OF PROGRAM.
There is hereby established the ``Patient and State Stability
Fund'' to be administered by the Secretary of Health and Human
Services, acting through the Administrator of the Centers for
Medicare & Medicaid Services (in this section referred to as
the ``Administrator''), to provide funding, in accordance with
this title, to the 50 States and the District of Columbia (each
referred to in this section as a ``State'') during the period,
subject to section 2204(c), beginning on January 1, 2018, and
ending on December 31, 2026, for the purposes described in
section 2202.
SEC. 2202. USE OF FUNDS.
A State may use the funds allocated to the State under this
title for any of the following purposes:
(1) Helping, through the provision of financial
assistance, high-risk individuals who do not have
access to health insurance coverage offered through an
employer enroll in health insurance coverage in the
individual market in the State, as such market is
defined by the State (whether through the establishment
of a new mechanism or maintenance of an existing
mechanism for such purpose).
(2) Providing incentives to appropriate entities to
enter into arrangements with the State to help
stabilize premiums for health insurance coverage in the
individual market, as such markets are defined by the
State.
(3) Reducing the cost for providing health insurance
coverage in the individual market and small group
market, as such markets are defined by the State, to
individuals who have, or are projected to have, a high
rate of utilization of health services (as measured by
cost).
(4) Promoting participation in the individual market
and small group market in the State and increasing
health insurance options available through such market.
(5) Promoting access to preventive services; dental
care services (whether preventive or medically
necessary); vision care services (whether preventive or
medically necessary); prevention, treatment, or
recovery support services for individuals with mental
or substance use disorders; or any combination of such
services.
(6) Providing payments, directly or indirectly, to
health care providers for the provision of such health
care services as are specified by the Administrator.
(7) Providing assistance to reduce out-of-pocket
costs, such as copayments, coinsurance, premiums, and
deductibles, of individuals enrolled in health
insurance coverage in the State.
SEC. 2203. STATE ELIGIBILITY AND APPROVAL; DEFAULT SAFEGUARD.
(a) Encouraging State Options for Allocations.--
(1) In general.--To be eligible for an allocation of
funds under this title for a year during the period
described in section 2201 for use for one or more
purposes described in section 2202, a State shall
submit to the Administrator an application at such time
(but, in the case of allocations for 2018, not later
than 45 days after the date of the enactment of this
title and, in the case of allocations for a subsequent
year, not later than March 31 of the previous year) and
in such form and manner as specified by the
Administrator and containing--
(A) a description of how the funds will be
used for such purposes;
(B) a certification that the State will make,
from non-Federal funds, expenditures for such
purposes in an amount that is not less than the
State percentage required for the year under
section 2204(e)(1); and
(C) such other information as the
Administrator may require.
(2) Automatic approval.--An application so submitted
is approved unless the Administrator notifies the State
submitting the application, not later than 60 days
after the date of the submission of such application,
that the application has been denied for not being in
compliance with any requirement of this title and of
the reason for such denial.
(3) One-time application.--If an application of a
State is approved for a year, with respect to a purpose
described in section 2202, such application shall be
treated as approved, with respect to such purpose, for
each subsequent year through 2026.
(4) Treatment as a state health care program.--Any
program receiving funds from an allocation for a State
under this title, including pursuant to subsection (b),
shall be considered to be a ``State health care
program'' for purposes of sections 1128, 1128A, and
1128B.
(b) Default Federal Safeguard.--
(1) In general.--
(A) 2018.--For allocations made under this
title for 2018, in the case of a State that
does not submit an application under subsection
(a) by the 45-day submission date applicable to
such year under subsection (a)(1) and in the
case of a State that does submit such an
application by such date that is not approved,
subject to section 2204(e), the Administrator,
in consultation with the State insurance
commissioner, shall use the allocation that
would otherwise be provided to the State under
this title for such year, in accordance with
paragraph (2), for such State.
(B) 2019 through 2026.--In the case of a
State that does not have in effect an approved
application under this section for 2019 or a
subsequent year beginning during the period
described in section 2201, subject to section
2204(e), the Administrator, in consultation
with the State insurance commissioner, shall
use the allocation that would otherwise be
provided to the State under this title for such
year, in accordance with paragraph (2), for
such State.
(2) Required use for market stabilization payments to
issuers.--Subject to section 2204(a), an allocation for
a State made pursuant to paragraph (1) for a year shall
be used to carry out the purpose described in section
2202(2) in such State by providing payments to
appropriate entities described in such section with
respect to claims that exceed $50,000 (or, with respect
to allocations made under this title for 2020 or a
subsequent year during the period specified in section
2201, such dollar amount specified by the
Administrator), but do not exceed $350,000 (or, with
respect to allocations made under this title for 2020
or a subsequent year during such period, such dollar
amount specified by the Administrator), in an amount
equal to 75 percent (or, with respect to allocations
made under this title for 2020 or a subsequent year
during such period, such percentage specified by the
Administrator) of the amount of such claims.
SEC. 2204. ALLOCATIONS.
(a) Appropriation.--For the purpose of providing allocations
for States (including pursuant to section 2203(b)) under this
title there is appropriated, out of any money in the Treasury
not otherwise appropriated--
(1) for 2018, $15,000,000,000;
(2) for 2019, $15,000,000,000;
(3) for 2020, $10,000,000,000;
(4) for 2021, $10,000,000,000;
(5) for 2022, $10,000,000,000;
(6) for 2023, $10,000,000,000;
(7) for 2024, $10,000,000,000;
(8) for 2025, $10,000,000,000; and
(9) for 2026, $10,000,000,000.
(b) Allocations.--
(1) Payment.--
(A) In general.--From amounts appropriated
under subsection (a) for a year, the
Administrator shall, with respect to a State
and not later than the date specified under
subparagraph (B) for such year, allocate,
subject to subsection (e), for such State
(including pursuant to section 2203(b)) the
amount determined for such State and year under
paragraph (2).
(B) Specified date.--For purposes of
subparagraph (A), the date specified in this
subparagraph is--
(i) for 2018, the date that is 45
days after the date of the enactment of
this title; and
(ii) for 2019 and subsequent years,
January 1 of the respective year.
(2) Allocation amount determinations.--
(A) For 2018 and 2019.--
(i) In general.--For purposes of
paragraph (1), the amount determined
under this paragraph for 2018 and 2019
for a State is an amount equal to the
sum of--
(I) the relative incurred
claims amount described in
clause (ii) for such State and
year; and
(II) the relative uninsured
and issuer participation amount
described in clause (iv) for
such State and year.
(ii) Relative incurred claims
amount.--For purposes of clause (i),
the relative incurred claims amount
described in this clause for a State
for 2018 and 2019 is the product of--
(I) 85 percent of the amount
appropriated under subsection
(a) for the year; and
(II) the relative State
incurred claims proportion
described in clause (iii) for
such State and year.
(iii) Relative state incurred claims
proportion.--The relative State
incurred claims proportion described in
this clause for a State and year is the
amount equal to the ratio of--
(I) the adjusted incurred
claims by the State, as
reported through the medical
loss ratio annual reporting
under section 2718 of the
Public Health Service Act for
the third previous year; to
(II) the sum of such adjusted
incurred claims for all States,
as so reported, for such third
previous year.
(iv) Relative uninsured and issuer
participation amount.--For purposes of
clause (i), the relative uninsured and
issuer participation amount described
in this clause for a State for 2018 and
2019 is the product of--
(I) 15 percent of the amount
appropriated under subsection
(a) for the year; and
(II) the relative State
uninsured and issuer
participation proportion
described in clause (v) for
such State and year.
(v) Relative state uninsured and
issuer participation proportion.--The
relative State uninsured and issuer
participation proportion described in
this clause for a State and year is--
(I) in the case of a State
not described in clause (vi)
for such year, 0; and
(II) in the case of a State
described in clause (vi) for
such year, the amount equal to
the ratio of--
(aa) the number of
individuals residing in
such State who for the
third preceding year
were not enrolled in a
health plan or
otherwise did not have
health insurance
coverage (including
through a Federal or
State health program)
and whose income is
below 100 percent of
the poverty line
applicable to a family
of the size involved;
to
(bb) the sum of the
number of such
individuals for all
States described in
clause (vi) for the
third preceding year.
(vi) States described.--For purposes
of clause (v), a State is described in
this clause, with respect to 2018 and
2019, if the State satisfies either of
the following criterion:
(I) The number of individuals
residing in such State and
described in clause (v)(II)(aa)
was higher in 2015 than 2013.
(II) The State have fewer
than three health insurance
issuers offering qualified
health plans through the
Exchange for 2017.
(B) For 2020 through 2026.--For purposes of
paragraph (1), the amount determined under this
paragraph for a year (beginning with 2020)
during the period described in section 2201 for
a State is an amount determined in accordance
with an allocation methodology specified by the
Administrator which--
(i) takes into consideration the
adjusted incurred claims of such State,
the number of residents of such State
who for the previous year were not
enrolled in a health plan or otherwise
did not have health insurance coverage
(including through a Federal or State
health program) and whose income is
below 100 percent of the poverty line
applicable to a family of the size
involved, and the number of health
insurance issuers participating in the
insurance market in such State for such
year;
(ii) is established after
consultation with health care
consumers, health insurance issuers,
State insurance commissioners, and
other stakeholders and after taking
into consideration additional cost and
risk factors that may inhibit health
care consumer and health insurance
issuer participation; and
(iii) reflects the goals of improving
the health insurance risk pool,
promoting a more competitive health
insurance market, and increasing choice
for health care consumers.
(c) Annual Distribution of Previous Year's Remaining Funds.--
In carrying out subsection (b), the Administrator shall, with
respect to a year (beginning with 2020 and ending with 2027),
not later than March 31 of such year--
(1) determine the amount of funds, if any, from the
amounts appropriated under subsection (a) for the
previous year but not allocated for such previous year;
and
(2) if the Administrator determines that any funds
were not so allocated for such previous year, allocate
such remaining funds, in accordance with the allocation
methodology specified pursuant to subsection
(b)(2)(B)--
(A) to States that have submitted an
application approved under section 2203(a) for
such previous year for any purpose for which
such an application was approved; and
(B) for States for which allocations were
made pursuant to section 2203(b) for such
previous year, to be used by the Administrator
for such States, to carry out the purpose
described in section 2202(2) in such States by
providing payments to appropriate entities
described in such section with respect to
claims that exceed $1,000,000;
with, respect to a year before 2027, any remaining
funds being made available for allocations to States
for the subsequent year.
(d) Availability.--Amounts appropriated under subsection (a)
for a year and allocated to States in accordance with this
section shall remain available for expenditure through December
31, 2027.
(e) Conditions for and Limitations on Receipt of Funds.--The
Secretary may not make an allocation under this title for a
State, with respect to a purpose described in section 2202--
(1) in the case of an allocation that would be made
to a State pursuant to section 2203(a), if the State
does not agree that the State will make available non-
Federal contributions towards such purpose in an amount
equal to--
(A) for 2020, 7 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(B) for 2021, 14 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(C) for 2022, 21 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(D) for 2023, 28 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(E) for 2024, 35 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(F) for 2025, 42 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
(G) for 2026, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(2) in the case of an allocation that would be made
for a State pursuant to section 2203(b), if the State
does not agree that the State will make available non-
Federal contributions towards such purpose in an amount
equal to--
(A) for 2020, 10 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(B) for 2021, 20 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
(C) for 2022, 30 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(D) for 2023, 40 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(E) for 2024, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose;
(F) for 2025, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
(G) for 2026, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose; or
(3) if such an allocation for such purpose would not
be permitted under subsection (c)(7) of section 2105 if
such allocation were payment made under such section.
----------
PUBLIC HEALTH SERVICE ACT
* * * * * * *
TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
PART A--INDIVIDUAL AND GROUP MARKET REFORMS
Subpart I--General Reform
SEC. 2701. FAIR HEALTH INSURANCE PREMIUMS.
(a) Prohibiting Discriminatory Premium Rates.--
(1) In general.--With respect to the premium rate
charged by a health insurance issuer for health
insurance coverage offered in the individual or small
group market--
(A) such rate shall vary with respect to the
particular plan or coverage involved only by--
(i) whether such plan or coverage
covers an individual or family;
(ii) rating area, as established in
accordance with paragraph (2);
(iii) age, except that such rate
shall not vary by more than 3 to 1 for
adults (consistent with section
2707(c)) or, for plan years beginning
on or after January 1, 2018, as the
Secretary may implement through interim
final regulation, 5 to 1 for adults
(consistent with section 2707(c)) or
such other ratio for adults (consistent
with section 2707(c)) as the State
involved may provide; and
(iv) tobacco use, except that such
rate shall not vary by more than 1.5 to
1; and
(B) [such rate] subject to section 2710A,
such rate shall not vary with respect to the
particular plan or coverage involved by any
other factor not described in subparagraph (A).
(2) Rating area.--
(A) In general.--Each State shall establish 1
or more rating areas within that State for
purposes of applying the requirements of this
title.
(B) Secretarial review.--The Secretary shall
review the rating areas established by each
State under subparagraph (A) to ensure the
adequacy of such areas for purposes of carrying
out the requirements of this title. If the
Secretary determines a State's rating areas are
not adequate, or that a State does not
establish such areas, the Secretary may
establish rating areas for that State.
(3) Permissible age bands.--The Secretary, in
consultation with the National Association of Insurance
Commissioners, shall define the permissible age bands
for rating purposes under paragraph (1)(A)(iii).
(4) Application of variations based on age or tobacco
use.--With respect to family coverage under a group
health plan or health insurance coverage, the rating
variations permitted under clauses (iii) and (iv) of
paragraph (1)(A) shall be applied based on the portion
of the premium that is attributable to each family
member covered under the plan or coverage.
(5) Special rule for large group market.--If a State
permits health insurance issuers that offer coverage in
the large group market in the State to offer such
coverage through the State Exchange (as provided for
under section 1312(f)(2)(B) of the Patient Protection
and Affordable Care Act), the provisions of this
subsection shall apply to all coverage offered in such
market (other than self-insured group health plans
offered in such market) in the State.
* * * * * * *
SEC. [2709] 2710. DISCLOSURE OF INFORMATION.
(a) Disclosure of Information by Health Plan Issuers.--In
connection with the offering of any health insurance coverage
to a small employer or an individual, a health insurance
issuer--
(1) shall make a reasonable disclosure to such
employer,, or individual, as applicable, as part of its
solicitation and sales materials, of the availability
of information described in subsection (b), and
(2) upon request of such a employer, or individual,
as applicable,, or individual, as applicable, provide
such information.
(b) Information Described.--
(1) In general.--Subject to paragraph (3), with
respect to a health insurance issuer offering health
insurance coverage to a employer, or individual, as
applicable,, information described in this subsection
is information concerning--
(A) the provisions of such coverage
concerning issuer's right to change premium
rates and the factors that may affect changes
in premium rates; and
(B) the benefits and premiums available under
all health insurance coverage for which the
employer, or individual, as applicable, is
qualified.
(2) Form of information.--Information under this
subsection shall be provided to employers, or
individuals, as applicable, in a manner determined to
be understandable by the average employer, or
individual, as applicable,, and shall be sufficient to
reasonably inform employers, or individuals, as
applicable, of their rights and obligations under the
health insurance coverage.
(3) Exception.--An issuer is not required under this
section to disclose any information that is proprietary
and trade secret information under applicable law.
SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.
(a) Penalty Applied.--
(1) In general.--Notwithstanding section 2701,
subject to the succeeding provisions of this section, a
health insurance issuer offering health insurance
coverage in the individual or small group market shall,
in the case of an individual who is an applicable
policyholder of such coverage with respect to an
enforcement period applicable to enrollments for a plan
year beginning with plan year 2019 (or, in the case of
enrollments during a special enrollment period,
beginning with plan year 2018), increase the monthly
premium rate otherwise applicable to such individual
for such coverage during each month of such period, by
an amount determined under paragraph (2).
(2) Amount of penalty.--The amount determined under
this paragraph for an applicable policyholder enrolling
in health insurance coverage described in paragraph (1)
for a plan year, with respect to each month during the
enforcement period applicable to enrollments for such
plan year, is the amount that is equal to 30 percent of
the monthly premium rate otherwise applicable to such
applicable policyholder for such coverage during such
month.
(b) Definitions.--For purposes of this section:
(1) Applicable policyholder.--The term ``applicable
policyholder'' means, with respect to months of an
enforcement period and health insurance coverage, an
individual who--
(A) is a policyholder of such coverage for
such months;
(B) cannot demonstrate (through presentation
of certifications described in section 2704(e)
or in such other manner as may be specified in
regulations, such as a return or statement made
under section 6055(d) or 36 of the Internal
Revenue Code of 1986), during the look-back
period that is with respect to such enforcement
period, there was not a period of at least 63
continuous days during which the individual did
not have creditable coverage (as defined in
paragraph (1) of section 2704(c) and credited
in accordance with paragraphs (2) and (3) of
such section); and
(C) in the case of an individual who had been
enrolled under dependent coverage under a group
health plan or health insurance coverage by
reason of section 2714 and such dependent
coverage of such individual ceased because of
the age of such individual, is not enrolling
during the first open enrollment period
following the date on which such coverage so
ceased.
(2) Look-back period.--The term ``look-back period''
means, with respect to an enforcement period applicable
to an enrollment of an individual for a plan year
beginning with plan year 2019 (or, in the case of an
enrollment of an individual during a special enrollment
period, beginning with plan year 2018) in health
insurance coverage described in subsection (a)(1), the
12-month period ending on the date the individual
enrolls in such coverage for such plan year.
(3) Enforcement period.--The term ``enforcement
period'' means--
(A) with respect to enrollments during a
special enrollment period for plan year 2018,
the period beginning with the first month that
is during such plan year and that begins
subsequent to such date of enrollment, and
ending with the last month of such plan year;
and
(B) with respect to enrollments for plan year
2019 or a subsequent plan year, the 12-month
period beginning on the first day of the
respective plan year.
* * * * * * *
MINORITY VIEWS
Committee Democrats adamantly and unanimously oppose the
Committee's Reconciliation recommendations. Democrats voted in
opposition to the Reconciliation recommendations during their
consideration in the Committee on March 8 through March 9,
2017. We believe the recommendations will rip coverage away
from millions, weaken consumer protections, and increase costs,
particularly for older and sicker Americans. The
recommendations raise costs for working families in order to
provide billions of dollars in tax cuts to the wealthiest
individuals and corporations. The legislative recommendations
drastically alter the structure of the Medicaid program by
harshly cutting federal funding, capping benefits, and
ultimately shifting enormous costs to the states. We believe
the recommendations would turn back the clock on efforts to
transform the United States health care system from a system
based on the treatment of disease to a system based on disease
prevention. The Reconciliation instructions would also harm
women's health and place politicians between women and their
trusted health care provider by restricting access to the
quality health services provided by Planned Parenthood.
The combination of Medicaid cuts, ending the Medicaid
expansion, and providing less generous financial assistance for
low and moderate income Americans to purchase health insurance
in the individual market will result in millions of Americans
losing health insurance coverage. Although the nonpartisan
Congressional Budget Office (CBO) did not provide an analysis
or score prior to the markup, independent estimates suggest
that the repeal legislation could result in 15 million or more
Americans losing coverage.\1\ This legislation will leave
Americans less healthy, less financially secure, and less able
to access the healthcare they need.
---------------------------------------------------------------------------
\1\Loren Adler and Matthew Fiedler, Expect the CBO to estimate
large coverage losses from the GOP health care plan, Brookings
Institution (Mar. 9, 2017).
---------------------------------------------------------------------------
Despite the wide-ranging, serious implications of this
legislation for the health and financial security of all
Americans, the Committee did not hold a single hearing on the
details and effect of the legislation. Notably, stakeholders
have not had the ability to weigh in on the impacts of the bill
to the health care system. In fact, the Committee received
letters from hospitals, doctors, and patient and advocacy
groups all outlining their significant concerns with the
legislation. Additionally, despite Speaker Ryan's claims that
the bill would be considered through regular order and through
a transparent process, the repeal bill was drafted in secret
and introduced less than two days before markup. The minority
is deeply concerned by the decision to proceed to markup
without first receiving the views of the CBO on the impact of
this legislation on health insurance coverage, costs, and the
federal budget. Given the likelihood that millions of Americans
will lose their health insurance as a result of this
legislation, proceeding to markup without a CBO score is highly
irresponsible and deprives Committee members of a full
understanding of the implications of the legislation before
voting on it.
ELIMINATING THE PREVENTION AND PUBLIC HEALTH FUND WILL HARM EFFORTS TO
BEND THE COST CURVE AND IMPROVE AMERICA'S HEALTH
The Reconciliation recommendations would repeal the
Prevention and Public Health Fund (Prevention Fund) and rescind
$15.1 billion from fiscal year 2019 through fiscal year 2028,
and $2 billion each year thereafter. As a result, that funding
would not be available to invest in critical preventive and
public health programs such as efforts to reduce tobacco use,
increase physical activity, expand mental health and injury
prevention, and improve nutrition. The Prevention Fund is
needed to invest in these types of efforts that bend the cost
curve and improve America's health through the prevention and
control of chronic disease.
Today in America, chronic disease, such as heart disease,
diabetes, and cancer, are among the nation's most common,
costly, and preventable health problems. Unsurprisingly,
spending on chronic disease alone accounts for roughly 86
percent of all health care expenditures in the United
States.\2\ Chronic diseases also take a toll on American lives.
In fact, chronic diseases account for 7 out of 10 deaths in the
United States. Yet, despite the harms caused by chronic
diseases, only a small percentage of government health
expenditures are directed at preventing these diseases before
they happen.
---------------------------------------------------------------------------
\2\Centers for Disease Control and Prevention (CDC), Chronic
Disease Prevention and Health Promotion (Nov. 2016) (https://
www.cdc.gov/chronicdisease/index.htm).
---------------------------------------------------------------------------
The Prevention Fund is the federal government's only
dedicated investment in prevention and the nation's largest
single investment in prevention. Since its creation, most
Prevention Fund dollars have gone directly to states,
communities, and tribal community organizations to improve the
health and wellness of Americans. It has funded such programs
as the highly successful Tips from Former Smokers national
campaign. A recent study published in the Lancet found that the
first three months of the national ad campaign led an estimated
1.6 million smokers to attempt to quit smoking and helped more
than 100,000 Americans quit smoking permanently.\3\ Another
study published in the American Journal of Preventive Medicine
found that the campaign prevented more than 17,000 premature
deaths in the United States.\4\
---------------------------------------------------------------------------
\3\Tim McAfee, et al, Effect of the First Federally Funded US
Antismoking National Media Campaign, The Lancet (Sept. 9, 2013).
\4\Xin Xu, et al, A Cost-Effectiveness Analysis of the First
Federally Funded Antismoking Campaign, American Journal of Preventive
Medicine (Dec. 9, 2014).
---------------------------------------------------------------------------
In addition to improving health, we know such investments
save money. According to a study by Trust for America's Health,
every $1 spent on proven, community-based interventions to
increase physical activity, improve nutrition, and prevent
smoking--generates a return of $5.60.\5\ A study by the Urban
Institute estimates that proven community-based diabetes
prevention programs can save as much as $191 billion over 10
years.\6\ Another study by Trust for America's Health found
that a reduction of body mass index rates by 5 percent would
save over $158 billion in 10 years and almost $612 billion in
20 years.\7\ Those are just some of the types of programs we
invest in through the Prevention Fund.
---------------------------------------------------------------------------
\5\Trust for America's Health, Prevention for a Healthier America:
Investments in Disease Prevention Yield Significant Savings, Stronger
Communities (Feb. 2009) (http://healthyamericans.org/reports/
prevention08/Prevention08.pdf).
\6\Urban Institute, How We Can Play for Health Care Reform (July
29, 2009) (http://www.urban.org/research/publication/how-we-can-pay-
health-reform).
\7\Trust for America's Health, Bending the Obesity Cost Curve (Feb.
2012) (http://healthyamericans.org/report/93/).
---------------------------------------------------------------------------
Bending the United States health care cost curve and
improving America's health demands that we expand rather than
eliminate prevention efforts. Unfortunately, the Republican
plan does the opposite. The Republican plan will eliminate the
Prevention Fund's dedicated investment in prevention efforts
and limit our ability to prevent and control chronic disease.
Thus rather than save money and lives, the Republican plan will
cost us more in the end.
DENYING FUNDING TO PLANNED PARENTHOOD RESTRICTS WOMEN'S ACCESS TO
ESSENTIAL PREVENTIVE CARE AND BLOCKS PATIENTS FROM THEIR PROVIDERS OF
CHOICE
The Reconciliation recommendations deny mandatory funding
to Planned Parenthood for one year, including reimbursements
from Medicaid, as well as funding provided through the
Children's Health Insurance Program, Maternal and Child Health
Services Block Grants, and Social Services Block Grants. While
the bill notably does not mention Planned Parenthood by name,
it denies funding to a designated class of providers that
appear to be only applicable to Planned Parenthood-affiliated
health centers. When questioned whether other providers could
be subject to the bill, majority counsel was unable to
specifically name any other providers besides Planned
Parenthood that would meet these criteria.
As a result, millions of patients could lose access to
essential care based solely on Republicans' ideological
opposition to abortion, despite Planned Parenthood already
receiving no federal funding for abortion services provided at
some affiliated health centers.
Denying Medicaid reimbursements and other funding to
Planned Parenthood would restrict patients' access to quality
preventive care services, including screenings for breast and
cervical cancer, sexually transmitted infection (STI)
screenings, and contraception counseling and care. In 2014,
Planned Parenthood-affiliated health centers saw 2.5 million
patients and provided more than 4 million STI tests and
treatments, more than 360,000 breast exams, more than 270,000
Pap tests, and contraception for over 2 million people.\8\
These services help to further the public health goals of
detecting cancer, stopping the spread of STIs, and preventing
unintended pregnancy.
---------------------------------------------------------------------------
\8\Planned Parenthood Federation of America, 2014-2015 Annual
Report, 28 (https://www.plannedparenthood.org/files/2114/5089/0863/
2014-2015_PPFA_Annual_Report_.pdf).
---------------------------------------------------------------------------
While the Reconciliation recommendations provide additional
funding to other safety-net providers, specifically community
health centers, experts agree that community health centers
cannot fill the gap in care if funding is denied to Planned
Parenthood. One public health expert noted that ``the assertion
that community health centers could step into a breach of this
magnitude is simply wrong and displays a fundamental
misunderstanding of how the health care system works.''\9\
Additionally, CBO previously estimated that 15 percent of
Planned Parenthood's patient population, or roughly 390,000
patients, would lose access to care if affiliated health
centers were denied federal funding, and up to an additional 25
percent of individuals, or approximately 650,000 patients,
could face reduced access.\10\
---------------------------------------------------------------------------
\9\Sara Rosenbaum, Planned Parenthood, Community Health Centers,
and Women's Health: Getting the Facts Right, Health Affairs Blog (Sept.
2, 2015) (http://healthaffairs.org/blog/2015/09/02/planned-parenthood-
community-health-centers-and-womens-health-getting-the-facts-right/).
\10\Congressional Budget Office, Cost Estimate, H.R. 3762 Restoring
Americans' Healthcare Freedom Reconciliation Act of 2015 (Oct. 20,
2015) (https://www.cbo.gov/sites/default/files/114th-congress-2015-
2016/costestimate/hr3762.pdf).
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Approximately 60 percent of the patients served by Planned
Parenthood receive benefits through public health coverage
programs, including Medicaid.\11\ Under federal law, Medicaid
beneficiaries generally have the right to obtain medical
services ``from any institution, agency, community pharmacy, or
person, qualified to perform the service or services required .
. . who undertakes to provide . . . such services.\12\ For
decades, this ``any willing provider'' provision has served as
a cornerstone of the Medicaid program and has ensured that
patients enrolled in Medicaid are afforded the same basic
rights and privileges as those with private coverage when
choosing from whom to receive covered health services,
including family planning and reproductive health care. The
bill reneges on this principle and contradicts longstanding
guidance and law prohibiting discrimination against certain
providers based on reasons other than their ability to perform
the required services.\13\
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\11\Planned Parenthood Federation of America, The Urgent Need for
Planned Parenthood Health Centers (https://www.plannedparenthood.org/
files/4314/8183/5009/20161207_Defunding_fs_d01_1.pdf).
\12\Social Security Act, Sec. 1902(a)(23).
\13\Centers for Medicare and Medicaid Services, Re: Clarifying
``Free Choice of Provider'' Requirement in Conjunction with State
Authority to Take Action against Medicaid Providers (Apr. 19, 2016).
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Denying funds to Planned Parenthood solely for ideological
reasons separate than the ability to provide care harms
patients and restricts women from making their own health care
decisions about where to access care and from what provider.
This bill sets a dangerous precedent, and will lead to a
reduction in access to care and services provided for millions
of women, men, and adolescents.
RATIONING CARE FOR MILLIONS OF AMERICANS RECEIVING COVERAGE THROUGH THE
MEDICAID PROGRAM
Repeal of the Medicaid expansion
The Reconciliation legislation effectively ends the
Medicaid expansion in its current form. While current Medicaid
expansion enrollees would be grandfathered in at the higher
matching rate, as of 2020, no new states would be allowed to
expand, and states would lose the higher matching rate for any
enrollees who had a break in coverage. Essentially, this ends
the Medicaid expansion through attrition. States that had taken
a step forward to cover uninsured residents would be punished
with cuts to their Medicaid disproportionate share hospital
(DSH) payments for a period of two years. This policy will hurt
millions of the lowest income residents, and negatively impact
many of our state economies.
Rolling back the Medicaid expansion will result in a loss
of coverage for many of the nation's lowest income, working,
individuals. Currently, 31 states and the District of Columbia
have expanded their Medicaid programs.\14\ Because of the
Medicaid expansion, more than 14 million individuals have
gained coverage, 11 million of which would not have been able
to access coverage prior to the passage of Affordable Care Act
(ACA).\15\ This new coverage, combined with coverage expansions
through the Marketplaces and other coverage improvements the
ACA made, has helped drive the uninsured rate to below 9
percent--the lowest level in our nation's history.\16\ It is
undeniable that Medicaid expansion serves a critical role to
provide health insurance to those who otherwise could not
afford it and would remain uninsured.
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\14\Kaiser Family Foundation, Medicaid Expansion Enrollment (2015)
(http://kff.org/health-reform/state-indicator/medicaid-expansion-
enrollment/?currentTimeframe=0).
\15\Id.
\16\Letter from Andy M. Slavitt, Acting Administrator, Centers for
Medicare and Medicaid Services (CMS) to Representative Tim Murphy (Jan.
18, 2017).
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Moreover, Medicaid provides high quality coverage that
improves the lives of its beneficiaries. For individuals
gaining coverage because of the Medicaid expansion, access to
primary care and treatment for chronic conditions have
increased, and rates of skipping medications to save money have
decreased.\17\ Medicaid expansion has led to as much as a
$1,000-per-person reduction in medical debt sent to collection,
and hospitals have seen their uncompensated-care burden drop by
$10 billion.\18\ Medicaid expansion has improved the
affordability of care, with the number of low-income adults
reporting problems paying medical bills down more than 10
percentage points,\19\ and 86 percent of new Medicaid enrollees
were optimistic about their new health insurance's ability to
connect them to the health care they need.\20\ Medicaid has
made a difference in the lives of millions; the overwhelming
majority of those gaining coverage because of the expansion
have said they were better off than before they received
Medicaid.\21\
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\17\Benjamin D. Sommers, et al, Changes in utilization and health
among low-income adults after Medicaid expansion or expanded private
insurance, JAMA Internal Medicine (Oct. 2016) (https://
www.ncbi.nlm.nih.gov/pubmed/27532694).
\18\White House Council of Economic Advisers, The Economic Record
of the Obama administration: Reforming the Health Care System (Dec.
2016).
\19\Letter from Andy M. Slavitt, Acting Administrator, Centers for
Medicare & Medicaid Services (CMS) to Representative Tim Murphy (Jan.
18, 2017).
\20\The Commonwealth Fund, Americans' Experiences with ACA
Marketplace and Medicaid Coverage: Access to Care and Satisfaction (May
25, 2016) (http://www.commonwealthfund.org/publications/issue-briefs/
2016/may/aca-tracking-survey-access-to-care-and-satisfaction).
\21\Id.
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Rolling back the Medicaid expansion means rolling back
gains made in state economies and local jobs. Evidence from
states that have expanded Medicaid consistently shows that
expansion generates savings and revenue which can be used to
finance other state spending priorities or to offset much, if
not all, of the state costs of expansion. Medicaid expansion
states see more jobs in the health sector. On average, the
states that expanded Medicaid in January 2014 saw jobs grow by
2.4 percent during 2014, while jobs in states that did not
expand grew by only 1.8 percent in the same year.\22\ Coverage
expansions are contributing to a national reduction in hospital
uncompensated care costs. Hospitals' uncompensated care costs
are estimated to have been $7.4 billion (21 percent) less in
2014 than they would have been in the absence of coverage
expansions. In 2014, expansion states saw a reduction in
uncompensated care costs of 26 percent, compared to a 16
percent reduction in non-expansion states.\23\ It is worth
noting that state Medicaid spending grew more slowly in states
that expanded than in those that did not. State Medicaid
spending in expansion states grew by half as much as spending
in non-expansion states.\24\ Medicaid expansion has been a good
deal both for the individuals gaining coverage, and for the
financial bottom line of states that have chosen to provide
that coverage.
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\22\Families USA, Medicaid Expansion States See Financial Savings
and Health Care Jobs Growth (Mar. 2015) (http://familiesusa.org/blog/
2015/03/medicaid-expansion-states-see-financial-savings-and-health-
care-jobs-growth).
\23\Office of the Assistant Secretary for Planning and Evaluation
(ASPE), Economic Impact of the Medicaid Expansion (Mar. 23, 2015)
(https://aspe.hhs.gov/sites/default/files/pdf/139231/
ib_MedicaidExpansion.pdf).
\24\Kaiser Family Foundation, Medicaid Enrollment & Spending
Growth: FY 2015 & 2016 (Oct. 2015) (http://kff.org/medicaid/issue-
brief/medicaid-enrollment-spending-growth-fy-2015-2016/).
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Capping the Medicaid Program
The Reconciliation legislation would fundamentally alter
the current Medicaid funding structure, adopting a per capita
cap per beneficiary construct that will be applied starting in
FY 2019, but penalizing states beginning in 2020. The policy
was drafted with no opportunity for comment from key
stakeholders. This is not acceptable consideration for
irrevocably changing the health insurance that more than 76
million Americans, the vast majority of them children, seniors,
and individuals with disabilities, depend on. The hasty
consideration of this legislation shows: key implementation
questions remain from the drafting of this provision and
further, whether states can even reasonably effectuate such a
policy if enacted, in what amounts to less than two years'
time. The consequences of enactment of this policy as drafted
will be disastrous.
Under this legislation, it has been estimated that Medicaid
costs per beneficiary could rise by about 0.2 percentage points
faster each year than states' capped amounts; thus states would
get less federal funding than under current law, with the cuts
growing each year. This policy is a cost shift to states, at
the expense of our most vulnerable. Under this policy, states
would be responsible for 100 percent of any costs in excess of
the per capita cap, whether due to unanticipated health care
cost growth or to demographic changes that a per capita cap
wouldn't account for. For example, states would be responsible
for all costs due to an epidemic, a new treatment, or higher
costs as seniors on Medicaid move from young-old age to old-old
age and have much greater medical and long-term care needs and
costs. In response, states would have to contribute more of
their own funding or, as is far likelier, substantially cut
eligibility, benefits, and provider payments, with those cuts
growing more severe each year. Along with those who have gained
coverage under the Medicaid expansion who would lose it under
this legislation, the remaining 63 million children, families,
seniors, and people with disabilities who rely on Medicaid
today would face the significant risk of ending up uninsured or
losing access to needed care.
This policy is predicated on the concept that Medicaid
costs are somehow unsustainable, when, in reality, Medicaid is
the leanest of the federal health programs. This is due, in
part, to many states' efforts around delivery system reform
effectuating global reduction in costs while still improving
the quality of care beneficiaries receive. States need the
flexible financing construct that Medicaid has today in order
to continue to design and implement such innovations in the
future. Medicaid's current financing structure incentivizes and
supports states to redesign the delivery system in ways that
are better for their beneficiaries, and for state fiscal
health.
Capping the Medicaid program and rationing care is the
wrong way to ensure Medicaid's long-term financial health. Over
the past 30 years, Medicaid costs per beneficiary have
essentially tracked costs in the health care system as a whole,
public and private. In fact, Medicaid has controlled per
enrollee costs better than other payers. The per enrollee cost
of Medicaid coverage grew 1.9 percent annually between 2000 and
2014, as compared to 5.9 percent growth in private coverage and
5.1 percent in Medicare.\25\ Congress should build on
successful state and federal efforts that have led to positive
outcomes for both the program's financial health and care for
beneficiaries.
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\25\Centers for Medicare and Medicaid Services, National Health
Expenditure Accounts and MACPAC, Trends in Medicaid Spending.
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Repeal of the Essential Health Benefits for the Medicaid expansion
population
This legislation will repeal the Essential Health Benefit
package for the Medicaid expansion population. Under Section
1902(k)(1) of the Social Security Act, states are required to
offer newly eligible/expansion Medicaid beneficiaries
``benchmark benefits.'' Further, Section 1937(b)(5) enumerates
that benchmark benefits must meet the essential health benefits
(EHB) requirements.\26\ Today, in practice, the Essential
Health Benefits (EHB) represent a minimum base assurance of
benefits covered for the Medicaid Expansion population. Many
states, given the robust federal participation in the expansion
population, have chosen to design benefit packages that go
beyond the basic benchmark.\27\ However, the repeal of this
basic protection of benefits, coupled with the changes made to
slowly end the federal financial commitment to the Medicaid
expansion wholesale over time means that states will most
likely respond with sharp reductions in benefits to vulnerable
beneficiaries.
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\26\Centers for Medicare and Medicaid Services, Medicaid and
Children's Health Insurance Programs: Essential Health Benefits in
Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal
Processes, and Premiums and Cost Sharing; Exchanges: Eligibility and
Enrollment (CMS-2334-F) (July 15, 2013).
\27\The Commonwealth Fund, Medicaid Benefit Designs for Newly
Eligible Adults: State Approaches (May 11, 2015) (http://
www.commonwealthfund.org/publications/issue-briefs/2015/may/medicaid-
benefit-designs-for-newly-eligible-adults).
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Presumptive Eligibility repeal
The bill eliminates the state option for Presumptive
Eligibility (PE) for the Medicaid expansion population and
repeals the ability of hospitals to determine Presumptive
Eligibility in Medicaid. Presumptive Eligibility makes the
enrollment process easier for eligible people and gets them the
care they need immediately, which is more efficient, saves
money and can save lives. We oppose the repeal of such
policies.
Presumptive Eligibility is a longstanding state policy
option in the Medicaid and Children's Health Insurance (CHIP)
programs, which allows individuals who appear eligible to be
enrolled quickly and begin receiving vital services while the
full eligibility determination process is being completed.
Presumptive eligibility allows individuals to begin receiving
crucial health care services right away. It helps avert
situations in which an individual who is eligible for Medicaid
will have to delay needed care while they wait for their
Medicaid application to be fully processed. Given that most PE
determinations are made by health care providers while the
person is present, forgoing the opportunity to deliver
necessary care is highly inefficient. The missed opportunity to
enroll the eligible person in Medicaid can result in
significantly higher costs being incurred unnecessarily.
Removing this option for the expansion population stigmatizes
this population and delays needed care.
Moreover, hospital presumptive eligibility authority allows
hospitals to temporarily enroll children, pregnant women, and
other individuals in Medicaid until their full enrollment
determination can be made. This policy has allowed hospitals to
serve as a liaison between patients and state Medicaid programs
to appropriately cover eligible individuals who would otherwise
be uninsured, leading to poorer access to care for patients and
higher uncompensated care for hospitals. This policy is
particularly important for children; because hospitals are
often the initial point of contact, they can help follow up to
increase the likelihood that families complete the enrollment
process for their uninsured children. This means earlier access
to needed care for Medicaid eligible children, regardless of
which state they live in. Outright repeal of this policy is
problematic for all populations, however, and will result in
additional barriers to individuals receiving the care they
need.
Repeal of three-month retroactive coverage
The ACA allowed for a three-month look back period to cover
individuals who were eligible, but not covered by Medicaid at
the time of hospital admission. Ensuring retroactive coverage
of benefits under Medicaid is very important for eligible
individuals, including children with special health care needs
and individuals with disabilities, who may have very high cost
medical conditions. Retroactive coverage allows Medicaid to
cover expenses for covered benefits in the three months prior
to the month of application for individuals who are eligible
for Medicaid. Without this provision, it would be challenging
for families who incurred high levels of expense prior to being
enrolled in the program even though they would have been
eligible for Medicaid during that period of time. This
provision is punitive and particularly harmful to very sick
and/or high-need populations.
Repeal of alignment of children's coverage
The ACA aligned coverage for more than half a million low-
income, school-aged children in 22 states that were previously
covered under different programs.\28\ Specifically, the ACA
required that all states align the minimum threshold for
Medicaid eligibility for all children under the age of 18 to
138 percent of the Federal Poverty Level (FPL). This
legislation repeals this basic protection for children's
coverage.
---------------------------------------------------------------------------
\28\Wesley Prater and Joan Alker, Aligning Eligibility for
Children: Moving the Stairstep Kids to Medicaid, Kaiser Commission on
Medicaid and the Uninsured (Aug. 2013) (http://ccf.georgetown.edu/wp-
content/uploads/2013/08/stair-step.pdf).
---------------------------------------------------------------------------
Prior to the ACA's passage, young children under age six
with family incomes up to 138 percent of the FPL were covered
in Medicaid, whereas children ages 6-18 were only required to
be covered up to 100 percent FPL. While states had the option
to align Medicaid eligibility levels for children of all ages
at 133 percent FPL or higher, many instead placed the older
children above the poverty line in separate CHIP. This created
a `stairstep' coverage structure in many states, where young
children were in Medicaid while school-aged children, even in
the same family, received coverage in separate CHIP programs.
The pediatric benefit in Medicaid--known as the Early and
Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit--
ensures children can receive the screenings they need to make
sure their development is on track, and if any illnesses or
delays are identified, that children receive the treatment they
need to thrive. Under the proposed legislation, states would be
able to strip this benefit from school-aged children (6-18 year
olds) in families with incomes between 100-133 percent of
poverty. States could also impose premiums and co-pays on this
population, making it harder for school-aged children to access
needed services. This provision is a step backwards for the
health of low-income children.
Mandatory six-month redetermination for expansion population
The bill would institute a six-month redetermination
requirement for the Medicaid expansion population. Requiring
states to redetermine eligibility of beneficiaries eligible
under the expansion every six months instead of once a year
would cause adults to lose access to health care, would be
costly and burdensome for states, and would make it harder for
health care providers and managed care organizations to
coordinate care for beneficiaries. Coupled with provisions in
this legislation to end the enhanced match for the expansion in
2020, this provision is clearly designed to decrease enrollment
of adults receiving the enhanced match and shift costs to
states, who would have to contribute an estimated 2.8 to 5
times more to cover them.
The ACA changed Medicaid to a 12-month renewal cycle to
limit ``churn'' between programs. States have multiple ways to
ensure program integrity without requiring beneficiaries to
submit paperwork every six months, such as checking
unemployment and wage data, sharing data with the Supplemental
Nutritional Assistance Program and other state programs. When
these data sources suggest a Medicaid beneficiary is no longer
eligible, states can follow up and request information from the
beneficiary. Requiring 6-month renewals limits a state's
flexibility to run their Medicaid program in a cost-effective
and efficient manner by imposing burdensome and unnecessary
mandates.
Repeal of Community First Choice match
The Community First Choice option was authorized by the ACA
as part of a host of new options to incentivize states to
rebalance their Medicaid long-term care programs toward home
and community based care, helping to keep individuals in their
homes and communities as long as possible. The ``Community
First Choice Option'' allows States to provide home and
community-based attendant services and supports to eligible
Medicaid enrollees under their state Plan, providing a 6
percentage point increase in federal matching payments to
states for service expenditures related to this option.
Services are provided statewide, with no enrollment caps.
Currently, eight states provide this important option, yet this
legislation would remove the federal support, resulting in
hundreds of millions in cuts in funding for this important
initiative to each state. This provision would incentivize
states to drop this important program, endangering the service
for the elderly and individuals with disabilities and moving
the program backwards.
UNRAVELING HEALTH INSURANCE COVERAGE FOR MILLIONS OF AMERICANS AND
FORCING THEM TO PAY MORE FOR LESS
The minority is opposed to this bill, because it will force
Americans to pay more for less, by driving up costs for older
Americans, increasing deductibles, and lowering financial
assistance to purchase health insurance. The legislation
implements an ``age tax'' that allows insurers to charge an
older person five times more than a young person. The
Affordable Care Act limited insurers to 3:1 age rating, thus
requiring insurers to charge older Americans no more than three
times more than younger Americans. This repeal legislation sets
5:1 age rating as the default, and would allow states to go
beyond 5:1 to establish any age rating ratio they choose. This
would raise older Americans' premiums by thousands of dollars a
year.
The repeal bill also replaces the ACA's tax credits with a
wholly inadequate flat tax credit based on age. The ACA's tax
credits have made health insurance affordable for millions of
lower and middle income Americans. In 2016, over 85 percent of
consumers received an advance premium tax credit, which varies
by an individual's income, family size, and the cost of
premiums in the area in which they live. The repeal legislation
will eliminate the ACA's premium assistance and replace them
with tax credits that vary only by age. These tax credits will
be substantially lower in value than the ACA's premium tax
credits. Current enrollees would receive an average tax credit
in 2020 that is 36 percent less than under the ACA, according
to the Kaiser Family Foundation. Additionally, these tax
credits would not keep pace with the cost of healthcare, as
they are indexed to CPI plus one percent, unlike the ACA's tax
credits, which are tied to the growth of insurance premiums.
This coupled with changes to age rating will make health care
unaffordable for older Americans.
The repeal bill also eliminates the ACA's cost-sharing
subsidies, which lower out-of-pocket costs for low-income
consumers below 250 percent of the federal poverty level and
help families afford copays and deductibles when seeing their
doctors. Cost-sharing reductions significantly lower out-of-
pocket costs for consumers, and the majority's decision to
eliminate them without replacing them with any equivalent
financial assistance will profoundly impact the ability of low-
income individuals to afford to use their health insurance.
The repeal bill fails to protect consumers, including up to
129 million Americans with pre-existing conditions. It
undermines the ACA's protections for individuals with
preexisting conditions by implementing a new, 30 percent
surcharge on enrollees who have had a lapse in coverage. This
``sick tax'' will make coverage more expensive for consumers
when they need it most. For instance, according to the American
Cancer Society, cancer patients are likely to have gaps in
coverage beyond their control and would therefore be
disproportionately penalized by the continuous coverage
requirement.
Additionally, the minority is concerned that millions of
Americans will be unable to afford health insurance under the
repeal legislation, and will therefore be subject to this sick
tax. The lack of any hardship exemption whatsoever underscores
the reality that the most vulnerable enrollees, such as the
very sick and very low-income enrollees, will be
disproportionately subject to this penalty. Low-income
enrollees with serious medical conditions, such as chronic
illnesses and disabilities, could find themselves permanently
locked out of coverage.
Moreover, the policies in this bill will likely result in a
``death spiral'' in the ACA marketplaces, which will raise
premiums even more for individuals with preexisting conditions.
The continuous coverage penalty, while onerous to those who are
sick and need care, is unlikely to incentivize healthy
Americans to purchase coverage. Many economists, as well as
health insurers, believe that the young and healthy will
gamble, and will stay out of the market unless they get sick.
As the young and healthy pull out of the pool, premiums will go
up for those left in the individual market.
The repeal bill also repeals important consumer protections
in the ACA that ensure that consumers get value for their
health insurance. It eliminates the actuarial value
requirements of the ACA, which require insurers to offer
individual market plans that meet certain standards--bronze,
silver, gold and platinum. Each actuarial value corresponds to
an average value to the consumer--higher value plans have lower
out-of-pocket costs (deductibles, coinsurance, and co-pays),
while lower value plans have higher out-of-pocket costs.
Repealing this requirement will send us back to the days before
the ACA, when insurance companies provided bare bones plans
that provided very little value for Americans' premium dollars.
Insurance companies will no longer be required to offer a
minimum level of benefits, resulting in skinnier plans with
higher deductibles and higher cost-sharing.
This legislation creates an ill-defined and inadequate
``Patient and State Stability Fund'' with zero protections to
ensure the funding helps consumers access health care. The bill
allocates $15 billion in 2018 and 2019 and $10 billion each
year until 2026; there is no additional funding beyond this
date. This small amount of funding is expected to be used for
wide-ranging purposes such as high-risk pools, stabilizing
insurance markets, provider payments, providing preventive
care, and reducing premium costs for consumers. Majority
members at the Committee markup further suggested that the
funds could be used to solve the opioid epidemic, or to allow
states to expand access to treatment for the mentally ill. The
minority is concerned that the majority's aspirations for these
limited dollars are not grounded in reality. Given that
aggregate premiums in the individual insurance market are
expected to be around $175 billion in 2026 according to CBO,
even if the full amount of the fund were used to reduce
premiums, the overall impact for consumers would be limited.
Additionally, there is no requirement that the funds actually
reduce premiums and costs for consumers or expand coverage.
Under the broad terms listed in the legislation, states could
use the money to increase payments to providers under state
health programs, build new hospitals or clinics, or provide flu
shots. While important, none of these projects would
necessarily increase access to affordable health insurance.
Finally, to the extent that states use these funds to set
up high risk pools, the minority is concerned that quarantining
the sickest patients in high risk pools is destined to fail and
will not protect people with pre-existing conditions. Decades
of experience with high-risk pools has proven that they do not
work--they are expensive for states to administer, expensive
for consumers to purchase, and offer poor coverage with high
premiums and even higher deductibles. High risk pools were
incredibly expensive for sick patients, sometimes charging up
to 250 percent of what healthy patients paid for their health
insurance. Deductibles were sometimes as high as $25,000 with
annual limits as low as $75,000. Even with inadequate coverage
and high deductibles, states still had difficulty funding high-
risk pools, resulting in long waiting lists and the rationing
of care for the sickest patients. Furthermore, as the repeal
legislation has no federal standards or consumer protections
associated with these state high risk pools, states would be
free to impose annual and lifetime limits, coverage exclusions
associated with a patient's pre-existing conditions, and
waiting periods.
For all of these reasons, the Democratic Members of the
Energy and Commerce Committee strongly oppose the
Reconciliation bill.
SIGNATORIES
Frank Pallone, Jr.
Bobby Rush
Anna G. Eshoo
Eliot L. Engel
Gene Green
Diana DeGette
Mike Doyle
Jan Schakowsky
G.K. Butterfield
Doris O. Matsui
Kathy Castor
John Sarbanes
Jerry McNerney
Peter Welch
Ben Ray Lujan
Paul D. Tonko
Yvette D. Clarke
Dave Loebsack
Kurt Schrader
Joseph P. Kennedy, III
Tony Cardenas
Raul Ruiz
Scott H. Peters
Debbie Dingell
Committee Print
_______________________________________________________________________
Budget Reconciliation Legislative Recommendations Relating to Repeal
and Replace of the Patient Protection and Affordable Care Act, As
Adopted by the Committee on Energy and Commerce on March 9, 2017
_______________________________________________________________________
TITLE I--ENERGY AND COMMERCE
Subtitle A--Patient Access to Public Health Programs
SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND.
(a) In General.--Subsection (b) of section 4002 of the
Patient Protection and Affordable Care Act (42 U.S.C. 300u-11),
as amended by section 5009 of the 21st Century Cures Act, is
amended--
(1) in paragraph (2), by adding ``and'' at the end;
(2) in paragraph (3)--
(A) by striking ``each of fiscal years 2018
and 2019'' and inserting ``fiscal year 2018'';
and
(B) by striking the semicolon at the end and
inserting a period; and
(3) by striking paragraphs (4) through (8).
(b) Rescission of Unobligated Funds.--Of the funds made
available by such section 4002, the unobligated balance at the
end of fiscal year 2018 is rescinded.
SEC. 102. COMMUNITY HEALTH CENTER PROGRAM.
Effective as if included in the enactment of the Medicare
Access and CHIP Reauthorization Act of 2015 (Public Law 114-10,
129 Stat. 87), paragraph (1) of section 221(a) of such Act is
amended by inserting ``, and an additional $422,000,000 for
fiscal year 2017'' after ``2017''.
SEC. 103. FEDERAL PAYMENTS TO STATES.
(a) In General.--Notwithstanding section 504(a), 1902(a)(23),
1903(a), 2002, 2005(a)(4), 2102(a)(7), or 2105(a)(1) of the
Social Security Act (42 U.S.C. 704(a), 1396a(a)(23), 1396b(a),
1397a, 1397d(a)(4), 1397bb(a)(7), 1397ee(a)(1)), or the terms
of any Medicaid waiver in effect on the date of enactment of
this Act that is approved under section 1115 or 1915 of the
Social Security Act (42 U.S.C. 1315, 1396n), for the 1-year
period beginning on the date of the enactment of this Act, no
Federal funds provided from a program referred to in this
subsection that is considered direct spending for any year may
be made available to a State for payments to a prohibited
entity, whether made directly to the prohibited entity or
through a managed care organization under contract with the
State.
(b) Definitions.--In this section:
(1) Prohibited entity.--The term ``prohibited
entity'' means an entity, including its affiliates,
subsidiaries, successors, and clinics--
(A) that, as of the date of enactment of this
Act--
(i) is an organization described in
section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from
tax under section 501(a) of such Code;
(ii) is an essential community
provider described in section 156.235
of title 45, Code of Federal
Regulations (as in effect on the date
of enactment of this Act), that is
primarily engaged in family planning
services, reproductive health, and
related medical care; and
(iii) provides for abortions, other
than an abortion--
(I) if the pregnancy is the
result of an act of rape or
incest; or
(II) in the case where a
woman suffers from a physical
disorder, physical injury, or
physical illness that would, as
certified by a physician, place
the woman in danger of death
unless an abortion is
performed, including a life-
endangering physical condition
caused by or arising from the
pregnancy itself; and
(B) for which the total amount of Federal and
State expenditures under the Medicaid program
under title XIX of the Social Security Act in
fiscal year 2014 made directly to the entity
and to any affiliates, subsidiaries,
successors, or clinics of the entity, or made
to the entity and to any affiliates,
subsidiaries, successors, or clinics of the
entity as part of a nationwide health care
provider network, exceeded $350,000,000.
(2) Direct spending.--The term ``direct spending''
has the meaning given that term under section 250(c) of
the Balanced Budget and Emergency Deficit Control Act
of 1985 (2 U.S.C. 900(c)).
Subtitle B--Medicaid Program Enhancement
SEC. 111. REPEAL OF MEDICAID PROVISIONS.
The Social Security Act is amended--
(1) in section 1902 (42 U.S.C. 1396a)--
(A) in subsection (a)(47)(B), by inserting
``and provided that any such election shall
cease to be effective on January 1, 2020, and
no such election shall be made after that
date'' before the semicolon at the end; and
(B) in subsection (l)(2)(C), by inserting
``and ending December 31, 2019,'' after
``January 1, 2014,'';
(2) in section 1915(k)(2) (42 U.S.C. 1396n(k)(2)), by
striking ``during the period described in paragraph
(1)'' and inserting ``on or after the date referred to
in paragraph (1) and before January 1, 2020''; and
(3) in section 1920(e) (42 U.S.C. 1396r-1(e)), by
striking ``under clause (i)(VIII), clause (i)(IX), or
clause (ii)(XX) of subsection (a)(10)(A)'' and
inserting ``under clause (i)(VIII) or clause (ii)(XX)
of section 1902(a)(10)(A) before January 1, 2020,
section 1902(a)(10)(A)(i)(IX),''.
SEC. 112. REPEAL OF MEDICAID EXPANSION.
(a) In General.--Section 1902(a)(10)(A) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(A)) is amended--
(1) in clause (i)(VIII), by inserting ``at the option
of a State,'' after ``January 1, 2014,''; and
(2) in clause (ii)(XX), by inserting ``and ending
December 31, 2019,'' after ``2014,''.
(b) Termination of EFMAP for New ACA Expansion Enrollees.--
Section 1905 of the Social Security Act (42 U.S.C. 1396d) is
amended--
(1) in subsection (y)(1), in the matter preceding
subparagraph (A), by striking ``with respect to'' and
all that follows through ``shall be'' and inserting
``with respect to amounts expended before January 1,
2020, by such State for medical assistance for newly
eligible individuals described in subclause (VIII) of
section 1902(a)(10)(A)(i) who are enrolled under the
State plan (or a waiver of the plan) before such date
and with respect to amounts expended after such date by
such State for medical assistance for individuals
described in such subclause who were enrolled under
such plan (or waiver of such plan) as of December 31,
2019, and who do not have a break in eligibility for
medical assistance under such State plan (or waiver)
for more than one month after such date, shall be'';
and
(2) in subsection (z)(2)--
(A) in subparagraph (A), by striking
``medical assistance for individuals'' and all
that follows through ``shall be'' and inserting
``amounts expended before January 1, 2020, by
such State for medical assistance for
individuals described in section
1902(a)(10)(A)(i)(VIII) who are nonpregnant
childless adults with respect to whom the State
may require enrollment in benchmark coverage
under section 1937 and who are enrolled under
the State plan (or a waiver of the plan) before
such date and with respect to amounts expended
after such date by such State for medical
assistance for individuals described in such
section, who are nonpregnant childless adults
with respect to whom the State may require
enrollment in benchmark coverage under section
1937, who were enrolled under such plan (or
waiver of such plan) as of December 31, 2019,
and who do not have a break in eligibility for
medical assistance under such State plan (or
waiver) for more than one month after such
date, shall be''; and
(B) in subparagraph (B)(ii)--
(i) in subclause (III), by adding
``and'' at the end; and
(ii) by striking subclauses (IV),
(V), and (VI) and inserting the
following new subclause:
``(IV) 2017 and each subsequent year is 80
percent.''.
(c) Sunset of Essential Health Benefits Requirement.--Section
1937(b)(5) of the Social Security Act (42 U.S.C. 1396u-7(b)(5))
is amended by adding at the end the following: ``This paragraph
shall not apply after December 31, 2019.''.
SEC. 113. ELIMINATION OF DSH CUTS.
Section 1923(f) of the Social Security Act (42 U.S.C. 1396r-
4(f)) is amended--
(1) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by striking
``2025'' and inserting
``2019''; and
(ii) in clause (ii)--
(I) in subclause (I), by
adding ``and'' at the end;
(II) in subclause (II), by
striking the semicolon at the
end and inserting a period; and
(III) by striking subclauses
(III) through (VIII); and
(B) by adding at the end the following new
subparagraph:
``(C) Exemption from exemption for non-
expansion states.--
``(i) In general.--In the case of a
State that is a non-expansion State for
a fiscal year, subparagraph (A)(i)
shall not apply to the DSH allotment
for such State and fiscal year.
``(ii) No change in reduction for
expansion states.--In the case of a
State that is an expansion State for a
fiscal year, the DSH allotment for such
State and fiscal year shall be
determined as if clause (i) did not
apply.
``(iii) Non-expansion and expansion
state defined.--
``(I) The term `expansion
State' means with respect to a
fiscal year, a State that, as
of July 1 of the preceding
fiscal year, provides for
eligibility under clause
(i)(VIII) or (ii)(XX) of
section 1902(a)(10)(A) for
medical assistance under this
title (or a waiver of the State
plan approved under section
1115).
``(II) The term `non-
expansion State' means, with
respect to a fiscal year, a
State that is not an expansion
State.''; and
(2) in paragraph (8), by striking ``fiscal year
2025'' and inserting ``fiscal year 2019''.
SEC. 114. REDUCING STATE MEDICAID COSTS.
(a) Letting States Disenroll High Dollar Lottery Winners.--
(1) In general.--Section 1902 of the Social Security
Act (42 U.S.C. 1396a) is amended--
(A) in subsection (a)(17), by striking
``(e)(14), (e)(14)'' and inserting ``(e)(14),
(e)(15)''; and
(B) in subsection (e)--
(i) in paragraph (14) (relating to
modified adjusted gross income), by
adding at the end the following new
subparagraph:
``(J) Treatment of certain lottery winnings
and income received as a lump sum.--
``(i) In general.--In the case of an
individual who is the recipient of
qualified lottery winnings (pursuant to
lotteries occurring on or after January
1, 2020) or qualified lump sum income
(received on or after such date) and
whose eligibility for medical
assistance is determined based on the
application of modified adjusted gross
income under subparagraph (A), a State
shall, in determining such eligibility,
include such winnings or income (as
applicable) as income received--
``(I) in the month in which
such winnings or income (as
applicable) is received if the
amount of such winnings or
income is less than $80,000;
``(II) over a period of 2
months if the amount of such
winnings or income (as
applicable) is greater than or
equal to $80,000 but less than
$90,000;
``(III) over a period of 3
months if the amount of such
winnings or income (as
applicable) is greater than or
equal to $90,000 but less than
$100,000; and
``(IV) over a period of 3
months plus 1 additional month
for each increment of $10,000
of such winnings or income (as
applicable) received, not to
exceed a period of 120 months
(for winnings or income of
$1,260,000 or more), if the
amount of such winnings or
income is greater than or equal
to $100,000.
``(ii) Counting in equal
installments.--For purposes of
subclauses (II), (III), and (IV) of
clause (i), winnings or income to which
such subclause applies shall be counted
in equal monthly installments over the
period of months specified under such
subclause.
``(iii) Hardship exemption.--An
individual whose income, by application
of clause (i), exceeds the applicable
eligibility threshold established by
the State, may continue to be eligible
for medical assistance to the extent
that the State determines, under
procedures established by the State
under the State plan (or in the case of
a waiver of the plan under section
1115, incorporated in such waiver), or
as otherwise established by such State
in accordance with such standards as
may be specified by the Secretary, that
the denial of eligibility of the
individual would cause an undue medical
or financial hardship as determined on
the basis of criteria established by
the Secretary.
``(iv) Notifications and assistance
required in case of loss of
eligibility.--A State shall, with
respect to an individual who loses
eligibility for medical assistance
under the State plan (or a waiver of
such plan) by reason of clause (i),
before the date on which the individual
loses such eligibility, inform the
individual of the date on which the
individual would no longer be
considered ineligible by reason of such
clause to receive medical assistance
under the State plan or under any
waiver of such plan and the date on
which the individual would be eligible
to reapply to receive such medical
assistance.
``(v) Qualified lottery winnings
defined.--In this subparagraph, the
term `qualified lottery winnings' means
winnings from a sweepstakes, lottery,
or pool described in paragraph (3) of
section 4402 of the Internal Revenue
Code of 1986 or a lottery operated by a
multistate or multijurisdictional
lottery association, including amounts
awarded as a lump sum payment.
``(vi) Qualified lump sum income
defined.--In this subparagraph, the
term `qualified lump sum income' means
income that is received as a lump sum
from one of the following sources:
``(I) Monetary winnings from
gambling (as defined by the
Secretary and including
monetary winnings from gambling
activities described in section
1955(b)(4) of title 18, United
States Code).
``(II) Income received as
liquid assets from the estate
(as defined in section
1917(b)(4)) of a deceased
individual.''; and
(ii) by striking ``(14) Exclusion''
and inserting ``(15) Exclusion''.
(2) Rules of construction.--
(A) Interception of lottery winnings
allowed.--Nothing in the amendment made by
paragraph (1)(B)(i) shall be construed as
preventing a State from intercepting the State
lottery winnings awarded to an individual in
the State to recover amounts paid by the State
under the State Medicaid plan under title XIX
of the Social Security Act for medical
assistance furnished to the individual.
(B) Applicability limited to eligibility of
recipient of lottery winnings or lump sum
income.--Nothing in the amendment made by
paragraph (1)(B)(i) shall be construed, with
respect to a determination of household income
for purposes of a determination of eligibility
for medical assistance under the State plan
under title XIX of the Social Security Act (42
U.S.C. 1396 et seq.) (or a waiver of such plan)
made by applying modified adjusted gross income
under subparagraph (A) of section 1902(e)(14)
of such Act (42 U.S.C. 1396a(e)(14)), as
limiting the eligibility for such medical
assistance of any individual that is a member
of the household other than the individual (or
the individual's spouse) who received qualified
lottery winnings or qualified lump-sum income
(as defined in subparagraph (J) of such section
1902(e)(14), as added by paragraph (1)(B)(i) of
this subsection).
(b) Repeal of Retroactive Eligibility.--
(1) In general.--
(A) State plan requirements.--Section
1902(a)(34) of the Social Security Act (42
U.S.C. 1396a(a)(34)) is amended by striking
``in or after the third month before the month
in which he made application'' and inserting
``in or after the month in which the individual
made application''.
(B) Definition of medical assistance.--
Section 1905(a) of the Social Security Act (42
U.S.C. 1396d(a)) is amended by striking ``in or
after the third month before the month in which
the recipient makes application for
assistance'' and inserting ``in or after the
month in which the recipient makes application
for assistance''.
(2) Effective date.--The amendments made by paragraph
(1) shall apply to medical assistance with respect to
individuals whose eligibility for such assistance is
based on an application for such assistance made (or
deemed to be made) on or after October 1, 2017.
(c) Ensuring States Are Not Forced to Pay for Individuals
Ineligible for the Program.--
(1) In general.--Section 1137(f) of the Social
Security Act (42 U.S.C. 1320b-7(f)) is amended--
(A) by striking ``Subsections (a)(1) and
(d)'' and inserting ``(1) Subsections (a)(1)
and (d)''; and
(B) by adding at the end the following new
paragraph:
``(2)(A) Subparagraphs (A) and (B)(ii) of subsection (d)(4)
shall not apply in the case of an initial determination made on
or after the date that is 6 months after the date of the
enactment of this paragraph with respect to the eligibility of
an alien described in subparagraph (B) for benefits under the
program listed in subsection (b)(2).
``(B) An alien described in this subparagraph is an
individual declaring to be a citizen or national of the United
States with respect to whom a State, in accordance with section
1902(a)(46)(B), requires--
``(i) pursuant to 1902(ee), the submission of a
social security number; or
``(ii) pursuant to 1903(x), the presentation of
satisfactory documentary evidence of citizenship or
nationality.''.
(2) No payments for medical assistance provided
before presentation of evidence.--Section 1903(i)(22)
of the Social Security Act (42 U.S.C. 1396b(i)(22)) is
amended--
(A) by striking ``with respect to amounts
expended'' and inserting ``(A) with respect to
amounts expended'';
(B) by inserting ``and'' at the end; and
(C) by adding at the end the following new
subparagraph:
``(B) in the case of a State that elects to provide a
reasonable period to present satisfactory documentary
evidence of such citizenship or nationality pursuant to
paragraph (2)(C) of section 1902(ee) or paragraph (4)
of subsection (x) of this section, for amounts expended
for medical assistance for such an individual (other
than an individual described in paragraph (2) of such
subsection (x)) during such period;''.
(3) Conforming amendments.--Section 1137(d)(4) of the
Social Security Act (42 U.S.C. 1320b-7(d)(4)) is
amended--
(A) in subparagraph (A), in the matter
preceding clause (i), by inserting ``subject to
subsection (f)(2),'' before ``the State''; and
(B) in subparagraph (B)(ii), by inserting
``subject to subsection (f)(2),'' before
``pending such verification''.
(d) Updating Allowable Home Equity Limits in Medicaid.--
(1) In general.--Section 1917(f)(1) of the Social
Security Act (42 U.S.C. 1396p(f)(1)) is amended--
(A) in subparagraph (A), by striking
``subparagraphs (B) and (C)'' and inserting
``subparagraph (B)'';
(B) by striking subparagraph (B);
(C) by redesignating subparagraph (C) as
subparagraph (B); and
(D) in subparagraph (B), as so redesignated,
by striking ``dollar amounts specified in this
paragraph'' and inserting ``dollar amount
specified in subparagraph (A)''.
(2) Effective date.--
(A) In general.--The amendments made by
paragraph (1) shall apply with respect to
eligibility determinations made after the date
that is 180 days after the date of the
enactment of this section.
(B) Exception for state legislation.--In the
case of a State plan under title XIX of the
Social Security Act that the Secretary of
Health and Human Services determines requires
State legislation in order for the respective
plan to meet any requirement imposed by
amendments made by this subsection, the
respective plan shall not be regarded as
failing to comply with the requirements of such
title solely on the basis of its failure to
meet such an additional requirement before the
first day of the first calendar quarter
beginning after the close of the first regular
session of the State legislature that begins
after the date of the enactment of this Act.
For purposes of the previous sentence, in the
case of a State that has a 2-year legislative
session, each year of the session shall be
considered to be a separate regular session of
the State legislature.
SEC. 115. SAFETY NET FUNDING FOR NON-EXPANSION STATES.
Title XIX of the Social Security Act is amended by inserting
after section 1923 (42 U.S.C. 1396r-4) the following new
section:
``ADJUSTMENT IN PAYMENT FOR SERVICES OF SAFETY NET PROVIDERS IN NON-
EXPANSION STATES
``Sec. 1923A. (a) In General.--Subject to the limitations of
this section, for each year during the period beginning with
2018 and ending with 2021, each State that is one of the 50
States or the District of Columbia and that, as of July 1 of
the preceding year, did not provide for eligibility under
clause (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for
medical assistance under this title (or a waiver of the State
plan approved under section 1115) (each such State or District
referred to in this section for the year as a `non-expansion
State') may adjust the payment amounts otherwise provided under
the State plan under this title (or a waiver of such plan) to
health care providers that provide health care services to
individuals enrolled under this title (in this section referred
to as `eligible providers').
``(b) Increase in Applicable FMAP.--Notwithstanding section
1905(b), the Federal medical assistance percentage applicable
with respect to expenditures attributable to a payment
adjustment under subsection (a) for which payment is permitted
under subsection (c) shall be equal to--
``(1) 100 percent for calendar quarters in calendar
years 2018, 2019, 2020, and 2021; and
``(2) 95 percent for calendar quarters in calendar
year 2022.
``(c) Limitations; Disqualification of States.--
``(1) Annual allotment limitation.--Payment under
section 1903(a) shall not be made to a State with
respect to any payment adjustment made under this
section for all calendar quarters in a year in excess
of the $2,000,000,000 multiplied by the ratio of--
``(A) the population of the State with income
below 138 percent of the poverty line in 2015
(as determined based the table entitled `Health
Insurance Coverage Status and Type by Ratio of
Income to Poverty Level in the Past 12 Months
by Age' for the universe of the civilian
noninstitutionalized population for whom
poverty status is determined based on the 2015
American Community Survey 1-Year Estimates, as
published by the Bureau of the Census), to
``(B) the sum of the populations under
subparagraph (A) for all non-expansion States.
``(2) Limitation on payment adjustment amount for
individual providers.--The amount of a payment
adjustment under subsection (a) for an eligible
provider may not exceed the provider's costs incurred
in furnishing health care services (as determined by
the Secretary and net of payments under this title,
other than under this section, and by uninsured
patients) to individuals who either are eligible for
medical assistance under the State plan (or under a
waiver of such plan) or have no health insurance or
health plan coverage for such services.
``(d) Disqualification in Case of State Coverage Expansion.--
If a State is a non-expansion for a year and provides
eligibility for medical assistance described in subsection (a)
during the year, the State shall no longer be treated as a non-
expansion State under this section for any subsequent years.''.
SEC. 116. PROVIDING INCENTIVES FOR INCREASED FREQUENCY OF ELIGIBILITY
REDETERMINATIONS.
(a) In General.--Section 1902(e)(14) of the Social Security
Act (42 U.S.C. 1396a(e)(14)) (relating to modified adjusted
gross income), as amended by section 114(a)(1), is further
amended by adding at the end the following:
``(K) Frequency of eligibility
redeterminations.--Beginning on October 1,
2017, and notwithstanding subparagraph (H), in
the case of an individual whose eligibility for
medical assistance under the State plan under
this title (or a waiver of such plan) is
determined based on the application of modified
adjusted gross income under subparagraph (A)
and who is so eligible on the basis of clause
(i)(VIII) or clause (ii)(XX) of subsection
(a)(10)(A), a State shall redetermine such
individual's eligibility for such medical
assistance no less frequently than once every 6
months.''.
(b) Civil Monetary Penalty.--Section 1128A(a) of the Social
Security Act (42 U.S.C. 1320a-7a(a)) is amended, in the matter
following paragraph (10), by striking ``(or, in cases under
paragraph (3)'' and inserting the following: ``(or, in cases
under paragraph (1) in which an individual was knowingly
enrolled on or after October 1, 2017, pursuant to section
1902(a)(10)(A)(i)(VIII) for medical assistance under the State
plan under title XIX whose income does not meet the income
threshold specified in such section or in which a claim was
presented on or after October 1, 2017, as a claim for an item
or service furnished to an individual described in such section
but whose enrollment under such State plan is not made on the
basis of such individual's meeting the income threshold
specified in such section, $20,000 for each such individual or
claim; in cases under paragraph (3)''.
(c) Increased Administrative Matching Percentage.--For each
calendar quarter during the period beginning on October 1,
2017, and ending on December 31, 2019, the Federal matching
percentage otherwise applicable under section 1903(a) of the
Social Security Act (42 U.S.C. 1396b(a)) with respect to State
expenditures during such quarter that are attributable to
meeting the requirement of section 1902(e)(14) (relating to
determinations of eligibility using modified adjusted gross
income) of such Act shall be increased by 5 percentage points
with respect to State expenditures attributable to activities
carried out by the State (and approved by the Secretary) to
increase the frequency of eligibility redeterminations required
by subparagraph (K) of such section (relating to eligibility
redeterminations made on a 6-month basis) (as added by
subsection (a)).
Subtitle C--Per Capita Allotment for Medical Assistance
SEC. 121. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE.
Title XIX of the Social Security Act is amended--
(1) in section 1903 (42 U.S.C. 1396b)--
(A) in subsection (a), in the matter before
paragraph (1), by inserting ``and section
1903A(a)'' after ``except as otherwise provided
in this section''; and
(B) in subsection (d)(1), by striking ``to
which'' and inserting ``to which, subject to
section 1903A(a),''; and
(2) by inserting after such section 1903 the
following new section:
``SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.
``(a) Application of Per Capita Cap on Payments for Medical
Assistance Expenditures.--
``(1) In general.--If a State has excess aggregate
medical assistance expenditures (as defined in
paragraph (2)) for a fiscal year (beginning with fiscal
year 2020), the amount of payment to the State under
section 1903(a)(1) for each quarter in the following
fiscal year shall be reduced by \1/4\ of the excess
aggregate medical assistance payments (as defined in
paragraph (3)) for that previous fiscal year. In this
section, the term `State' means only the 50 States and
the District of Columbia.
``(2) Excess aggregate medical assistance
expenditures.--In this subsection, the term `excess
aggregate medical assistance expenditures' means, for a
State for a fiscal year, the amount (if any) by which--
``(A) the amount of the adjusted total
medical assistance expenditures (as defined in
subsection (b)(1)) for the State and fiscal
year; exceeds
``(B) the amount of the target total medical
assistance expenditures (as defined in
subsection (c)) for the State and fiscal year.
``(3) Excess aggregate medical assistance payments.--
In this subsection, the term `excess aggregate medical
assistance payments' means, for a State for a fiscal
year, the product of--
``(A) the excess aggregate medical assistance
expenditures (as defined in paragraph (2)) for
the State for the fiscal year; and
``(B) the Federal average medical assistance
matching percentage (as defined in paragraph
(4)) for the State for the fiscal year.
``(4) Federal average medical assistance matching
percentage.--In this subsection, the term `Federal
average medical assistance matching percentage' means,
for a State for a fiscal year, the ratio (expressed as
a percentage) of--
``(A) the amount of the Federal payments that
would be made to the State under section
1903(a)(1) for medical assistance expenditures
for calendar quarters in the fiscal year if
paragraph (1) did not apply; to
``(B) the amount of the medical assistance
expenditures for the State and fiscal year.
``(b) Adjusted Total Medical Assistance Expenditures.--
Subject to subsection (g), the following shall apply:
``(1) In general.--In this section, the term
`adjusted total medical assistance expenditures' means,
for a State--
``(A) for fiscal year 2016, the product of--
``(i) the amount of the medical
assistance expenditures (as defined in
paragraph (2)) for the State and fiscal
year, reduced by the amount of any
excluded expenditures (as defined in
paragraph (3)) for the State and fiscal
year otherwise included in such medical
assistance expenditures; and
``(ii) the 1903A FY16 population
percentage (as defined in paragraph
(4)) for the State; or
``(B) for fiscal year 2019 or a subsequent
fiscal year, the amount of the medical
assistance expenditures (as defined in
paragraph (2)) for the State and fiscal year
that is attributable to 1903A enrollees,
reduced by the amount of any excluded
expenditures (as defined in paragraph (3)) for
the State and fiscal year otherwise included in
such medical assistance expenditures.
``(2) Medical assistance expenditures.--In this
section, the term `medical assistance expenditures'
means, for a State and fiscal year, the medical
assistance payments as reported by medical service
category on the Form CMS-64 quarterly expense report
(or successor to such a report form, and including
enrollment data and subsequent adjustments to any such
report, in this section referred to collectively as a
`CMS-64 report') that directly result from providing
medical assistance under the State plan (including
under a waiver of the plan) for which payment is (or
may otherwise be) made pursuant to section 1903(a)(1).
``(3) Excluded expenditures.--In this section, the
term `excluded expenditures' means, for a State and
fiscal year, expenditures under the State plan (or
under a waiver of such plan) that are attributable to
any of the following:
``(A) DSH.--Payment adjustments made for
disproportionate share hospitals under section
1923.
``(B) Medicare cost-sharing.--Payments made
for medicare cost-sharing (as defined in
section 1905(p)(3)).
``(C) Safety net provider payment adjustments
in non-expansion states.--Payment adjustments
under subsection (a) of section 1923A for which
payment is permitted under subsection (c) of
such section.
``(4) 1903A fy 16 population percentage.--In this
subsection, the term `1903A FY16 population percentage'
means, for a State, the Secretary's calculation of the
percentage of the actual medical assistance
expenditures, as reported by the State on the CMS-64
reports for calendar quarters in fiscal year 2016, that
are attributable to 1903A enrollees (as defined in
subsection (e)(1)).
``(c) Target Total Medical Assistance Expenditures.--
``(1) Calculation.--In this section, the term `target
total medical assistance expenditures' means, for a
State for a fiscal year, the sum of the products, for
each of the 1903A enrollee categories (as defined in
subsection (e)(2)), of--
``(A) the target per capita medical
assistance expenditures (as defined in
paragraph (2)) for the enrollee category,
State, and fiscal year; and
``(B) the number of 1903A enrollees for such
enrollee category, State, and fiscal year, as
determined under subsection (e)(4).
``(2) Target per capita medical assistance
expenditures.--In this subsection, the term `target per
capita medical assistance expenditures' means, for a
1903A enrollee category, State, and a fiscal year, an
amount equal to--
``(A) the provisional FY19 target per capita
amount for such enrollee category (as
calculated under subsection (d)(5)) for the
State; increased by
``(B) the percentage increase in the medical
care component of the consumer price index for
all urban consumers (U.S. city average) from
September of 2019 to September of the fiscal
year involved.
``(d) Calculation of FY19 Provisional Target Amount for Each
1903A Enrollee Category.--Subject to subsection (g), the
following shall apply:
``(1) Calculation of base amounts for fiscal year
2016.--For each State the Secretary shall calculate
(and provide notice to the State not later than April
1, 2018, of) the following:
``(A) The amount of the adjusted total
medical assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2016.
``(B) The number of 1903A enrollees for the
State in fiscal year 2016 (as determined under
subsection (e)(4)).
``(C) The average per capita medical
assistance expenditures for the State for
fiscal year 2016 equal to--
``(i) the amount calculated under
subparagraph (A); divided by
``(ii) the number calculated under
subparagraph (B).
``(2) Fiscal year 2019 average per capita amount
based on inflating the fiscal year 2016 amount to
fiscal year 2019 by cpi-medical.--The Secretary shall
calculate a fiscal year 2019 average per capita amount
for each State equal to--
``(A) the average per capita medical
assistance expenditures for the State for
fiscal year 2016 (calculated under paragraph
(1)(C)); increased by
``(B) the percentage increase in the medical
care component of the consumer price index for
all urban consumers (U.S. city average) from
September, 2016 to September, 2019.
``(3) Aggregate and average expenditures per capita
for fiscal year 2019.--The Secretary shall calculate
for each State the following:
``(A) The amount of the adjusted total
medical assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2019.
``(B) The number of 1903A enrollees for the
State in fiscal year 2019 (as determined under
subsection (e)(4)).
``(4) Per capita expenditures for fiscal year 2019
for each 1903a enrollee category.--The Secretary shall
calculate (and provide notice to each State not later
than January 1, 2020, of) the following:
``(A)(i) For each 1903A enrollee category,
the amount of the adjusted total medical
assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2019 for individuals in the enrollee
category, calculated by excluding from medical
assistance expenditures those expenditures
attributable to expenditures described in
clause (iii) or non-DSH supplemental
expenditures (as defined in clause (ii)).
``(ii) In this paragraph, the term `non-DSH
supplemental expenditure' means a payment to a
provider under the State plan (or under a
waiver of the plan) that--
``(I) is not made under section 1923;
``(II) is not made with respect to a
specific item or service for an
individual;
``(III) is in addition to any
payments made to the provider under the
plan (or waiver) for any such item or
service; and
``(IV) complies with the limits for
additional payments to providers under
the plan (or waiver) imposed pursuant
to section 1902(a)(30)(A), including
the regulations specifying upper
payment limits under the State plan in
part 447 of title 42, Code of Federal
Regulations (or any successor
regulations).
``(iii) An expenditure described in this
clause is an expenditure that meets the
criteria specified in subclauses (I), (II), and
(III) of clause (ii) and is authorized under
section 1115 for the purposes of funding a
delivery system reform pool, uncompensated care
pool, a designated state health program, or any
other similar expenditure (as defined by the
Secretary).
``(B) For each 1903A enrollee category, the
number of 1903A enrollees for the State in
fiscal year 2019 in the enrollee category (as
determined under subsection (e)(4)).
``(C) For fiscal year 2016, the State's non-
DSH supplemental payment percentage is equal to
the ratio (expressed as a percentage) of--
``(i) the total amount of non-DSH
supplemental expenditures (as defined
in subparagraph (A)(ii)) for the State
for fiscal year 2016; to
``(ii) the amount described in
subsection (b)(1)(A) for the State for
fiscal year 2016.
``(D) For each 1903A enrollee category an
average medical assistance expenditures per
capita for the State for fiscal year 2019 for
the enrollee category equal to--
``(i) the amount calculated under
subparagraph (A) for the State,
increased by the non-DSH supplemental
payment percentage for the State (as
calculated under subparagraph (C));
divided by
``(ii) the number calculated under
subparagraph (B) for the State for the
enrollee category.
``(5) Provisional fy19 per capita target amount for
each 1903a enrollee category.--Subject to subsection
(f)(2), the Secretary shall calculate for each State a
provisional FY19 per capita target amount for each
1903A enrollee category equal to the average medical
assistance expenditures per capita for the State for
fiscal year 2019 (as calculated under paragraph (4)(D))
for such enrollee category multiplied by the ratio of--
``(A) the product of--
``(i) the fiscal year 2019 average
per capita amount for the State, as
calculated under paragraph (2); and
``(ii) the number of 1903A enrollees
for the State in fiscal year 2019, as
calculated under paragraph (3)(B); to
``(B) the amount of the adjusted total
medical assistance expenditures for the State
for fiscal year 2019, as calculated under
paragraph (3)(A).
``(e) 1903A Enrollee; 1903A Enrollee Category.--Subject to
subsection (g), for purposes of this section, the following
shall apply:
``(1) 1903A enrollee.--The term `1903A enrollee'
means, with respect to a State and a month, any
Medicaid enrollee (as defined in paragraph (3)) for the
month, other than such an enrollee who for such month
is in any of the following categories of excluded
individuals:
``(A) CHIP.--An individual who is provided,
under this title in the manner described in
section 2101(a)(2), child health assistance
under title XXI.
``(B) IHS.--An individual who receives any
medical assistance under this title for
services for which payment is made under the
third sentence of section 1905(b).
``(C) Breast and cervical cancer services
eligible individual.--An individual who is
entitled to medical assistance under this title
only pursuant to section
1902(a)(10)(A)(ii)(XVIII).
``(D) Partial-benefit enrollees.--An
individual who--
``(i) is an alien who is entitled to
medical assistance under this title
only pursuant to section 1903(v)(2);
``(ii) is entitled to medical
assistance under this title only
pursuant to subclause (XII) or (XXI) of
section 1902(a)(10)(A)(ii) (or pursuant
to a waiver that provides only
comparable benefits);
``(iii) is a dual eligible individual
(as defined in section 1915(h)(2)(B))
and is entitled to medical assistance
under this title (or under a waiver)
only for some or all of medicare cost-
sharing (as defined in section
1905(p)(3)); or
``(iv) is entitled to medical
assistance under this title and for
whom the State is providing a payment
or subsidy to an employer for coverage
of the individual under a group health
plan pursuant to section 1906 or
section 1906A (or pursuant to a waiver
that provides only comparable
benefits).
``(2) 1903A enrollee category.--The term `1903A
enrollee category' means each of the following:
``(A) Elderly.--A category of 1903A enrollees
who are 65 years of age or older.
``(B) Blind and disabled.--A category of
1903A enrollees (not described in the previous
subparagraph) who are eligible for medical
assistance under this title on the basis of
being blind or disabled.
``(C) Children.--A category of 1903A
enrollees (not described in a previous
subparagraph) who are children under 19 years
of age.
``(D) Expansion enrollees.--A category of
1903A enrollees (not described in a previous
subparagraph) for whom the amounts expended for
medical assistance are subject to an increase
or change in the Federal medical assistance
percentage under subsection (y) or (z)(2),
respectively, of section 1905.
``(E) Other nonelderly, nondisabled, non-
expansion adults.--A category of 1903A
enrollees who are not described in any previous
subparagraph.
``(3) Medicaid enrollee.--The term `Medicaid
enrollee' means, with respect to a State for a month,
an individual who is eligible for medical assistance
for items or services under this title and enrolled
under the State plan (or a waiver of such plan) under
this title for the month.
``(4) Determination of number of 1903a enrollees.--
The number of 1903A enrollees for a State and fiscal
year, and, if applicable, for a 1903A enrollee
category, is the average monthly number of Medicaid
enrollees for such State and fiscal year (and, if
applicable, in such category) that are reported through
the CMS-64 report under (and subject to audit under)
subsection (h).
``(f) Special Payment Rules.--
``(1) Application in case of research and
demonstration projects and other waivers.--In the case
of a State with a waiver of the State plan approved
under section 1115, section 1915, or another provision
of this title, this section shall apply to medical
assistance expenditures and medical assistance payments
under the waiver, in the same manner as if such
expenditures and payments had been made under a State
plan under this title and the limitations on
expenditures under this section shall supersede any
other payment limitations or provisions (including
limitations based on a per capita limitation) otherwise
applicable under such a waiver.
``(2) Treatment of states expanding coverage after
fiscal year 2016.--In the case of a State that did not
provide for medical assistance for the 1903A enrollee
category described in subsection (e)(2)(D) during
fiscal year 2016 but which provides for such assistance
for such category in a subsequent year, the provisional
FY19 per capita target amount for such enrollee
category under subsection (d)(5) shall be equal to the
provisional FY19 per capita target amount for the 1903A
enrollee category described in subsection (e)(2)(E).
``(3) In case of state failure to report necessary
data.--If a State for any quarter in a fiscal year
(beginning with fiscal year 2019) fails to
satisfactorily submit data on expenditures and
enrollees in accordance with subsection (h)(1), for
such fiscal year and any succeeding fiscal year for
which such data are not satisfactorily submitted--
``(A) the Secretary shall calculate and apply
subsections (a) through (e) with respect to the
State as if all 1903A enrollee categories for
which such expenditure and enrollee data were
not satisfactorily submitted were a single
1903A enrollee category; and
``(B) the growth factor otherwise applied
under subsection (c)(2)(B) shall be decreased
by 1 percentage point.
``(g) Recalculation of Certain Amounts for Data Errors.--The
amounts and percentage calculated under paragraphs (1) and
(4)(C) of subsection (d) for a State for fiscal year 2016, and
the amounts of the adjusted total medical assistance
expenditures calculated under subsection (b) and the number of
Medicaid enrollees and 1903A enrollees determined under
subsection (e)(4) for a State for fiscal year 2016, fiscal year
2019, and any subsequent fiscal year, may be adjusted by the
Secretary based upon an appeal (filed by the State in such a
form, manner, and time, and containing such information
relating to data errors that support such appeal, as the
Secretary specifies) that the Secretary determines to be valid,
except that any adjustment by the Secretary under this
subsection for a State may not result in an increase of the
target total medical assistance expenditures exceeding 2
percent.
``(h) Required Reporting and Auditing of CMS-64 Data;
Transitional Increase in Federal Matching Percentage for
Certain Administrative Expenses.--
``(1) Reporting.--In addition to the data required on
form Group VIII on the CMS-64 report form as of January
1, 2017, in each CMS-64 report required to be submitted
(for each quarter beginning on or after October 1,
2018), the State shall include data on medical
assistance expenditures within such categories of
services and categories of enrollees (including each
1903A enrollee category and each category of excluded
individuals under subsection (e)(1)) and the numbers of
enrollees within each of such enrollee categories, as
the Secretary determines are necessary (including
timely guidance published as soon as possible after the
date of the enactment of this section) in order to
implement this section and to enable States to comply
with the requirement of this paragraph on a timely
basis.
``(2) Auditing.--The Secretary shall conduct for each
State an audit of the number of individuals and
expenditures reported through the CMS-64 report for
fiscal year 2016, fiscal year 2019, and each subsequent
fiscal year, which audit may be conducted on a
representative sample (as determined by the Secretary).
``(3) Temporary increase in federal matching
percentage to support improved data reporting systems
for fiscal years 2018 and 2019.--For amounts expended
during calendar quarters beginning on or after October
1, 2017, and before October 1, 2019--
``(A) the Federal matching percentage applied
under section 1903(a)(3)(A)(i) shall be
increased by 10 percentage points to 100
percent;
``(B) the Federal matching percentage applied
under section 1903(a)(3)(B) shall be increased
by 25 percentage points to 100 percent; and
``(C) the Federal matching percentage applied
under section 1903(a)(7) shall be increased by
10 percentage points to 60 percent but only
with respect to amounts expended that are
attributable to a State's additional
administrative expenditures to implement the
data requirements of paragraph (1).''.
Subtitle D--Patient Relief and Health Insurance Market Stability
SEC. 131. REPEAL OF COST-SHARING SUBSIDY.
(a) In General.--Section 1402 of the Patient Protection and
Affordable Care Act is repealed.
(b) Effective Date.--The repeal made by subsection (a) shall
apply to cost-sharing reductions (and payments to issuers for
such reductions) for plan years beginning after December 31,
2019.
SEC. 132. PATIENT AND STATE STABILITY FUND.
The Social Security Act (42 U.S.C. 301 et seq.) is amended by
adding at the end the following new title:
``TITLE XXII--PATIENT AND STATE STABILITY FUND
``SEC. 2201. ESTABLISHMENT OF PROGRAM.
``There is hereby established the `Patient and State
Stability Fund' to be administered by the Secretary of Health
and Human Services, acting through the Administrator of the
Centers for Medicare & Medicaid Services (in this section
referred to as the `Administrator'), to provide funding, in
accordance with this title, to the 50 States and the District
of Columbia (each referred to in this section as a `State')
during the period, subject to section 2204(c), beginning on
January 1, 2018, and ending on December 31, 2026, for the
purposes described in section 2202.
``SEC. 2202. USE OF FUNDS.
``A State may use the funds allocated to the State under this
title for any of the following purposes:
``(1) Helping, through the provision of financial
assistance, high-risk individuals who do not have
access to health insurance coverage offered through an
employer enroll in health insurance coverage in the
individual market in the State, as such market is
defined by the State (whether through the establishment
of a new mechanism or maintenance of an existing
mechanism for such purpose).
``(2) Providing incentives to appropriate entities to
enter into arrangements with the State to help
stabilize premiums for health insurance coverage in the
individual market, as such markets are defined by the
State.
``(3) Reducing the cost for providing health
insurance coverage in the individual market and small
group market, as such markets are defined by the State,
to individuals who have, or are projected to have, a
high rate of utilization of health services (as
measured by cost).
``(4) Promoting participation in the individual
market and small group market in the State and
increasing health insurance options available through
such market.
``(5) Promoting access to preventive services; dental
care services (whether preventive or medically
necessary); vision care services (whether preventive or
medically necessary); prevention, treatment, or
recovery support services for individuals with mental
or substance use disorders; or any combination of such
services.
``(6) Providing payments, directly or indirectly, to
health care providers for the provision of such health
care services as are specified by the Administrator.
``(7) Providing assistance to reduce out-of-pocket
costs, such as copayments, coinsurance, premiums, and
deductibles, of individuals enrolled in health
insurance coverage in the State.
``SEC. 2203. STATE ELIGIBILITY AND APPROVAL; DEFAULT SAFEGUARD.
``(a) Encouraging State Options for Allocations.--
``(1) In general.--To be eligible for an allocation
of funds under this title for a year during the period
described in section 2201 for use for one or more
purposes described in section 2202, a State shall
submit to the Administrator an application at such time
(but, in the case of allocations for 2018, not later
than 45 days after the date of the enactment of this
title and, in the case of allocations for a subsequent
year, not later than March 31 of the previous year) and
in such form and manner as specified by the
Administrator and containing--
``(A) a description of how the funds will be
used for such purposes;
``(B) a certification that the State will
make, from non-Federal funds, expenditures for
such purposes in an amount that is not less
than the State percentage required for the year
under section 2204(e)(1); and
``(C) such other information as the
Administrator may require.
``(2) Automatic approval.--An application so
submitted is approved unless the Administrator notifies
the State submitting the application, not later than 60
days after the date of the submission of such
application, that the application has been denied for
not being in compliance with any requirement of this
title and of the reason for such denial.
``(3) One-time application.--If an application of a
State is approved for a year, with respect to a purpose
described in section 2202, such application shall be
treated as approved, with respect to such purpose, for
each subsequent year through 2026.
``(4) Treatment as a state health care program.--Any
program receiving funds from an allocation for a State
under this title, including pursuant to subsection (b),
shall be considered to be a `State health care program'
for purposes of sections 1128, 1128A, and 1128B.
``(b) Default Federal Safeguard.--
``(1) In general.--
``(A) 2018.--For allocations made under this
title for 2018, in the case of a State that
does not submit an application under subsection
(a) by the 45-day submission date applicable to
such year under subsection (a)(1) and in the
case of a State that does submit such an
application by such date that is not approved,
subject to section 2204(e), the Administrator,
in consultation with the State insurance
commissioner, shall use the allocation that
would otherwise be provided to the State under
this title for such year, in accordance with
paragraph (2), for such State.
``(B) 2019 through 2026.--In the case of a
State that does not have in effect an approved
application under this section for 2019 or a
subsequent year beginning during the period
described in section 2201, subject to section
2204(e), the Administrator, in consultation
with the State insurance commissioner, shall
use the allocation that would otherwise be
provided to the State under this title for such
year, in accordance with paragraph (2), for
such State.
``(2) Required use for market stabilization payments
to issuers.--Subject to section 2204(a), an allocation
for a State made pursuant to paragraph (1) for a year
shall be used to carry out the purpose described in
section 2202(2) in such State by providing payments to
appropriate entities described in such section with
respect to claims that exceed $50,000 (or, with respect
to allocations made under this title for 2020 or a
subsequent year during the period specified in section
2201, such dollar amount specified by the
Administrator), but do not exceed $350,000 (or, with
respect to allocations made under this title for 2020
or a subsequent year during such period, such dollar
amount specified by the Administrator), in an amount
equal to 75 percent (or, with respect to allocations
made under this title for 2020 or a subsequent year
during such period, such percentage specified by the
Administrator) of the amount of such claims.
``SEC. 2204. ALLOCATIONS.
``(a) Appropriation.--For the purpose of providing
allocations for States (including pursuant to section 2203(b))
under this title there is appropriated, out of any money in the
Treasury not otherwise appropriated--
``(1) for 2018, $15,000,000,000;
``(2) for 2019, $15,000,000,000;
``(3) for 2020, $10,000,000,000;
``(4) for 2021, $10,000,000,000;
``(5) for 2022, $10,000,000,000;
``(6) for 2023, $10,000,000,000;
``(7) for 2024, $10,000,000,000;
``(8) for 2025, $10,000,000,000; and
``(9) for 2026, $10,000,000,000.
``(b) Allocations.--
``(1) Payment.--
``(A) In general.--From amounts appropriated
under subsection (a) for a year, the
Administrator shall, with respect to a State
and not later than the date specified under
subparagraph (B) for such year, allocate,
subject to subsection (e), for such State
(including pursuant to section 2203(b)) the
amount determined for such State and year under
paragraph (2).
``(B) Specified date.--For purposes of
subparagraph (A), the date specified in this
subparagraph is--
``(i) for 2018, the date that is 45
days after the date of the enactment of
this title; and
``(ii) for 2019 and subsequent years,
January 1 of the respective year.
``(2) Allocation amount determinations.--
``(A) For 2018 and 2019.--
``(i) In general.--For purposes of
paragraph (1), the amount determined
under this paragraph for 2018 and 2019
for a State is an amount equal to the
sum of--
``(I) the relative incurred
claims amount described in
clause (ii) for such State and
year; and
``(II) the relative uninsured
and issuer participation amount
described in clause (iv) for
such State and year.
``(ii) Relative incurred claims
amount.--For purposes of clause (i),
the relative incurred claims amount
described in this clause for a State
for 2018 and 2019 is the product of--
``(I) 85 percent of the
amount appropriated under
subsection (a) for the year;
and
``(II) the relative State
incurred claims proportion
described in clause (iii) for
such State and year.
``(iii) Relative state incurred
claims proportion.--The relative State
incurred claims proportion described in
this clause for a State and year is the
amount equal to the ratio of--
``(I) the adjusted incurred
claims by the State, as
reported through the medical
loss ratio annual reporting
under section 2718 of the
Public Health Service Act for
the third previous year; to
``(II) the sum of such
adjusted incurred claims for
all States, as so reported, for
such third previous year.
``(iv) Relative uninsured and issuer
participation amount.--For purposes of
clause (i), the relative uninsured and
issuer participation amount described
in this clause for a State for 2018 and
2019 is the product of--
``(I) 15 percent of the
amount appropriated under
subsection (a) for the year;
and
``(II) the relative State
uninsured and issuer
participation proportion
described in clause (v) for
such State and year.
``(v) Relative state uninsured and
issuer participation proportion.--The
relative State uninsured and issuer
participation proportion described in
this clause for a State and year is--
``(I) in the case of a State
not described in clause (vi)
for such year, 0; and
``(II) in the case of a State
described in clause (vi) for
such year, the amount equal to
the ratio of--
``(aa) the number of
individuals residing in
such State who for the
third preceding year
were not enrolled in a
health plan or
otherwise did not have
health insurance
coverage (including
through a Federal or
State health program)
and whose income is
below 100 percent of
the poverty line
applicable to a family
of the size involved;
to
``(bb) the sum of the
number of such
individuals for all
States described in
clause (vi) for the
third preceding year.
``(vi) States described.--For
purposes of clause (v), a State is
described in this clause, with respect
to 2018 and 2019, if the State
satisfies either of the following
criterion:
``(I) The number of
individuals residing in such
State and described in clause
(v)(II)(aa) was higher in 2015
than 2013.
``(II) The State have fewer
than three health insurance
issuers offering qualified
health plans through the
Exchange for 2017.
``(B) For 2020 through 2026.--For purposes of
paragraph (1), the amount determined under this
paragraph for a year (beginning with 2020)
during the period described in section 2201 for
a State is an amount determined in accordance
with an allocation methodology specified by the
Administrator which--
``(i) takes into consideration the
adjusted incurred claims of such State,
the number of residents of such State
who for the previous year were not
enrolled in a health plan or otherwise
did not have health insurance coverage
(including through a Federal or State
health program) and whose income is
below 100 percent of the poverty line
applicable to a family of the size
involved, and the number of health
insurance issuers participating in the
insurance market in such State for such
year;
``(ii) is established after
consultation with health care
consumers, health insurance issuers,
State insurance commissioners, and
other stakeholders and after taking
into consideration additional cost and
risk factors that may inhibit health
care consumer and health insurance
issuer participation; and
``(iii) reflects the goals of
improving the health insurance risk
pool, promoting a more competitive
health insurance market, and increasing
choice for health care consumers.
``(c) Annual Distribution of Previous Year's Remaining
Funds.-- In carrying out subsection (b), the Administrator
shall, with respect to a year (beginning with 2020 and ending
with 2027), not later than March 31 of such year--
``(1) determine the amount of funds, if any, from the
amounts appropriated under subsection (a) for the
previous year but not allocated for such previous year;
and
``(2) if the Administrator determines that any funds
were not so allocated for such previous year, allocate
such remaining funds, in accordance with the allocation
methodology specified pursuant to subsection
(b)(2)(B)--
``(A) to States that have submitted an
application approved under section 2203(a) for
such previous year for any purpose for which
such an application was approved; and
``(B) for States for which allocations were
made pursuant to section 2203(b) for such
previous year, to be used by the Administrator
for such States, to carry out the purpose
described in section 2202(2) in such States by
providing payments to appropriate entities
described in such section with respect to
claims that exceed $1,000,000;
with, respect to a year before 2027, any remaining
funds being made available for allocations to States
for the subsequent year.
``(d) Availability.--Amounts appropriated under subsection
(a) for a year and allocated to States in accordance with this
section shall remain available for expenditure through December
31, 2027.
``(e) Conditions for and Limitations on Receipt of Funds.--
The Secretary may not make an allocation under this title for a
State, with respect to a purpose described in section 2202--
``(1) in the case of an allocation that would be made
to a State pursuant to section 2203(a), if the State
does not agree that the State will make available non-
Federal contributions towards such purpose in an amount
equal to--
``(A) for 2020, 7 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(B) for 2021, 14 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(C) for 2022, 21 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(D) for 2023, 28 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(E) for 2024, 35 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(F) for 2025, 42 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
``(G) for 2026, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(2) in the case of an allocation that would be made
for a State pursuant to section 2203(b), if the State
does not agree that the State will make available non-
Federal contributions towards such purpose in an amount
equal to--
``(A) for 2020, 10 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(B) for 2021, 20 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
``(C) for 2022, 30 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(D) for 2023, 40 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(E) for 2024, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(F) for 2025, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
``(G) for 2026, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose; or
``(3) if such an allocation for such purpose would
not be permitted under subsection (c)(7) of section
2105 if such allocation were payment made under such
section.''.
SEC. 133. CONTINUOUS HEALTH INSURANCE COVERAGE INCENTIVE.
Subpart I of part A of title XXVII of the Public Health
Service Act is amended--
(1) in section 2701(a)(1)(B), by striking ``such
rate'' and inserting ``subject to section 2710A, such
rate'';
(2) by redesignating the second section 2709 as
section 2710; and
(3) by adding at the end the following new section:
``SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.
``(a) Penalty Applied.--
``(1) In general.--Notwithstanding section 2701,
subject to the succeeding provisions of this section, a
health insurance issuer offering health insurance
coverage in the individual or small group market shall,
in the case of an individual who is an applicable
policyholder of such coverage with respect to an
enforcement period applicable to enrollments for a plan
year beginning with plan year 2019 (or, in the case of
enrollments during a special enrollment period,
beginning with plan year 2018), increase the monthly
premium rate otherwise applicable to such individual
for such coverage during each month of such period, by
an amount determined under paragraph (2).
``(2) Amount of penalty.--The amount determined under
this paragraph for an applicable policyholder enrolling
in health insurance coverage described in paragraph (1)
for a plan year, with respect to each month during the
enforcement period applicable to enrollments for such
plan year, is the amount that is equal to 30 percent of
the monthly premium rate otherwise applicable to such
applicable policyholder for such coverage during such
month.
``(b) Definitions.--For purposes of this section:
``(1) Applicable policyholder.--The term `applicable
policyholder' means, with respect to months of an
enforcement period and health insurance coverage, an
individual who--
``(A) is a policyholder of such coverage for
such months;
``(B) cannot demonstrate (through
presentation of certifications described in
section 2704(e) or in such other manner as may
be specified in regulations, such as a return
or statement made under section 6055(d) or 36C
of the Internal Revenue Code of 1986), during
the look-back period that is with respect to
such enforcement period, there was not a period
of at least 63 continuous days during which the
individual did not have creditable coverage (as
defined in paragraph (1) of section 2704(c) and
credited in accordance with paragraphs (2) and
(3) of such section); and
``(C) in the case of an individual who had
been enrolled under dependent coverage under a
group health plan or health insurance coverage
by reason of section 2714 and such dependent
coverage of such individual ceased because of
the age of such individual, is not enrolling
during the first open enrollment period
following the date on which such coverage so
ceased.
``(2) Look-back period.--The term `look-back period'
means, with respect to an enforcement period applicable
to an enrollment of an individual for a plan year
beginning with plan year 2019 (or, in the case of an
enrollment of an individual during a special enrollment
period, beginning with plan year 2018) in health
insurance coverage described in subsection (a)(1), the
12-month period ending on the date the individual
enrolls in such coverage for such plan year.
``(3) Enforcement period.--The term `enforcement
period' means--
``(A) with respect to enrollments during a
special enrollment period for plan year 2018,
the period beginning with the first month that
is during such plan year and that begins
subsequent to such date of enrollment, and
ending with the last month of such plan year;
and
``(B) with respect to enrollments for plan
year 2019 or a subsequent plan year, the 12-
month period beginning on the first day of the
respective plan year.''.
SEC. 134. INCREASING COVERAGE OPTIONS.
Section 1302 of the Patient Protection and Affordable Care
Act (42 U.S.C. 18022) is amended--
(1) in subsection (a)(3), by inserting ``and with
respect to a plan year before plan year 2020'' after
``subsection (e)''; and
(2) in subsection (d), by adding at the end the
following:
``(5) Sunset.--The provisions of this subsection
shall not apply after December 31, 2019, and after such
date any reference to this subsection or level of
coverage or plan described in this subsection and any
requirement under law applying such a level of coverage
or plan shall have no force or effect (and such a
requirement shall be applied as if this section had
been repealed).''.
SEC. 135. CHANGE IN PERMISSIBLE AGE VARIATION IN HEALTH INSURANCE
PREMIUM RATES.
Section 2701(a)(1)(A)(iii) of the Public Health Service Act
(42 U.S.C. 300gg(a)(1)(A)(iii)), as inserted by section 1201(4)
of the Patient Protection and Affordable Care Act, is amended
by inserting after ``(consistent with section 2707(c))'' the
following: ``or, for plan years beginning on or after January
1, 2018, as the Secretary may implement through interim final
regulation, 5 to 1 for adults (consistent with section 2707(c))
or such other ratio for adults (consistent with section
2707(c)) as the State involved may provide''.
House of Representatives,
Committee on Ways and Means,
Washington, DC, March 13, 2017.
Hon. Diane Black,
Chairman, Committee on the Budget,
Washington, DC.
Dear Chairman Black: Pursuant to section 2002 of S. Con.
Res. 3, the Fiscal Year 2017 Concurrent Resolution on the
Budget, as well as section 310 of the Congressional Budget and
Impoundment Control Act of 1974, I hereby transmit to the House
Committee on the Budget these recommendations, which were
approved by vote of the Committee Ways and Means on March 9,
2017, and the appropriate accompanying material, including
dissenting views.
Sincerely,
Kevin Brady,
Chairman.
CONTENTS
Page
SUBTITLE [A]--REPEAL AND REPLACE OF HEALTH-RELATED TAX POLICY.... 367
I. SUMMARY AND BACKGROUND.........................................367
II. EXPLANATION OF PROVISIONS......................................370
III. VOTES OF THE COMMITTEE.........................................406
IV. BUDGET EFFECTS OF THE PROVISIONS...............................412
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.....415
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED....................420
VII. DISSENTING VIEWS...............................................421
SUBTITLE [A]--REPEAL AND REPLACE OF HEALTH-RELATED TAX POLICY
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
In fulfillment of the reconciliation instructions included
in section 2002 of the Concurrent Resolution on the Budget for
Fiscal Year 2017 (S. Con. Res. 3), the Committee on Ways and
Means ordered favorably transmitted (with a quorum being
present) the Budget Reconciliation Legislative Recommendations
Relating to Repeal and Replace of Health-Related Tax Policy.
The Committee recommends modification for a transition period,
followed by repeal, of the premium assistance tax credit and
the small business tax credit under the Internal Revenue Code
of 1986, as amended (``Code'');\1\ repeal of various other
taxes and tax increases imposed by the Patient Protection and
Affordable Care Act of 2010 (``PPACA''), Pub. L. No. 111-148
(March 23, 2010), as amended by the Health Care and Education
Reconciliation Act of 2010 (``HCERA''), Pub. L. No. 111-152
(March 30, 2010);\2\ enactment of a tax credit for the purchase
of health insurance in the individual market by taxpayers who
are not eligible for health coverage from other sources; and
improvements to the rules governing health savings accounts.
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\1\All section references herein are to the Code unless otherwise
stated.
\2\PPACA and HCERA are collectively referred to as the Affordable
Care Act (``ACA'').
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B. Background and Need for Legislation
In the Committee's pursuit of comprehensive health care
reform to relieve unnecessary burdens on insurance markets, the
broader economy, and taxpayers in need of access to quality
health care, the Committee wishes to take immediate measures to
stabilize insurance markets, provide relief from taxes imposing
excessive constraints on choice and innovation, expand access
to additional health insurance options, and encourage consumer
awareness of health care costs and effectiveness. The Committee
believes that transition modifications to the present-law
premium assistance and small business tax credits, accompanied
by the repeal of burdensome individual and business taxes and
expansion of health savings accounts, in combination with
replacement measures that expand health coverage choices, will
further these goals.
C. Legislative History
Budget resolution
On January 13, 2017, the House of Representatives approved
S. Con. Res. 3, the budget resolution for fiscal year 2017.
Pursuant to section 2002(a)(3) of S. Con. Res. 3, the Committee
on Ways and Means was directed to submit to the Committee on
the Budget recommendations for changes in law within the
jurisdiction of the Committee on Ways and Means sufficient to
reduce the deficit by $1,000,000,000 for the period of fiscal
years 2017 through 2026.
Committee action
Beginning March 8, 2017, in response to its instructions
under the budget resolution, the Committee on Ways and Means
marked up the budget reconciliation legislative recommendations
relating to repeal and replace of health-related tax policy and
ordered the legislative recommendations, as amended, favorably
transmitted (with a quorum being present) on March 9, 2017.
Committee hearings
Since the 112th Congress, the Committee on Ways and Means
held a number of hearings on health reform that explored
various parts of the health system and informed policy
contained in the American Health Care Act. These hearings
include:
Full Committee
January 26, 2011--Hearing on the Health Care Law's
Impact on Jobs, Employers, and the Economy.
February 16, 2011--Hearing on the President's
Fiscal Year 2012 Budget Proposal with US Department of Health
and Human Services Secretary Kathleen Sebelius.
February 28, 2012--Hearing on the President's
Fiscal Year 2013 Budget Proposal with HHS Secretary Kathleen
Sebelius.
July 10, 2012--Hearing on Tax Ramifications of the
Supreme Court's Ruling on the Democrats' Health Care Law.
April 12, 2013--The President's Fiscal Year 2014
Budget Proposal with U.S. Department of Health and Human
Services Secretary Kathleen Sebelius.
October 29, 2013--Hearing on The Status of the
Affordable Care Act Implementation.
January 28, 2014--The Impact of the Employer
Mandate's Definition of Full-Time Employee on Jobs and
Opportunities.
March 6, 2014--The President's Fiscal Year 2015
Budget Proposal with U.S. Department of the Treasury Secretary
Jacob J. Lew.
March 12, 2014--The President's Fiscal Year 2015
Budget Proposal with U.S. Department of Health and Human
Services Secretary Kathleen Sebelius.
June 10, 2015--Hearing on Obamacare Implementation
and the Department of Health and Human Services Fiscal Year
2016 Budget Request.
February 10, 2016--Hearing on the Department of
Health and Human Services Fiscal Year 2017 Budget Request.
March 14, 2016--Hearing on the Tax Treatment of
Health Care.
Health Subcommittee
September 9, 2011--Hearing on Health Care Industry
Consolidation.
March 29, 2012--Hearing on the Individual and
Employer Mandates in the Democrat's Health Care Law.
September 12, 2012--Hearing on Implementation of
Health Insurance Exchanges and Related Provisions.
July 10, 2013--Hearing on The Delay of the
Employer Mandate.
July 17, 2013--Hearing on the Delay of the
Employer Mandate Penalties and Reporting Requirements.
December 4, 2013--Hearing on the Challenges of the
Affordable Care Act.
April 8, 2014--The Treasury Department's Final
Employer Mandate and Employer Reporting Requirements
Regulations.
June 10, 2014--Verification of Income and
Insurance Information Under the Affordable Care Act.
September 10, 2014--Hearing on the Status of the
Affordable Care Act Implementation.
April 14, 2015--Hearing on the Individual and
Employer Mandates in the President's Health Care Law.
November 3, 2015--Hearing on the State of
Obamacare's CO-OP Program.
May 17, 2016--Member Day Hearing on Tax-related
Proposals to Improve Health Care.
September 14, 2016--Hearing on Exploring the Use
of Technology and Innovation to Create Efficiencies and Higher
Quality in Health Care.
Select Revenue Measures Subcommittee
March 16, 2011--Hearing on Tax-Related Provisions
of H.R. 3.
Human Resources Subcommittee
June 27, 2012--Hearing on How Welfare and Tax
Benefits Can Discourage Work.
Oversight Subcommittee
March 2, 2011--Hearing on Improving Efforts to
Combat Health Care Fraud.
April 25, 2012--Hearing on the Impact of
Limitations on the Use of Tax-Advantaged Accounts for the
Purchase of Over-the-Counter Medication.
September 11, 2012--Hearing on Internal Revenue
Service's Implementation and Administration of The Democrats
Health Care Law.
March 5, 2013--Hearing on Tax-Related Provisions
in the President's Health Care Law.
June 10, 2014--Verification of Income and
Insurance Information Under the Affordable Care Act.
July 23, 2014--Hearing on the Integrity of the
Affordable Care Act's Premium Tax Credit.
May 20, 2015--Hearing on the Use of Administrative
Action in the ACA Implementation.
June 24, 2015--Hearing on Rising Health Insurance
Premiums Under Obamacare.
July 12, 2016--Hearing on Rising Health Insurance
Premiums Under the Affordable Care Act.
II. EXPLANATION OF PROVISIONS
A. Modifications and Repeal of Premium Tax Credit (secs. _01-_03 of the
committee print and sec. 36B of the Code)
PRESENT LAW
In general
A refundable tax credit (the ``premium assistance credit'')
is provided for eligible individuals and families to subsidize
the purchase of health insurance plans through an American
Health Benefit Exchange (``Exchange''), referred to as
``qualified health plans.''\3\ In general, advance payments
with respect to the premium assistance credit are made during
the year directly to the insurer, as discussed below. However,
eligible individuals may choose to pay their total health
insurance premiums without advance payments and claim the
credit at the end of the taxable year.
---------------------------------------------------------------------------
\3\Under PPACA, an American Health Benefit Exchange is a source
through which individuals can purchase health insurance coverage.
---------------------------------------------------------------------------
Qualified health plans generally must meet certain
requirements.\4\ Special rules apply to certain qualified
health plans, referred to as ``catastrophic-only'' qualified
health plans, which are available only to individuals who are
under age 30 or meet other specified requirements.\5\ The
premium assistance credit is not available with respect to
catastrophic-only qualified health plans.\6\ In addition, in
the case of a qualified health plan that provides coverage for
abortions for which Federal funds may not be used, no part of
the premium assistance credit may be used for the portion of
premiums attributable to that coverage.\7\
---------------------------------------------------------------------------
\4\Secs. 1301 and 1302 of PPACA.
\5\Sec. 1302(e) of PPACA.
\6\Under the Public Health Service Act (``PHSA'') as amended by the
ACA, health insurance must meet certain requirements. Section 1251 of
PPACA excepts certain health plans sold at the time of enactment of
PPACA from some of the PHSA requirements (referred to as
``grandfathered'' plans). In addition, under guidance provided by the
Center for Consumer Information & Insurance Oversight (``CCIIO,'' part
of the Department of Health and Human Services), including a letter
dated November 14, 2013, to the State Insurance Commissioners and
subsequent extensions, certain health plans that were sold in the
individual insurance market as of January 1, 2013, are permitted to be
sold after January 1, 2014, despite not complying with ACA requirements
(referred to as ``grandmothered plans''). The premium assistance credit
is not available with respect to a grandfathered plan or a
grandmothered plan.
\7\Sec. 1303(b)(2) of PPACA.
---------------------------------------------------------------------------
The premium assistance credit is generally available for
individuals (single or joint filers) with household incomes
between 100 and 400 percent of the Federal poverty level
(``FPL'') for the family size involved.\8\ Household income is
defined as the sum of: (1) the individual's modified adjusted
gross income, plus (2) the aggregate modified adjusted gross
incomes of all other individuals taken into account in
determining the individual's family size (but only if the other
individuals are required to file a tax return for the taxable
year). Modified adjusted gross income is defined as adjusted
gross income increased by: (1) any amount excluded from gross
income for citizens or residents living abroad,\9\ (2) any tax-
exempt interest received or accrued during the tax year, and
(3) the portion of the individual's social security benefits
not included in gross income.\10\ To be eligible for the
premium assistance credit, individuals who are married must
file a joint return. Individuals who are listed as dependents
on a return are not eligible for the premium assistance credit.
---------------------------------------------------------------------------
\8\Federal poverty level refers to the most recently published
poverty guidelines determined by the Secretary of Health and Human
Services (``HHS''). Levels for 2017 and previous years are available at
https://aspe.hhs.gov/prior-hhs-poverty-guidelines-and-federal-register-
references.
\9\Sec. 911.
\10\Under section 86, only a portion of an individual's social
security benefits are included in gross income.
---------------------------------------------------------------------------
An individual who is eligible for minimum essential
coverage from a source other than the individual insurance
market generally is not eligible for the premium assistance
credit.\11\ However, an individual who is offered minimum
essential coverage under an employer-sponsored health plan may
be eligible for the premium assistance credit if an employee's
share of the premium for self-only coverage exceeds 9.69
percent (for 2017) of the employee's household income, or the
plan's share of total allowed costs of benefits provided under
the plan is less than 60 percent of such costs (called
``minimum value''), and the individual declines the employer-
offered coverage. An individual who enrolls in an employer-
sponsored health plan generally is ineligible for the premium
assistance credit, even if the coverage is considered
unaffordable or does not provide minimum value.
---------------------------------------------------------------------------
\11\Minimum essential coverage is defined in section 5000A(f).
---------------------------------------------------------------------------
As part of the process of enrollment in a qualified health
plan through an Exchange, an individual may apply and be
approved for advance payments with respect to a premium
assistance credit (``advance payments'').\12\ The individual
must provide information on income, family size, changes in
marital or family status or income, and citizenship or lawful
presence status.\13\ Eligibility for advance payments is
generally based on the individual's income for the tax year
ending two years prior to the enrollment period. The Exchange
process includes a system through which information provided by
the individual is verified using information from the Internal
Revenue Service (``IRS'') and certain other sources.\14\ If an
individual is approved for advance payments, the Treasury pays
the advance amount directly to the issuer of the health plan in
which the individual is enrolled. The individual then pays to
the issuer of the plan the difference between the advance
payment amount and the total premium charged for the plan.
---------------------------------------------------------------------------
\12\Secs. 1411-1412 of PPACA. Under section 1402 of PPACA, certain
individuals eligible for advance premium assistance payments are
eligible also for a reduction in their share of medical costs, such as
deductibles and copays, under the plan, referred to as reduced cost-
sharing. Eligibility for reduced cost-sharing is also determined as
part of the Exchange enrollment process. The Department of Health and
Human Services (``HHS'') is responsible for rules relating to Exchanges
and the eligibility determination process.
\13\Under section 1312(f)(3) of PPACA, an individual may not enroll
in a qualified health plan through an Exchange if the individual is not
a citizen or national of United States or an alien lawfully present in
the United States. Thus, such an individual is not eligible for the
premium assistance credit.
\14\Under section 6103, returns and return information are
confidential and may not be disclosed, except as authorized by the
Code, by the IRS, other Federal employees, State employees, and certain
others having access to such information. Under section 6103(l)(21),
upon written request of the Secretary of HHS, the IRS is permitted to
disclose certain return information for use in determining an
individual's eligibility for advance premium assistance payments,
reduced cost-sharing, or certain other State health subsidy programs,
including a State Medicaid program under title XIX of the Social
Security Act, a State's Children's Health Insurance Program under title
XXI of the Social Security Act and a Basic Health Program under section
1331 of PPACA.
---------------------------------------------------------------------------
Amount of credit
The premium assistance credit amount is generally the lower
of (1) the premium for the qualified health plan in which the
individual or family enrolls and (2) the premium for the second
lowest cost silver plan in the rating area where the individual
resides, reduced by the individual's or family's share of
premiums.\15\ As shown in Table 1 below, an individual's or
family's share of premiums is a certain percentage of household
income. For 2017, the percentage is 2.04 percent for household
income up to 133 percent of FPL and is determined on a sliding
scale in a linear manner up to 9.69 percent as household income
rises from 133 percent of FPL to 400 percent of FPL.
---------------------------------------------------------------------------
\15\The premium assistance amount is determined on a monthly basis
and the credit for a year is the sum of the monthly amounts.
TABLE 1.--INDIVIDUAL'S SHARE OF PREMIUMS
(For 2017)\16\
----------------------------------------------------------------------------------------------------------------
Initial percentage of Final percentage of
Household income (expressed as a percent of FPL) household income household income
----------------------------------------------------------------------------------------------------------------
100% up to 133%............................................. 2.04 2.04
133% up to 150%............................................. 3.06 4.08
150% up to 200%............................................. 4.08 6.43
200% up to 250%............................................. 6.43 8.21
250% up to 300%............................................. 8.21 9.69
300% up to 400%............................................. 9.69 9.69
----------------------------------------------------------------------------------------------------------------
Reconciliation of advance payment on return
An individual on whose behalf advance payments of the
premium assistance credit for a taxable year are made is
required to file an income tax return to reconcile the advance
payments with the credit to which the individual is entitled
for the taxable year.\17\
---------------------------------------------------------------------------
\16\Rev. Proc. 2016-24, 2016-18 I.R.B. 677. The percentages are
indexed to the excess of premium growth over income growth for the
preceding calendar year. After 2018, if the aggregate amount of premium
assistance credits (and cost-sharing reductions under section 1402 of
PPACA) exceeds 0.504 percent of the gross domestic product for that
year, the percentage of income is also adjusted to reflect the excess
(if any) of premium growth over the rate of growth in the consumer
price index for the preceding calendar year.
\17\Under section 6055, health insurance issuers are required to
report to the IRS and to an individual the months during a year for
which the individual was covered by minimum essential coverage issued
by the insurer in the individual market. In addition, under section
36B(f)(3), an Exchange is required to report to the IRS and to an
individual the months during a year for which the individual was
covered by a qualified health plan purchased through the Exchange, the
premiums paid by the individual, and, if applicable, advance premium
assistance payments made on behalf of the individual.
---------------------------------------------------------------------------
If the advance payments of the premium assistance credit
exceed the amount of credit to which the individual is
entitled, the excess (``excess advance payments'') is treated
as an additional tax liability on the individual's income tax
return for the taxable year (referred to as ``recapture''),
subject to a limit on the amount of additional liability in
some cases. For an individual with household income below 400
percent of FPL, liability for the excess advance payments for a
taxable year is limited to a specific dollar amount (the
``applicable dollar amount'') as shown in Table 2 below. One-
half of the applicable dollar amount shown in Table 2 applies
to an unmarried individual who is not a surviving spouse or
filing as a head of household.
TABLE 2.--RECONCILIATION LIMIT ON ADDITIONAL TAX LIABILITY
(For 2017)\18\
------------------------------------------------------------------------
Applicable dollar
Household income (expressed as a percent of FPL) amount
------------------------------------------------------------------------
Less than 200%....................................... $600
At least 200% but less than 300%..................... $1,500
At least 300% but less than 400%..................... $2,550
------------------------------------------------------------------------
If the advance payments of the premium assistance credit
for a taxable year are less than the amount of the credit to
which the individual is entitled, the additional credit amount
is also reflected on the individual's income tax return for the
year.
---------------------------------------------------------------------------
\18\Rev. Proc. 2016-55, 2015-45 I.R.B. 707. The applicable dollar
amounts are indexed to reflect cost-of-living increases, with the
amount of any increase rounded down to the next lowest multiple of $50.
---------------------------------------------------------------------------
REASONS FOR CHANGE
The premium assistance tax credit contains basic flaws and
has contributed to the weakening of the individual insurance
market and increased inefficiencies in that market.
Specifically, limiting the credit to health coverage purchased
through an Exchange has led to segmentation of individual
insurance markets and limited health plan choices in many
areas. Denying the credit for catastrophic coverage, which can
be an affordable option for younger individuals, has
discouraged younger and healthier individuals from
participating in insurance markets. Furthermore, the limits on
recapture of excess advance payments allow some individuals to
keep funds to which they are not entitled, thereby increasing
the cost of the credit and Federal deficits. The Committee
considers repeal and replacement of the premium assistance tax
credit to be a fundamental element of true health care reform.
However, the Committee also recognizes that making immediate
changes can be disruptive for individuals, insurers and health
care providers. The Committee therefore wishes to remedy the
flaws of the premium assistance credit while providing a smooth
transition period.
EXPLANATION OF PROVISION
Overview
The provision makes several modifications to the premium
assistance credit for a transition period and repeals the
premium assistance credit at the end of the transition period.
Recapture of excess advance payments
The provision repeals the present-law provision under
which, in the case of an individual with household income below
400 percent of FPL, the additional tax liability resulting from
excess advance payments is limited to the applicable dollar
amount. Thus, under the provision, the full amount of excess
advance payments is treated as an additional tax liability for
the individual.
Application of credit to additional coverage
Under the provision, the premium assistance credit is
available with respect to catastrophic-only qualified health
plans. In addition, the premium assistance credit is available
with respect to health plans that otherwise meet the
requirements relating to qualified health plans, except that
they are not offered through an Exchange.\19\ Thus, an
individual who purchases a qualified health plan in the
individual market, but not through an Exchange, may be eligible
for the premium assistance credit if the requirements for
eligibility are otherwise met.\20\
---------------------------------------------------------------------------
\19\As under present law, the credit is not available with respect
to a grandfathered plan or grandmothered plan. In addition, as under
present law, an individual who is not a citizen or national of the
United States, or an alien lawfully present in the United States, is
not eligible for the premium assistance credit.
\20\Advance premium assistance payments are not available with
respect to a qualified health plan that is not purchased through an
Exchange. An individual who purchases such a plan must claim the
premium assistance credit on his or her income tax return. The
provision amends the present-law reporting requirements under section
6055 so that additional information related to eligibility for the
premium assistance credit is reported.
---------------------------------------------------------------------------
Ineligibility of qualified health plans covering abortion
Under the provision, the premium assistance credit is not
available with respect to a qualified health plan that includes
coverage for abortions, other than an abortion necessary to
save the life of the mother or an abortion with respect to a
pregnancy that is the result of an act of rape or incest.\21\
For this purpose, the treatment of any infection, injury,
disease, or disorder that has been caused by or exacerbated by
the performance of an abortion is not considered an abortion.
---------------------------------------------------------------------------
\21\Nothing in the provision is to be construed as prohibiting any
individual from purchasing separate coverage for abortions, or a health
plan that includes those abortions, so long as no premium assistance
credit is allowed with respect to the premiums for the coverage or
plan. In addition, nothing in the provision restricts any health
insurance issuer from offering separate coverage for abortions, or a
plan that includes abortions, so long as premiums for the separate
coverage or plan are not paid for with any amount attributable to the
premium assistance credit (or the amount of any advance payment of the
credit under section 1412 of PPACA).
---------------------------------------------------------------------------
Changes to individual share of premiums
The provision revises the schedule under which an
individual's or family's share of premiums is determined in
applying the credit for taxable years beginning 2019. As
revised, the schedule varies with household income and with the
age of the individual or family members, as shown in Table 3
below, subject to adjustment as described below.\22\ Initial
and final percentages refer to percentage of the taxpayer's
household income.
---------------------------------------------------------------------------
\22\For purposes of the schedule, an individual's age for a taxable
year is the age the individual attains before the close of the taxable
year, and, in the case of a joint return, the age of the older spouse
is taken into account. As under present law, the applicable percentage
is determined on a sliding scale in a linear manner as household income
rises from 133 percent of FPL to 400 percent of FPL.
TABLE 3--INDIVIDUAL'S SHARE OF PREMIUMS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59
---------------------------------------------------------------------------------------------------
Household income (expressed as a percent of FPL) Initial Initial Initial Initial Initial
% Final % % Final % % Final % % Final % % Final %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Up to 133%.......................................... 2 2 2 2 2 2 2 2 2 2
133%-150%........................................... 3 4 3 4 3 4 3 4 3 4
150%-200%........................................... 4 4.3 4 5.3 4 6.3 4 7.3 4 8.3
200%-250%........................................... 4.3 4.3 5.3 5.9 6.3 8.05 7.3 9 8.3 10.0
250%-300%........................................... 4.3 4.3 5.9 5.9 8.05 8.35 9 10.5 10 11.5
300%-400%........................................... 4.3 4.3 5.9 5.9 8.35 8.35 10.5 10.5 11.5 11.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
To determine the percentages applicable for taxable years
beginning in calendar year 2019, the initial and final
percentages may be subject to two adjustments. The first
adjustment reflects the excess, if any, of (1) the rate of
premium growth for the period beginning with calendar year 2013
and ending with calendar year 2018 over (2) the rate of income
growth for that period. The second adjustment reflects the
excess, if any, of (1) the rate of premium growth for calendar
year 2018 over (2) the rate of growth in the consumer price
index for calendar year 2018. However, the second adjustment
applies only if the aggregate amount of premium assistance
credits and cost-sharing reductions for calendar year 2018
exceeds 0.504 percent of the gross domestic product for that
year.
Repeal of premium assistance credit
The provision terminates the premium assistance credit with
respect to any coverage month beginning after December 31,
2019.\23\
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\23\The provision generally also repeals the provisions of sections
1411 and 1412 of PPACA relating to the determination of eligibility for
advance premium assistance payments.
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EFFECTIVE DATE
Repeal of the limit on additional tax liability resulting
from excess advance payments is effective for taxable years
beginning after December 31, 2017, and before January 1, 2020.
The other transition modifications to the premium assistance
credit are generally effective for taxable years beginning
after December 31, 2017, except that the new schedule for
determining an individual's or family's share of premiums is
effective for taxable years beginning after December 31,
2018.\24\ Repeal of the premium assistance credit is effective
for months beginning after December 31, 2019, in taxable years
ending after that date.\25\
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\24\The provision specifying that advance premium assistance
payments are not available with respect to a qualified health plan that
is not purchased through an Exchange is effective on January 1, 2018.
The provision amending the present-law reporting requirements under
section 6055 is effective for coverage provided for months beginning
after December 31, 2017.
\25\Repeal of the provisions of sections 1411 and 1412 of PPACA
relating to the determination of eligibility for advance premium
assistance payments is effective January 1, 2020.
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B. Small Business Tax Credit (sec. _04 of the committee print and sec.
45R of the Code)
PRESENT LAW
In general
Present law provides a tax credit for an eligible small
employer for up to 50 percent of the employer's nonelective
contributions to purchase health insurance for its employees.
An eligible small employer for this purpose generally is an
employer with no more than 25 full-time equivalent employees
(``FTEs'') during the employer's taxable year, whose average
annual wages (for 2017) do not exceed $52,400.\26\ The full
amount of the credit is available only to an employer with 10
or fewer FTEs whose average annual wages do not exceed (for
2017) $26,200 and is phased out based on the number of FTEs
over 10 and average annual wages over $26,200.
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\26\Wages for this purpose is defined as under the Federal
Insurance Contributions Act (``FICA''), sections 3101-3128, without
regard to the dollar limit on FICA wages under section 3121(a). The
wage amounts relevant for purposes of the credit are indexed to the
Consumer Price Index for Urban Consumers (``CPI-U'') for years
beginning after 2013.
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For purposes of the credit, the employer is determined by
applying the aggregation rules for controlled groups, groups
under common control, and affiliated service groups.\27\ In
addition, for purposes of the credit, the term ``employee''
includes a leased employee, that is, an individual who is not
an employee of the employer, who provides services to the
employer pursuant to an agreement between the employer and
another person (a ``leasing organization'') and under the
primary direction or control of the employer, and who has
performed such services on a substantially full-time basis for
at least one year.\28\
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\27\Section 414(b) provides that, for specified employee benefit
purposes, employees of corporations that are members of a controlled
group of corporations are treated as employed by a single employer.
Similarly, employees of trades or businesses (whether or not
incorporated) under common control as provided in regulations under
section 414(c), and employees of members of an affiliated service group
as defined under section 414(m), are treated as employed by a single
employer for specified employee benefit purposes. Section 414(o)
authorizes the Secretary of the Treasury to issue regulations to
prevent avoidance of the purposes specified in section 414(m).
\28\Sec. 414(n)(2).
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Self-employed individuals (including partners and sole
proprietors),\29\ two-percent shareholders of an S
Corporation,\30\ and five-percent owners of the employer\31\
are not employees for purposes of the credit with the result
that they are disregarded in determining number of FTEs,
average annual wages, and nonelective contributions for
employees' health insurance. Family members of these
individuals and any member of the individual's household who is
a dependent for tax purposes are also not employees for
purposes of the credit. In addition, the hours of service
worked by and wages paid to a seasonal worker of an employer
are not taken into account in determining number of FTEs and
average annual wages unless the worker works for the employer
on more than 120 days during the taxable year.
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\29\Sec. 401(c).
\30\Sec. 1372(b).
\31\Five-percent owner is defined as for purposes of the qualified
retirement plan top-heavy rules under section 416(i)(1)(B)(i).
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The employer contributions must be provided under an
arrangement that requires the eligible small employer to make,
on behalf of each employee who enrolls in qualifying health
insurance offered by the employer, a nonelective contribution
equal to a uniform percentage (not less than 50 percent) of the
premium cost of the qualifying health insurance.\32\ The credit
is available only for nonelective contributions for premiums
for insurance purchased through a Small Business Health Options
(``SHOP'') Exchange and is available for a maximum credit
period of two consecutive taxable years beginning with the
first taxable year in which the employer (or any predecessor)
offers coverage to its employees through a SHOP Exchange.\33\
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\32\A nonelective contribution is an employer contribution other
than an employer contribution pursuant to a salary reduction
arrangement.
\33\The maximum two-year credit period does not take into account
any taxable years beginning before 2014.
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The credit is available only to offset actual tax liability
(that is, it is not a refundable credit) and is claimed on the
employer's tax return. The credit is a general business credit
and generally can be carried back for one year and carried
forward for 20 years. The credit is available for tax liability
under the alternative minimum tax. The dollar amount of the
credit reduces the amount of employer contributions the
employer may deduct as a business expense.
Tax-exempt organizations
A tax-exempt organization\34\ that otherwise qualifies as
an eligible small employer is eligible to receive the credit.
For tax-exempt organizations, the applicable credit percentage
is limited to 35 percent. In addition, for tax-exempt
organizations, instead of being a general business credit, the
credit is a refundable credit limited to the amount of the
payroll taxes of the employer during the calendar year in which
the taxable year begins. For this purpose, ``payroll taxes''
means: (1) the amount of income tax required to be withheld
from its employees' wages; (2) the amount of hospital insurance
tax required to be withheld from its employees' wages; and (3)
the amount of the hospital insurance tax imposed on the
employer.\35\
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\34\A tax-exempt organization is an organization described in
section 501(c) that is exempt from tax under section 501(a).
\35\Secs. 3402, 3101(b) and 3102, 3111(b).
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REASONS FOR CHANGE
The tax credit for health insurance premiums paid by an
employer was intended to encourage small businesses to provide
coverage to employees. However, the design of the credit limits
its usefulness to these employers. The Committee believes that
other measures to lower the cost of health coverage will
provide more effective incentive for small employers. The
Committee therefore wishes to repeal a credit in conjunction
with providing such other measures.
EXPLANATION OF PROVISION
Ineligibility of qualified health plans covering abortion
Under the provision, the small employer health insurance
credit is not available with respect to a qualified health plan
that includes coverage for abortions, other than an abortion
necessary to save the life of the mother or an abortion with
respect to a pregnancy that is the result of an act of rape or
incest.\36\ For this purpose, the treatment of any infection,
injury, disease, or disorder that has been caused by or
exacerbated by the performance of an abortion is not considered
an abortion.
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\36\Nothing in the provision is to be construed as prohibiting an
employer from purchasing for its employees separate coverage for
abortions, or a health plan that includes abortions, so long as no
small employer health insurance credit is allowed with respect to the
employer contributions for the coverage or plan. In addition, nothing
in the provision restricts any health insurance issuer from offering
separate coverage for abortions, or a plan that includes abortions, so
long as the separate coverage or plan is not paid for with any employer
contribution eligible for the credit.
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Repeal of the credit
The provision repeals the small employer health insurance
credit.
EFFECTIVE DATE
The provision disallowing the credit with respect to a
qualified health plan that provides coverage with respect to
abortions is effective for taxable years beginning after
December 31, 2017. The provision repealing the small employer
health insurance credit is effective for taxable years
beginning after December 31, 2019.
C. Repeal of Individual Mandate Penalty (sec. _05 of the committee
print and sec. 5000A of the Code)
PRESENT LAW
Individuals must be covered by a health plan that provides
at least minimum essential coverage or be subject to a tax
(also referred to as a penalty) for failure to maintain the
coverage (commonly referred to as the ``individual
mandate'').\37\ Minimum essential coverage includes government-
sponsored programs, eligible employer-sponsored plans, plans in
the individual market, grandfathered group health plans and
grandfathered health insurance coverage, and other coverage as
recognized by the Secretary of Health and Human Services
(``HHS'') in coordination with the Secretary of the
Treasury.\38\ The tax is imposed for any month that an
individual does not have minimum essential coverage unless the
individual qualifies for an exemption for the month as
described below.
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\37\If an individual is a dependent, as defined in section 152, of
another taxpayer, the other taxpayer is liable for any tax for failure
to maintain the required coverage with respect to the individual.
\38\Minimum essential coverage does not include coverage that
consists of only certain excepted benefits, such as limited scope
dental and vision benefits or long-term care insurance offered under a
separate policy, certificate or contract.
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The tax for any calendar month is one-twelfth of the tax
calculated as an annual amount. The annual amount is equal to
the greater of a flat dollar amount or an excess income amount.
The flat dollar amount is the lesser of (1) the sum of the
individual annual dollar amounts for the members of the
taxpayer's family and (2) 300 percent of the adult individual
dollar amount. The individual adult annual dollar amount is
$695 for 2017.\39\ For an individual who has not attained age
18, the individual annual dollar amount is one half of the
adult amount. The excess income amount is 2.5 percent of the
excess of the taxpayer's household income for the taxable year
over the threshold amount of income for requiring the taxpayer
to file an income tax return.\40\ The total annual household
payment may not exceed the national average annual premium for
bronze level health plans for the applicable family size
offered through Exchanges that year.
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\39\For years after 2016, the $695 amount is indexed to CPI-U,
rounded to the next lowest multiple of $50.
\40\Sec. 6012(a).
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Exemptions from the requirement to maintain minimum
essential coverage are provided for the following: (1) an
individual for whom coverage is unaffordable because the
required contribution exceeds eight percent of household
income, (2) an individual with household income below the
income tax return filing threshold, (3) a member of an Indian
tribe, (4) a member of certain recognized religious sects or a
health sharing ministry, (5) an individual with a coverage gap
for a continuous period of less than three months, and (6) an
individual who is determined by the Secretary of HHS to have
suffered a hardship with respect to the capability to obtain
coverage.\41\
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\41\In addition, certain individuals present or residing outside of
the United States and bona fide residents of United States territories
are deemed to maintain minimum essential coverage.
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REASONS FOR CHANGE
The excise tax for failure to maintain a specific type of
health coverage overrides personal health care choices,
interferes in health care markets, and imposes an undue
financial burden on families that fail to comply. The Committee
believes that individuals should not be required to purchase
specific Federally designed and dictated types of health
insurance coverage to pay for medical care services.
EXPLANATION OF PROVISION
Under the provision, the amount of the tax for failure to
maintain minimum essential coverage is zero. Thus, the
provision effectively repeals the individual mandate.
EFFECTIVE DATE
The provision is effective for months beginning after
December 31, 2015.
D. Repeal of Employer Mandate Penalty (sec. _06 of the committee print
and sec. 4980H of the Code)
PRESENT LAW
In general
An applicable large employer, as defined below, 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
with respect to health insurance purchased through an Exchange
(commonly referred to as the ``employer mandate'').\42\ 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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\42\As discussed in Part A, premium assistance credits under
section 36B apply with respect to health insurance purchased through an
Exchange. An employer may also be subject to an assessable payment if
an employee received reduced cost sharing with respect to coverage
purchased through an Exchange as discussed in Part A.
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Definitions of full-time employee and applicable large employer
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. For purposes of 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.
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.\43\ 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.
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\43\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.
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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 so certified to the employer, the employer may be
subject to an assessable payment (for 2017) of $2,260 (divided
by 12 and applied on a monthly basis) multiplied by the number
of its full-time employees in excess of 30, regardless of the
number of full-time employees so certified.
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.\44\
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 (for 2017) of $3,390 (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.
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\44\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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REASONS FOR CHANGE
The excise tax imposed on employers whose employees receive
premium assistance credits or cost-sharing reductions
interferes with market-driven compensation arrangements,
encourages employers to cut hours and employees, and stifles
new job creation. The Committee believes that repealing the
excise tax will remove an unnecessary impediment preventing job
creation and lead to more jobs and increased economic growth.
EXPLANATION OF PROVISION
Under the provision, the amount of the assessable penalties
under the employer mandate is zero. Thus, the provision
effectively repeals the employer mandate.
EFFECTIVE DATE
The provision is effective for months beginning after
December 31, 2015.
E. Repeal of Tax on Employee Health Insurance Premiums and Health Plan
Benefits (sec. _07 of the committee print and sec. 4980I of the Code)
PRESENT LAW
In general
Effective for taxable years beginning after December 31,
2019, an excise tax is imposed on the provider of applicable
employer-sponsored health coverage (the ``coverage provider'')
if the aggregate cost of the coverage for an employee
(including a former employee, surviving spouse, or any other
primary insured individual) exceeds a threshold amount
(referred to as ``high cost health coverage''). The tax is 40
percent of the amount by which aggregate cost exceeds the
threshold amount (the ``excess benefit'').
The annual threshold amount for 2018 is $10,200 for self-
only coverage and $27,500 for other coverage (such as family
coverage), multiplied by a one-time health cost adjustment
percentage.\45\ This threshold is then adjusted annually by an
age and gender adjusted excess premium amount.\46\ The age and
gender adjusted excess premium amount is the excess, if any, of
(1) the premium cost of standard FEHBP coverage for the type of
coverage provided to an individual if priced for the age and
gender characteristics of all employees of the employer, over
(2) the premium cost of standard FEHBP coverage if priced for
the age and gender characteristics of the national workforce.
For this purpose, standard FEHBP coverage means the per
employee cost of Blue Cross/Blue Shield standard benefit
coverage under the Federal Employees Health Benefit Program.
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\45\The health cost adjustment percentage is 100 percent plus the
excess, if any, of (1) the percentage by which the cost of standard
FEHBP coverage for 2018 (determined according to specified criteria)
exceeds the cost of standard FEHBP coverage for 2010, over (2) 55
percent.
\46\The 2018 threshold amounts are increased by $1,650 for self-
only coverage or $3,450 for other coverage in the case of certain
retirees and participants in a plan covering employees in a high-risk
profession or repair or installation of electrical or
telecommunications lines. For years after 2018, the threshold amounts
(after application of the health cost adjustment percentage), and the
increases for certain retirees and participants in a plan covering
employees in a high-risk profession or repair or installation of
electrical or telecommunications lines, are indexed to the Consumer
Price Index for Urban Consumers (``CPI-U'') (CPI-U increased by one
percentage point for 2019 only), rounded to the nearest $50.
---------------------------------------------------------------------------
The excise tax is determined on a monthly basis, by
reference to the monthly aggregate cost of applicable employer-
sponsored coverage for the month and 1/12 of the annual
threshold amount.
Applicable employer-sponsored coverage and determination of cost
Subject to certain exceptions, applicable employer-
sponsored coverage is coverage under any group health plan
offered to an employee by an employer that is excludible from
the employee's gross income or that would be excludible if it
were employer-sponsored coverage.\47\ Thus, applicable
employer-sponsored coverage includes coverage for which an
employee pays on an after-tax basis. Applicable employer-
sponsored coverage includes coverage under any group health
plan established and maintained primarily for its civilian
employees by the Federal government or any Federal agency or
instrumentality, or the government of any State or political
subdivision thereof or any agency or instrumentality of a State
or political subdivision.
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\47\Section 106 provides an exclusion for employer-provided
coverage.
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Applicable employer-sponsored coverage includes both
insured and self-insured health coverage, including coverage in
the form of reimbursements under a health flexible spending
account (``health FSA'') or a health reimbursement arrangement
and contributions to a health savings account (``HSA'') or
Archer medical savings account (``Archer MSA'').\48\ In the
case of a self-employed individual, coverage is treated as
applicable employer-sponsored coverage if the self-employed
individual is allowed a deduction for all or any portion of the
cost of coverage.\49\
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\48\Some types of coverage are not included in applicable employer-
sponsored coverage, such as long-term care coverage, separate insurance
coverage substantially all the benefits of which are for treatment of
the mouth (including any organ or structure within the mouth) or of the
eye, and certain excepted benefits. Excepted benefits for this purpose
include (whether through insurance or otherwise) coverage only for
accident, or disability income insurance, or any combination thereof;
coverage issued as a supplement to liability insurance; liability
insurance, including general liability insurance and automobile
liability insurance; workers' compensation or similar insurance;
automobile medical payment insurance; credit-only insurance; and other
similar insurance coverage (as specified in regulations), under which
benefits for medical care are secondary or incidental to other
insurance benefits. Applicable employer-sponsored coverage does not
include coverage only for a specified disease or illness or hospital
indemnity or other fixed indemnity insurance if the cost of the
coverage is not excludible from an employee's income or deductible by a
self-employed individual.
\49\Section 162(l) allows a deduction to a self-employed individual
for the cost of health insurance.
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For purposes of the excise tax, the cost of applicable
employer-sponsored coverage is generally determined under rules
similar to the rules for determining the applicable premium for
purposes of COBRA continuation coverage,\50\ except that any
portion of the cost of coverage attributable to the excise tax
is not taken into account. Cost is determined separately for
self-only coverage and other coverage. Special valuation rules
apply to retiree coverage, certain health FSAs, and
contributions to HSAs and Archer MSAs.
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\50\Sec. 4980B(f)(4).
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Calculation of excess benefit and imposition of excise tax
In determining the excess benefit with respect to an
employee (i.e., the amount by which the cost of applicable
employer-sponsored coverage for the employee exceeds the
threshold amount), the aggregate cost of all applicable
employer-sponsored coverage of the employee is taken into
account. The threshold amount for self-only coverage generally
applies to an employee. The threshold amount for other coverage
applies to an employee only if the employee and at least one
other beneficiary are enrolled in coverage other than self-only
coverage under a group health plan that provides minimum
essential coverage and under which the benefits provided do not
vary based on whether the covered individual is the employee or
other beneficiary. For purposes of the threshold amount, any
coverage provided under a multiemployer plan is treated as
coverage other than self-only coverage.\51\
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\51\As defined in section 414(f), a multiemployer plan is generally
a plan to which more than one employer is required to contribute and
that is maintained pursuant to one or more collective bargaining
agreements between one or more employee organizations and more than one
employer.
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The excise tax is imposed on the coverage provider.\52\ In
the case of insured coverage (i.e., coverage under a policy,
certificate, or contract issued by an insurance company), the
health insurance issuer is liable for the excise tax. In the
case of self-insured coverage, the person that administers the
plan benefits (``plan administrator'') is generally liable for
the excise tax. However, in the case of employer contributions
to an HSA or an Archer MSA, the employer is liable for the
excise tax.
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\52\The excise tax is allocated pro rata among the coverage
providers, with each responsible for the excise tax on an amount equal
to the total excess benefit multiplied by a fraction, the numerator of
which is the cost of the applicable employer-sponsored coverage of that
coverage provider and the denominator of which is the aggregate cost of
all applicable employer-sponsored coverage of the employee.
---------------------------------------------------------------------------
The employer is generally responsible for calculating the
amount of excess benefit allocable to each coverage provider
and notifying each coverage provider (and the IRS) of the
coverage provider's allocable share. In the case of applicable
employer-sponsored coverage under a multiemployer plan, the
plan sponsor is responsible for the calculation and
notification.\53\
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\53\The employer or multiemployer plan sponsor may be liable for a
penalty if the total excise tax due exceeds the tax on the excess
benefit calculated and allocated among coverage providers by the
employer or plan sponsor.
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REASONS FOR CHANGE
Like many in the country, employers--and employees--are
concerned about increasing health care costs and the increasing
portion of compensation needed to provide health coverage.
Accordingly, employers are taking measures to contain costs and
exploring options for additional measures. Although intended to
contain health care costs by discouraging use of high cost
employer-sponsored health coverage, the excise tax on such
coverage punishes employers for complying with requirements to
offer minimum essential coverage and with ACA regulations,
thereby driving up the cost of such coverage. The Committee
believes that postponing the punitive excise tax on employer-
provided coverage in the context of true health care reform
will prevent job loss, will provide relief to employers and
employees who are facing increased premium costs, and will lead
to increased economic growth, while providing employers with
time to identify and implement their own measures to contain
costs.
EXPLANATION OF PROVISION
Under the provision, the excise tax on high cost employer-
sponsored health coverage will not apply for any taxable period
beginning after December 31, 2019, and before January 1, 2025.
Thus, the tax will apply only for taxable periods beginning
after December 31, 2024.
EFFECTIVE DATE
The provision is effective upon enactment.
F. Repeal of Tax on Over-the-Counter Medications (sec. _08 of the
committee print and secs. 106, 220 and 223 of the Code)
PRESENT LAW
Exclusion for employer-provided health benefits
Employees may exclude from gross income the value of
employer-provided health coverage under an accident or health
plan.\54\ In addition, any reimbursements under an employer-
provided accident or health plan for medical care expenses for
employees, their spouses, their dependents, and adult children
under age 27 generally are excludible from gross income.\55\
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\54\Sec. 106.
\55\Sec. 105(b).
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An employer may agree to reimburse expenses for medical
care of its employees (and their spouses, dependents, and adult
children under age 27), not covered by a health insurance plan,
through a flexible spending arrangement (``FSA'') which allows
reimbursement not in excess of a specified dollar amount,
provided the amount is only available for reimbursement for
medical care.\56\ The amount available for reimbursement is
either elected by an employee under a cafeteria plan (``health
FSA'') or otherwise specified by the employer under a health
reimbursement arrangement (``HRA''). Reimbursements under these
arrangements are also excludible from gross income as
reimbursements for medical care under an employer-provided
accident or health plan.
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\56\Sec. 106(c)(1).
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Health savings accounts
An individual with a high deductible health plan (and no
other health plan other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA'').\57\ Subject to limits,
contributions made to an HSA by an employer, including
contributions made through a cafeteria plan through salary
reduction, are excludible from income (and from wages for
payroll tax purposes). Contributions made by individuals are
deductible for income tax purposes, regardless of whether the
individuals itemize deductions. Distributions from an HSA that
are used for qualified medical expenses are excludible from
gross income. Distributions from an HSA that are not used for
qualified medical expenses are includible in gross income and
generally are subject to an additional tax of 20 percent.
Similar rules apply for another type of medical savings
arrangement called an Archer medical savings account (``Archer
MSA'').\58\
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\57\Sec. 223.
\58\Sec. 220.
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Definition of medical care for excludible reimbursements
For purposes of the exclusion for reimbursements under
employer-provided accident and health plans (including under
health FSAs and HRAs), and for distributions from HSAs and
Archer MSAs used for qualified medical expenses, the definition
of medical care is generally the same as the definition that
applies for the itemized deduction for the cost of medical care
and includes prescription medicine or drugs and insulin.\59\
However, the definition of medical care for purposes of the
exclusion for reimbursements for medical care under employer-
provided accident and health plans and for distributions from
HSAs and Archer MSAs used for qualified medical expenses
includes an over-the-counter medicine but only if prescribed by
a physician.\60\ Thus, under present law, excludible treatment
under a health FSA or an HRA is available on reimbursements for
the cost of over-the-counter medicine only if the medicine is
prescribed by a physician, and distributions from an HSA or an
Archer MSA used to purchase over-the-counter medicine are not a
qualified medical expense unless the medicine is prescribed by
a physician.
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\59\Sec. 213(d). There are certain limitations on the general
definition including a rule that cosmetic surgery or similar procedures
are generally not medical care.
\60\The prescription requirement does not apply to insulin.
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REASONS FOR CHANGE
The requirement to obtain a prescription for an over-the-
counter medicine in order for the cost of the medicine to be
paid on a tax-favored basis from a health FSA, HRA, HSA, or
Archer MSA has left consumers with three undesirable options:
(1) seek an unnecessary appointment with a doctor to obtain a
prescription before purchasing the medicine; (2) purchase the
medicine without reimbursement, thus increasing the after-tax
cost to the consumer; or (3) forego the medicine and leave a
condition untreated, which could then worsen and necessitate
more expensive treatment. The Committee notes that all three
options increase costs to the consumer and to the healthcare
system. The Committee believes that an over-the-counter
medicine should be a qualified medical expense under a health
FSA, HRA, HSA, or Archer MSA, regardless of whether a
prescription is obtained. The requirement to obtain a
prescription should therefore be repealed.
EXPLANATION OF PROVISION
The provision changes the definition of qualified medical
care for purposes of the exclusions for reimbursements for
medical care under employer-provided accident and health plans
(including health FSAs and HRAs) and for distributions from
HSAs or Archer MSAs used for qualified medical expenses to
include over-the-counter medicine that is not prescribed by a
physician. Thus, for example, amounts paid from a health FSA or
HRA, or funds distributed from an HSA or an Archer MSA, to
reimburse a taxpayer for over-the-counter medicine, such as
nonprescription aspirin, allergy medicine, antacids, or pain
relievers, will be excluded from income in accordance with the
general rules associated with those health-related savings and
reimbursement vehicles.
EFFECTIVE DATE
The provision is effective (1) in the case of HSAs and
MSAs, amounts paid with respect to taxable years beginning
after December 31, 2017, and (2) in the case of health FSAs and
HRAs, expenses incurred with respect to taxable years beginning
after December 31, 2017.
G. Repeal of Increase in Tax on Health Savings Accounts (sec. _09 of
the committee print and secs. 220 and 223 of the Code)
PRESENT LAW
Subject to limits, an individual with a high deductible
health plan generally may make deductible contributions to a
health savings account (``HSA'') or an Archer MSA (or ``medical
savings account''), which is a tax-exempt trust or custodial
account. Employer contributions to Archer MSAs and HSAs on
behalf of employees are excluded from income and wages,
including Archer MSA and HSA contributions made with salary
reduction contributions through a cafeteria plan.\61\ Thus,
contributions to an HSA or Archer MSA are made on a pretax
basis.
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\61\Sec. 106(b) and (d). Employer contributions are subject to the
same limits as individual contributions and reduce the amount of
contributions that the individual can make.
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Distributions from an HSA or Archer MSA that are used for
qualified medical expenses are excludible from gross income.
Distributions that are not used for qualified medical expenses
are includible in income and are generally subject to an
additional tax. Before 2011, the additional tax on HSA
distributions not used for qualified medical expenses was 10
percent of the distributed amount, and the additional tax on
Archer MSA distributions not used for qualified medical
expenses was 15 percent of the distributed amount. Effective
for distributions made after December 31, 2010, the additional
tax on distributions from an HSA or an Archer MSA that are not
used for qualified medical expenses is 20 percent of the
distributed amount.
REASONS FOR CHANGE
HSAs and Archer MSAs enable individuals to save for and pay
for medical expenses on a tax-favored basis. The additional
taxes on distributions not used for medical expenses are
designed to discourage the use of HSA and Archer MSA funds for
other purposes. However, financial pressures may leave an
individual with no choice but using such funds for other
purposes. In that case, an additional tax of 20 percent unduly
increases financial pressure and results in further depletion
of HSA and Archer MSA assets. The Committee believes that the
prior-law rates of the additional tax are more appropriate and
should be restored.
EXPLANATION OF PROVISION
Under the provision, the additional tax on HSA
distributions not used for qualified medical expenses is 10
percent of the distributed amount, and the additional tax on
Archer MSA distributions not used for qualified medical
expenses is 15 percent of the distributed amount.
EFFECTIVE DATE
The provision is effective for distributions made after
December 31, 2017.
H. Repeal of Limitations on Contributions to Flexible Spending Accounts
(sec. _10 of the committee print and sec. 125 of the Code)
PRESENT LAW
A health flexible spending arrangement (``health FSA'') is
an arrangement under which medical care expenses of an employee
(and family members, if applicable) that are not covered by
insurance may be paid or reimbursed.\62\ The funds available to
an employee through a health FSA generally consist of the
employee's salary reduction contributions under a cafeteria
plan, meaning that employees are given the option to reduce
their current cash compensation and instead have the amount
made available for use in reimbursing the employee for his or
her medical expenses.\63\ In order for a health FSA to be a
qualified benefit under a cafeteria plan, an employee's salary
reduction contributions cannot exceed a dollar limit ($2,600
for 2017).\64\
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\62\Sec. 106(c)(2).
\63\Health FSAs may also include funds provided by the employer
(often called ``flex credits'').
\64\Sec. 125(i). The dollar limit is indexed to CPI-U, with any
increase that is not a multiple of $50 rounded to the next lowest
multiple of $50.
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REASONS FOR CHANGE
Health FSAs provide workers with pretax funds to pay for
medical expenses not covered by insurance. Salary reduction
contributions in turn give a worker the flexibility to
coordinate the funds available through the health FSA with the
actual level of his or her uncovered expenses. As a practical
matter, therefore, the effect of the limit falls most heavily
on workers with large uncovered expenses. The Committee
believes the limit should be repealed in order to provide tax
relief for these workers.
EXPLANATION OF PROVISION
The provision repeals the limitation on health FSA salary
reduction contributions.
EFFECTIVE DATE
The provision applies to taxable years beginning after
December 31, 2017.
I. Repeal of Medical Device Excise Tax (sec. _11 of the committee print
and sec. 4191 of the Code)
PRESENT LAW
Effective for sales after December 31, 2012, excluding
sales during the period beginning on January 1, 2016 and ending
on December 31, 2017, a tax equal to 2.3 percent of the sale
price is imposed on the sale of any taxable medical device by
the manufacturer, producer, or importer of such device.\65\ A
taxable medical device is any device, as defined in section
201(h) of the Federal Food, Drug, and Cosmetic Act,\66\
intended for humans. Regulations further define a medical
device as one that is listed by the Food and Drug
Administration (``FDA'') under section 510(j) of the Federal
Food, Drug, and Cosmetic Act and 21 C.F.R. Part 807, pursuant
to FDA requirements.\67\
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\65\Section 4191(c) provides a moratorium under which the medical
device excise tax does not apply to sales during the period beginning
on January 1, 2016, and ending on December 31, 2017.
\66\21 U.S.C. sec. 321. Section 201(h) defines device as ``an
instrument, apparatus, implement, machine, contrivance, implant, in
vitro reagent, or other similar or related article, including any
component, part, or accessory, which is (1) recognized in the official
National Formulary, or the United States Pharmacopeia, or any
supplement to them, (2) intended for use in the diagnosis of disease or
other conditions, or in the cure, mitigation, treatment, or prevention
of disease, in man or other animals, or (3) intended to affect the
structure or any function of the body of man or other animals, and
which does not achieve its primary intended purposes through chemical
action within or on the body of man or other animals and which is not
dependent upon being metabolized for the achievement of its primary
intended purposes.''
\67\Treas. Reg. sec. 48.4191-2(a). The regulations also include as
devices items that should have been listed as a device with the FDA as
of the date the FDA notifies the manufacturer or importer that
corrective action with respect to listing is required.
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The excise tax does not apply to eyeglasses, contact
lenses, hearing aids, or any other medical device determined by
the Secretary to be of a type that is generally purchased by
the general public at retail for individual use (``retail
exemption''). Regulations provide guidance on the types of
devices that are exempt under the retail exemption. A device is
exempt under these provisions if: (1) it is regularly available
for purchase and use by individual consumers who are not
medical professionals; and (2) the design of the device
demonstrates that it is not primarily intended for use in a
medical institution or office or by a medical professional.\68\
Additionally, the regulations provide certain safe harbors for
devices eligible for the retail exemption.\69\
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\68\Treas. Reg. sec. 48.4191-2(b)(2).
\69\Treas. Reg. sec. 48.4191-2(b)(2)(iii). The safe harbors include
devices that are described as over-the-counter devices in relevant FDA
classification headings as well as certain FDA device classifications
listed in the regulations.
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The medical device excise tax is generally subject to the
rules applicable to other manufacturers excise taxes. These
rules include certain general manufacturers excise tax
exemptions including the exemption for sales for use by the
purchaser for further manufacture (or for resale to a second
purchaser in further manufacture) or for export (or for resale
to a second purchaser for export).\70\ If a medical device is
sold free of tax for resale to a second purchaser for further
manufacture or for export, the exemption does not apply unless,
within the six-month period beginning on the date of sale by
the manufacturer, the manufacturer receives proof that the
medical device has been exported or resold for use in further
manufacturing.\71\ In general, the exemption does not apply
unless the manufacturer, the first purchaser, and the second
purchaser are registered with the Secretary of the Treasury.
Foreign purchasers of articles sold or resold for export are
exempt from the registration requirement.
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\70\Sec. 4221(a). Other general manufacturers excise tax exemptions
(i.e., the exemption for sales to purchasers for use as supplies for
vessels or aircraft, to a State or local government, to a nonprofit
educational organization, or to a qualified blood collector
organization) do not apply to the medical device excise tax.
\71\Sec. 4221(b).
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The lease of a medical device is generally considered to be
a sale of such device.\72\ Special rules apply for the
imposition of tax to each lease payment. The use of a medical
device subject to tax by manufacturers, producers, or importers
of such device, is treated as a sale for the purpose of
imposition of excise taxes.\73\
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\72\Sec. 4217(a).
\73\Sec. 4218.
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There are also rules for determining the price of a medical
device on which the excise tax is imposed.\74\ These rules
provide for (1) the inclusion of containers, packaging, and
certain transportation charges in the price, (2) determining a
constructive sales price if a medical device is sold for less
than the fair market price, and (3) determining the tax due in
the case of partial payments or installment sales.
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\74\Sec. 4216.
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REASONS FOR CHANGE
The U.S. medical device industry is a leader in medical
technology innovation. The industry is an important contributor
to the nation's economy, employing hundreds of thousands of
people and manufacturing devices both for the U.S. and foreign
markets. The United States is a net exporter of medical
devices. The Committee believes that the excise tax on medical
devices adversely affects the industry. The Committee believes
that repealing the tax will decrease the cost of healthcare,
encourage medical innovation, and lead to more jobs in the
industry.
EXPLANATION OF PROVISION
Under the provision, the medical device excise tax applies
only to sales before January 1, 2016. Thus, the medical device
excise tax will not resume for sales in calendar years
beginning after December 31, 2017.
EFFECTIVE DATE
The provision is effective upon enactment.
J. Repeal of Elimination of Deduction for Expenses Allocable to
Medicare Part D Subsidy (sec. _12 of the committee print and sec. 139A
of the Code)
PRESENT LAW
Sponsors of qualified retiree prescription drug plans are
eligible for subsidy payments from the Secretary of HHS with
respect to a portion of each qualified covered retiree's gross
covered prescription drug costs (``qualified retiree
prescription drug plan subsidy'').\75\ A qualified retiree
prescription drug plan is employment-based retiree health
coverage that has an actuarial value at least as great as the
Medicare Part D standard plan for the risk pool and that meets
certain other disclosure and recordkeeping requirements. These
qualified retiree prescription drug plan subsidies are
excludible from the plan sponsor's gross income.
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\75\Sec. 1860D-22 of the Social Security Act (SSA), 42 U.S.C. sec.
1395w-132.
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In general, no deduction is allowed under any provision of
the Code for any expense or amount that would otherwise be
allowable as a deduction if the expense or amount is allocable
to a class or classes of exempt income.\76\ Thus, expenses
incurred with respect to the subsidies excluded from income
would generally not be deductible. For years before 2013, the
exclusion for the qualified retiree prescription drug plan
subsidy included a provision under which the exclusion was not
taken into account in determining deductions with respect to
the retiree prescription drug costs for which subsidy payments
were received, thus allowing a deduction for costs subsidized
by HHS payments. The ACA eliminated that provision and, as a
result, the amount otherwise allowable as a deduction for
retiree prescription drug costs is reduced by the amount of
excludable subsidy payments received.
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\76\Sec. 265(a) and Treas. Reg. sec. 1.265-1(a).
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REASONS FOR CHANGE
Prescription drug coverage under employer-sponsored retiree
health plans helps limit Medicare costs. The HHS subsidy for a
qualified retiree prescription drug plan, accompanied by tax-
free treatment of the subsidy and a deduction for retiree drug
expenses, provides employers with a strong incentive to
continue providing these plans. The Committee wishes to restore
that incentive by restoring the deduction.
EXPLANATION OF PROVISION
Under the provision, the exclusion for qualified retiree
prescription drug plan subsidy payments is not taken into
account in determining whether a deduction is allowed with
respect to retiree prescription drug costs taken into account
in determining the subsidy payments from HHS. Therefore, a
taxpayer may claim a deduction for covered retiree prescription
drug expenses notwithstanding that the taxpayer excludes from
income qualified retiree prescription drug plan subsidies
received from HHS with respect to the expenses.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2017.
K. Repeal of Increase in Income Threshold for Medical Expense Deduction
(sec. _13 of the committee print and sec. 213 of the Code)
PRESENT LAW
An individual may claim an itemized deduction for
unreimbursed medical expenses, but only to the extent that the
expenses exceed 10 percent of adjusted gross income.\77\ For
taxable years beginning before January 1, 2017, for purposes of
the regular tax (but not for purposes of the AMT), the 10-
percent threshold is reduced to 7.5 percent in the case of an
individual who has attained the age of 65 before the close of
the taxable year.\78\
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\77\For taxable years beginning before January 1, 2013, the
threshold was 7.5 percent for the regular tax and 10 percent for
alternative minimum tax (``AMT'').
\78\In the case of married taxpayers, the 7.5 percent threshold
applies if either spouse has obtained the age of 65 before the close of
the taxable year.
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REASONS FOR CHANGE
The Committee believes that the increase of the income
threshold for the medical expense deduction from 7.5 percent to
10 percent imposed a tax burden on individuals with high health
care costs. The Committee believes that the increase of the
threshold should be repealed, lowering the threshold back to
the pre-2013 level for all taxpayers.
EXPLANATION OF PROVISION
The provision extends for one year the present-law regular
tax 7.5-percent threshold for taxpayers who have attained the
age of 65 before the close of the taxable year.
The provision permanently lowers the adjusted gross income
threshold from 10 percent to 7.5 percent for all taxpayers
(regardless of age) for purposes of both the regular tax and
the AMT.
EFFECTIVE DATE
The provision extending the regular tax 7.5-percent
threshold for taxpayers who have attained the age of 65 before
the close of the taxable year is effective for taxable years
beginning after December 31, 2016.
The provision lowering the adjusted gross income threshold
from 10 percent to 7.5 percent for all taxpayers is effective
for taxable years beginning after December 31, 2017.
L. Repeal of Medicare Tax Increase (sec. _14 of the committee print and
secs. 1401 and 3101 of the Code)
PRESENT LAW
Social Security and Medicare taxes--in general
The Federal Insurance Contributions Act (``FICA'') imposes
tax on employers and employees based on the amount of wages (as
defined for FICA purposes) paid to an employee during the
year.\79\ The tax imposed on the employer and on the employee
each consists of two parts: (1) the social security or old age,
survivors, and disability insurance (``OASDI'') tax equal to
6.2 percent of covered wages up to the taxable wage base
($127,200 for 2017); and (2) the Medicare or hospital insurance
(``HI'') tax equal to 1.45 percent of all covered wages
(including wages above the taxable wage base).\80\ The combined
employer and employee taxes result in a total OASDI tax rate of
12.4 percent of covered wages up to the taxable wage base and a
total Medicare tax rate of 2.9 percent of all covered wages.
The employee portion of the FICA tax generally must be withheld
and remitted to the Federal government by the employer. If the
employer fails to withhold the employee portion, the employer
is generally liable for the amount that should have been
withheld.
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\79\Secs. 3101-3128.
\80\Social security and Medicare taxes respectively fund the Social
Security and Medicare trust funds.
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Instead of FICA taxes, railroad employers and employees are
subject, under the Railroad Retirement Tax Act (``RRTA''), to
taxes equivalent to the OASDI and Medicare taxes under FICA
with respect to compensation as defined for RRTA purposes
(``RRTA compensation'').\81\ The employee portion of RRTA taxes
generally must be withheld from an employee's RRTA compensation
and remitted to the Federal government by the employer.
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\81\Secs. 3201-3233.
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As a parallel to FICA and RRTA taxes, the Self-Employment
Contributions Act (``SECA'') imposes tax on the self-employment
income of self-employed individuals.\82\ The rate of the OASDI
portion of SECA tax is equal to the combined employee and
employer OASDI FICA tax rates (12.4 percent) and applies to
self-employment income up to the FICA taxable wage base
(reduced by FICA wages, if any). Similarly, the rate of the
Medicare portion of SECA tax is the same as the combined
employer and employee Medicare rates (2.9 percent) and applies
to all self-employment income.
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\82\Secs. 1401-1403.
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Additional Medicare tax
An additional Medicare tax of 0.9 percent is imposed on
employees and self-employed individuals with FICA wages, RRTA
compensation or self-employment income exceeding a threshold
amount.
Under FICA and RRTA, the employee portion of the Medicare
tax (not the employer portion) is increased by an additional
tax of 0.9 percent on wages received in excess of the threshold
amount. The threshold amount is $250,000 in the case of a joint
return, $125,000 in the case of a married individual filing a
separate return, and $200,000 in any other case. Thus, in the
case of a joint return, the additional Medicare tax is based on
the combined wages of an employee and the employee's spouse.
An employer is required to withhold the additional Medicare
tax from an employee's wages and RRTA compensation only to the
extent wages or compensation paid to the employee by the
employer exceeds $200,000. The employer's withholding
obligation does not depend on the amount of the employee's
ultimate liability for the additional Medicare tax, if any.
That is, the amount required to be withheld may be more or less
than the employee's ultimate liability. If the employee's
liability is more than the amount withheld, the employee must
pay the additional amount. If the employee's liability is less
than the amount withheld, the employee may claim a refund.
The additional Medicare tax applies also to self-employment
income in excess of the threshold amount. As in the case of the
additional Medicare tax for employees, the threshold amount for
the additional SECA Medicare tax is $250,000 in the case of a
joint return, $125,000 in the case of a married individual
filing a separate return, and $200,000 in any other case. The
threshold amount is reduced (but not below zero) by the amount
of wages taken into account in determining the individual's
additional FICA Medicare tax, if any. Thus, only a single
threshold amount applies for an individual (or individual and
spouse) with both FICA wages and self-employment income.
REASONS FOR CHANGE
The Committee believes that taxes to fund Medicare should
vary proportionately with wages, the result provided by the
basic 2.9 percent combined Medicare tax rate under FICA and the
basic Medicare tax rate under SECA. The additional 0.9 percent
Medicare tax imposes a disproportionate tax burden on some
taxpayers. Furthermore, the wage thresholds at which the
additional tax applies are not indexed for inflation. Real wage
growth will cause more and more taxpayers to become subject to
the higher tax rates over time. Therefore, the Committee
considers it appropriate to repeal the additional Medicare tax.
EXPLANATION OF PROVISION
The provision repeals the additional 0.9 percent Medicare
tax.
EFFECTIVE DATE
The provision is effective with respect to remuneration
received after, and taxable years beginning after, December 31,
2017.
M. Refundable Tax Credit for Health Insurance Coverage (sec. _15 of the
committee print and new secs. 36C, 7529, 7530, and 6050X of the Code)
PRESENT LAW
Premium assistance credit
In general
A refundable tax credit (the ``premium assistance credit'')
is provided for eligible individuals and families to subsidize
the purchase of health insurance plans through an Exchange,
referred to as ``qualified health plans.''\83\ The premium
assistance credit is generally available for individuals
(single or joint filers) with household incomes between 100 and
400 percent of the Federal poverty level (``FPL'') for the
family size involved. An individual who is eligible for minimum
essential coverage from a source other than the individual
insurance market, such as employer-provided coverage, generally
is not eligible for the premium assistance credit.\84\ In
general, advance payments with respect to the premium
assistance credit are made during the year directly to the
insurer, as discussed below. However, eligible individuals may
choose to pay their total health insurance premiums without
advance payments and claim the credit at the end of the taxable
year.
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\83\Sec. 36B. Under the Public Health Service Act (``PHSA'') as
amended by the ACA, health insurance must meet certain requirements.
Section 1251 of PPACA excepts certain health plans sold at the time of
enactment of PPACA from some of the PHSA requirements (referred to as
``grandfathered'' plans). In addition, under guidance provided by the
Center for Consumer Information & Insurance Oversight (``CCIIO,'' part
of the Department of Health and Human Services), including a letter
dated November 14, 2013, to the State Insurance Commissioners and
subsequent extensions, certain health plans that were sold in the
individual insurance market as of January 1, 2013, are permitted to be
sold after January 1, 2014, despite not complying with ACA requirements
(referred to as ``grandmothered plans''). The premium assistance credit
is not available with respect to a grandfathered plan or a
grandmothered plan. Another provision in the bill repeals the premium
assistance credit.
\84\Minimum essential coverage is defined in section 5000A(f). An
individual covered by a qualified small employer health reimbursement
arrangement (``QSEHRA'') as defined in section 9831(d) may be eligible
for the premium assistance credit. In that case, the amount of the
credit is reduced by the benefit amount available to an individual
under the QSEHRA. Under section 162(l), a self-employed individual may
take a deduction in determining adjusted gross income (``AGI''), that
is, an ``above-the line'' deduction, for the cost of health insurance
for the individual and the individual's spouse, dependents and, under
the ACA, children up to age 26. Under section 213, an individual may
take an itemized deduction for medical expenses, including health
insurance premiums, that exceed 10 percent of AGI. If an individual
receives a premium assistance credit, the amount of premiums taken into
account in determining a deduction under section 162(l) or 213 is
reduced by the amount of the credit.
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As part of the process of enrollment in a qualified health
plan through an Exchange, an individual may apply and be
approved advance payments with respect to a premium assistance
credit (``advance payments'').\85\ The individual must provide
information on income, family size, changes in marital or
family status or income, and citizenship or lawful presence
status.\86\ Eligibility for advance payments is generally based
on the individual's income for the tax year ending two years
prior to the enrollment period. The Exchange process includes a
system through which information provided by the individual is
verified using information from the IRS and certain other
sources.\87\ If an individual is approved for advance premium
assistance payments, the Treasury pays the advance amount
directly to the issuer of the health plan in which the
individual is enrolled. The individual then pays to the issuer
of the plan the difference between the advance payment amount
and the total premium charged for the plan.
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\85\Secs. 1411-1412 of PPACA. Under section 1402 of PPACA, certain
individuals eligible for advance premium assistance payments are
eligible also for a reduction in their share of medical costs, such as
deductibles and copays, under the plan, referred to as reduced cost-
sharing. Eligibility for reduced cost-sharing is also determined as
part of the Exchange enrollment process. The Department of Health and
Human Services (``HHS'') is responsible for rules relating to Exchanges
and the eligibility determination process.
\86\Under section 1312(f)(3) of PPACA, an individual may not enroll
in a qualified health plan through an Exchange if the individual is not
a citizen or national of the United States or an alien lawfully present
in the United States. Thus, such an individual is not eligible for the
premium assistance credit.
\87\Under section 6103, returns and return information are
confidential and may not be disclosed, except as authorized by the
Code, by the IRS, other Federal employees, State employees, and certain
others having access to such information. Under section 6103(l)(21),
upon written request of the Secretary of HHS, the IRS is permitted to
disclose certain return information for use in determining an
individual's eligibility for advance premium assistance payments,
reduced cost-sharing, or certain other State health subsidy programs,
including a State Medicaid program under title XIX of the Social
Security Act, a State's Children's Health Insurance Program under title
XXI of the Social Security Act and a Basic Health Program under section
1331 of PPACA.
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Amount of credit and reconciliation of advance payment on
return
The premium assistance credit amount is generally the lower
of (1) the premium for the qualified health plan in which the
individual or family enrolls and (2) the premium for the second
lowest cost silver plan in the rating area where the individual
resides, reduced by the individual's or family's share of
premiums, determined as a specified percentage of household
income.\88\ Household income is defined as the sum of: (1) the
individual's modified adjusted gross income, plus (2) the
aggregate modified adjusted gross incomes of all other
individuals taken into account in determining the individual's
family size (but only if the other individuals are required to
file a tax return for the taxable year). Modified adjusted
gross income is defined as adjusted gross income increased by:
(1) any amount excluded from gross income for citizens or
residents living abroad,\89\ (2) any tax-exempt interest
received or accrued during the tax year, and (3) the portion of
the individual's social security benefits not included in gross
income.\90\
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\88\The premium assistance amount is determined on a monthly basis
and the credit for a year is the sum of the monthly amounts.
\89\Sec. 911.
\90\Under section 86, only a portion of an individual's social
security benefits are included in gross income.
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An individual on whose behalf advance payments of the
premium assistance credit for a taxable year are made is
required to file an income tax return to reconcile the advance
payments with the credit to which the individual is entitled
for the taxable year. If the advance payments of the premium
assistance credit exceed the amount of credit to which the
individual is entitled, the excess (``excess advance
payments'') is treated as an additional tax liability on the
individual's income tax return for the taxable year (referred
to as ``recapture''), subject to a limit on the amount of
additional liability in some cases. For an individual with
household income below 400 percent of FPL, liability for the
excess advance payments for a taxable year is limited to a
specific dollar amount (the ``applicable dollar amount'') as
shown in Table 4 below. One-half of the applicable dollar
amount shown in Table 4 applies to an unmarried individual who
is not a surviving spouse or filing as a head of household.
TABLE 4.--RECONCILIATION LIMIT ON ADDITIONAL TAX LIABILITY
(For 2017)\91\
------------------------------------------------------------------------
Household income (expressed as a percent of
FPL) Applicable dollar amount
------------------------------------------------------------------------
Less than 200%................................ $600
At least 200% but less than 300%.............. $1,500
At least 300% but less than 400%.............. $2,550
------------------------------------------------------------------------
If the advance payments of the premium assistance credit
for a taxable year are less than the amount of the credit to
which the individual is entitled, the additional credit amount
is also reflected on the individual's income tax return for the
year.
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\91\Rev. Proc. 2016-55, 2015-45 I.R.B. 707. The applicable dollar
amounts are indexed to reflect cost-of-living increases, with the
amount of any increase rounded down to the next lowest multiple of $50.
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Health coverage tax credit
Another refundable tax credit (the ``health coverage tax
credit'' or ``HCTC'') is available to certain individuals for
months beginning before January 1, 2020, generally based on
eligibility relating to the Trade Adjustment Assistance
(``TAA'') program or the receipt of pension benefits from the
Pension Benefit Guaranty Corporation.\92\ The credit amount is
72.5 percent of the individual's premiums for qualified health
insurance of the individual and qualifying family members for
each eligible coverage month beginning in the taxable year. The
credit is available on an advance payment basis through a
program established by the IRS.\93\ In the case of an
individual on whose behalf advance HCTC payments are made, the
individual's income tax liability is increased by the amount of
the advance payment, but then offset by the amount of the HCTC
allowed to the individual.\94\
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\92\Sec. 35.
\93\Sec. 7527.
\94\ Rules to coordinate eligibility for the HCTC and the premium
assistance credit apply in the case of an individual who is eligible
for both.
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Health Savings Accounts
An individual with a high deductible health plan and no
other health plan (other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA'').\95\ Subject to limits,
contributions to an HSA made by or on behalf of an eligible
individual are deductible in determining adjusted gross income
of the individual (that is, an ``above-the-line'' deduction).
Contributions to an HSA by an employer for an employee
(including salary reduction contributions made through a
cafeteria plan) are excludible from income and from wages for
employment tax purposes.\96\ Distributions from an HSA for
qualified medical expenses are not includible in gross income.
An individual may roll funds over from one HSA to another on a
nontaxable basis. In that case, the amount of the rollover is
not taken into account in applying the HSA contribution limits.
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\95\ Sec. 223.
\96\ Secs. 106(d), 125, 3121(a)(2), 3231(e)(1), 3306(b)(2),
3401(a)(22).
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Reporting relating to health insurance and employer-provided health
coverage
A health insurance issuer is required to report to the IRS
and to an individual the months during a year for which the
individual was covered by minimum essential coverage issued by
the insurer in the individual market.\97\ In addition, an
Exchange is required to report to the IRS and to an individual
the months during a year for which the individual was covered
by a qualified health plan purchased through the Exchange, the
premiums paid by the individual, and, if applicable, advance
premium assistance payments made on behalf of the
individual.\98\ An employer generally is required to report the
cost of health coverage provided to an employee on Form W-
2.\99\
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\97\ Sec. 6055.
\98\ Sec. 36B(f)(3).
\99\ Sec. 6051(a)(14).
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Penalty for claim of excess credit
Present law imposes a penalty of 20 percent on the amount
by which a claim for refund or credit exceeds the amount
allowable unless it is shown that the claim has reasonable
cause.\100\
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\100\ Sec. 6676. This penalty does not apply to the portion of any
claim to which accuracy-related and fraud penalties apply.
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REASONS FOR CHANGE
The Committee recognizes that an advanceable tax credit
will facilitate the purchase of health insurance by lower- and
middle-income individuals. The Committee therefore wishes to
provide such a credit. At the same time, the Committee wishes
to avoid the flaws in the design of the present-law premium
assistance credit, such as the limits on recapture of excess
advance payments. In addition, because premiums are higher for
older individuals, the Committee believes that credit amounts
should increase with age. The Committee wishes also to provide
an additional incentive for the purchase of high deductible
health plans, which further the goal of containing health costs
by encouraging consumers to be cost conscious in their use of
health care, as reflected in lower premiums for such plans. The
Committee believes an additional incentive can be provided by
allowing an individual who purchases a high deductible health
plan with premiums lower than the maximum credit to designate
an HSA into which the difference will be deposited. Finally,
the Committee wishes to limit the cost of the credit to the
Federal budget by including a maximum credit amount, which
varies by family size, and by phasing out the credit for
higher-income individuals.
EXPLANATION OF PROVISION
In general
The provision establishes a refundable tax credit with
respect to eligible health insurance for individuals and their
qualifying family members for eligible coverage months.
Qualifying family members are the individual's spouse in the
case of a joint return, a dependent, and a child who has not
attained age 27 as of the end of the taxable year and is
covered for the month by the same health insurance plan as the
individual or the individual's spouse.\101\
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\101\In order to claim the credit, married individuals must file a
joint return. A dependent, or a child described above, may not claim
the credit with respect to the same period for which a credit is
claimed by the individual. If a health insurance plan covers a person
other than the individual and qualifying family members, rules similar
to the rules of section 213(d)(6) apply in allocating the amount paid
for the coverage.
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The total credit for a taxable year is the lesser of (1)
the sum of the monthly credit amounts described below for the
year, subject to reduction based on modified adjusted gross
income, as described below, and (2) the amount paid for
eligible health insurance for the individual and qualifying
family members for eligible coverage months beginning during
the year.\102\ Advance payments with respect to the credit may
be made during the year directly to the insurer, as discussed
below. Alternatively, individuals may choose to pay their total
health insurance premiums without advance payments and claim
the credit at the end of the taxable year.
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\102\Amounts paid for eligible health insurance may not be taken
into account in determining a deduction under section 162(l) or 213
except to the extent they exceed the amount of the credit (plus the
amount deposited into an HSA as described below, if applicable). In the
case of an individual covered by a QSEHRA, the amount of the credit is
reduced by the benefit amount available to an individual under the
QSEHRA. The provision includes rules to coordinate eligibility for the
HCTC and the new credit in the case of an individual who is eligible
for both.
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Definitions
Eligible coverage month
For purposes of the credit, a month is an eligible coverage
month with respect to an individual if, as of the first day of
the month, the individual--
is covered by eligible health insurance,
is not eligible for other specified
coverage,
is a citizen or national of the United
States or a qualified alien,\103\ and
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\103\Qualified alien is defined in section 431 of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1641).
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is not incarcerated, other than
incarceration pending the disposition of charges.
Eligible health insurance
Eligible health insurance is health insurance coverage--
\104\
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\104\Health insurance coverage is defined in section 9832(b) and
means benefits consisting of medical care (provided directly, through
insurance or reimbursement, or otherwise) 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. Health insurance issuer means an insurance
company, insurance service, or insurance organization (including a
health maintenance organization) that is licensed to engage in the
business of insurance in a State and which is subject to State law
regulating. A group health plan, defined below, is not a health
insurance issuer.
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that is offered in the individual market
within a State or is unsubsidized COBRA continuation
coverage,\105\
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\105\Individual health insurance market means the market for health
insurance coverage offered to individuals other than in connection with
a group health plan, defined below. COBRA continuation coverage
generally means continuation coverage provided under section 4980B,
sections 601-608 of the Employee Retirement Income Security Act of
1974, or Title XXII of the PHSA, temporary continuation coverage under
the Federal Employees Health Benefit Program, or coverage under a State
program that provides comparable continuation coverage. It does not
include coverage under a health flexible spending arrangement.
Unsubsidized COBRA continuation coverage' means COBRA continuation
coverage no portion of the premiums for which are subsidized by the
employer.
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substantially all of which is not of
excepted benefits,\106\
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\106\Excepted benefits is defined in section 9832(b). Excepted
benefits are various types of arrangements providing only limited
coverage, such as dental, vision or long-term care.
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that does not include coverage relating to
abortions, other than an abortion necessary to save the
life of the mother or an abortion with respect to a
pregnancy that is the result of an act of rape or
incest,\107\
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\107\For purposes of this restriction, the treatment of any
infection, injury, disease, or disorder that has been caused by or
exacerbated by the performance of an abortion is not considered an
abortion. In addition, nothing in the provision is to be construed as
prohibiting any individual from purchasing separate coverage for
abortions, or a health plan that includes those abortions, so long as
no credit under the provision is allowed with respect to the premiums
for the coverage or plan. In addition, nothing in the provision
restricts any health insurance issuer offering a health plan from
offering separate coverage for abortions, or a plan that includes those
abortions, so long as premiums for the separate coverage or plan are
not paid for with any amount attributable to the credit under the
provision.
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that does not consist of short-term limited
duration insurance (as defined by the Secretary),\108\
and
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\108\It is expected that the definition will be consistent with the
definition used for purposes of the group health plan rules under
Chapter 100 of the Code, currently in Treas. Reg. sec. 54.9801-2.
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with respect to which, the State in which
the insurance is offered (or, in the case of
unsubsidized COBRA continuation coverage under a group
health plan, the plan administrator) certifies that the
coverage meets the preceding requirements.\109\
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\109\A State certification will not be taken into account for this
purpose unless the certification is made available to the public and
meets such other requirements as the Secretary may provide. A
certification relating to COBRA coverage must meet requirements
provided by the Secretary.
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Other specified coverage
Other specified coverage is (1) coverage under a group
health plan,\110\ other than COBRA continuation coverage or
coverage under a plan substantially all of the coverage of
which is of excepted benefits, (2) Part A Medicare coverage,
(3) Medicaid coverage, (4) coverage under the Children's Health
Insurance Plan (``CHIP''), (5) military-related medical
coverage, including coverage under the TRICARE program, (6)
coverage under a veterans health care program, as determined by
the Secretary of Veterans Affairs, in coordination with the
Secretary of Health and Human Services and the Secretary of the
Treasury,\111\ (7) coverage under a health plan for Peace Corps
volunteers, or (8) coverage under the Nonappropriated Fund
Health Benefits Program of the Department of Defense.
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\110\Group health plan is defined in section 5000(b)(1) and means a
plan (including a self-insured plan) of, or contributed to by, an
employer (including a self-employed person) or employee organization to
provide health care (directly or otherwise) to the employees, former
employees, the employer, others associated or formerly associated with
the employer in a business relationship, or their families. Group
health plan includes a health plan maintained by a governmental
employer, such as the Federal Employees Health Benefit Program.
\111\An individual is not treated as eligible for this coverage
unless enrolled in the coverage.
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Credit amount
The monthly credit amount applicable with respect to an
individual is 1/12 of an annual amount that varies with the age
of the individual as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Has attained
Has attained Has attained Has attained age 60 (and is
Age of individual\1\ Under age 30 age 30 but age 40 but age 50 but not eligible
under age 40 under age 50 under age 60 for Medicare)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual credit amount............................................... $2,000 $2,500 $3,000 $3,500 $4,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Age for this purpose is determined as of the beginning of the taxable year.
In general, the monthly credit amount for a family is the
sum of the monthly credit amounts applicable with respect to
the five oldest family members with respect to whom monthly
credit amounts are available. The maximum credit amount with
respect to a family for a taxable year is $14,000.\112\ In
addition, the credit amount otherwise determined for a taxable
year under this rule is reduced (but not below zero) by 10
percent of the excess (if any) of (1) the individual's modified
adjusted gross income for the taxable year, over (2) $75,000
(twice this amount in the case of a joint return).\113\ For
this purpose, modified adjusted gross income means adjusted
gross income increased by: (1) any amount excluded from gross
income for citizens or residents living abroad, (2) any tax-
exempt interest received or accrued during the tax year, and
(3) the portion of the individual's social security benefits
not included in gross income.
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\112\For years after 2020, the monthly and maximum credit amounts
are increased to reflect increases in cost-of-living based on the
consumer price index (``CPI'') plus one percentage point, with the
result rounded to the nearest multiple of $50.
\113\For years after 2020, the modified adjusted gross income
amount is increased to reflect increases in cost-of-living based on the
consumer price index (``CPI'') plus one percentage point, with the
result rounded to the nearest multiple of $50.
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The total credit for a taxable year cannot exceed the
amount paid for eligible health insurance for the individual
and qualifying family members eligible for coverage months
beginning during the year. If the amount paid for the insurance
is less than the maximum credit amount described above and the
individual or a qualifying family member is eligible to
contribute to a health savings account (``HSA'') for the year,
at the request of the individual, the Secretary may deposit the
excess into the HSA (or among one or more HSAs) of the
individual or a qualifying family member as designated by the
individual.\114\ The deposit is generally treated as a
rollover, and the amount deposited is not taken into account
for purposes of the limits on HSA contributions.
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\114\If the individual (or, in the case of a joint return, either
spouse) has a seriously delinquent tax debt, as defined in section
7345(b), that has not been fully satisfied, the Secretary will not make
any HSA deposit, and if the beneficiary of the designated HSA has a
seriously delinquent tax debt, the Secretary will not make a deposit to
that HSA.
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Advance payments and reconciliation
The provision directs the Secretary, in consultation with
the Secretary of HHS, the Secretary of Homeland Security, and
the Commissioner of Social Security, to establish a program not
later than January 1, 2020, for making payments to providers of
eligible health insurance on behalf of individuals eligible for
the credit (an ``advance payment'' program). The aggregate
advance payments made with respect to any individual,
determined as of any time during any calendar year, must not
exceed the monthly credit amounts determined with respect to
the individual under the provision for completed months during
the year.
The program established for making advance payments is, to
the greatest extent practicable, to use the methods and
procedures used to administer the programs created under the
rules relating to advance payments of the present-law premium
assistance credit (as in effect before repeal by another
provision), and each entity required to take any actions under
those programs is, at the request of the Secretary, to take
those actions to the extent necessary to carry out the advance
payment program under the provision, including HHS. Except as
otherwise provided by the Secretary, in making advance payments
with respect to eligible health insurance that is not enrolled
in through an Exchange, the rules relating to advance payments
of the present-law premium assistance credit are to be applied
by treating references to an Exchange as references to the
provider of the eligible health insurance (or, as the Secretary
determines appropriate, to the licensed agent or broker with
respect to the insurance).\115\
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\115\As under present law, the provision includes authority for the
IRS to disclose a limited amount of return information for purposes of
determining eligibility for the new credit and certain State health
subsidy programs. In addition, for insurance not purchased from an
Exchange, the provision permits the disclosure to the provider of the
insurance, the amount of any advance payment for which the taxpayer may
be eligible.
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The advance payment program is to provide that any
individual applying to have payments made on their behalf under
the program must, if the individual (or any qualifying family
member taken into account in determining the amount of the
credit) is employed, submit a written statement from each
employer of the individual or qualifying family member stating
whether the individual or qualifying family member (as the case
may be) is eligible for other specified coverage in connection
with the employment. An employer must, at the request of any
employee, provide such a statement at the time, and in the form
and manner, as the Secretary may provide.\116\
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\116\An employer may be subject to a reporting penalty if failing
to provide the statement as required.
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If an individual receives advance payments under the
provision for a taxable year, the credit amount for which the
individual would otherwise be eligible is reduced (but not
below zero) by the aggregate amount of the advance payments for
months beginning in the taxable year. If the aggregate amount
of the individual's advance payments for months beginning in
the taxable year exceed the credit amount for which the
individual is eligible (before the previously described
reduction), the individual's tax liability for the year is
increased by the excess.
Reporting
Provider of eligible health insurance
Under the provision, any person who provides eligible
health insurance for any month of any calendar year with
respect to any individual is required to report certain
information to the IRS, generally at the time prescribed by the
Secretary. However, in the case of an individual with respect
to whom payments are made under the advance payment program,
the reports to the IRS must be made on a monthly basis. The
required reporting is to be in the form prescribed by the
Secretary and must include the following information with
respect to each policy of eligible health insurance:
the name, address, and tax identification
number of each individual covered under the policy,
the premiums paid with respect to the
policy,
the amount of advance payments made on
behalf of the individual,
the months during which the health insurance
is provided to the individual,
whether the policy constitutes a high
deductible health plan, and
any other information prescribed by the
Secretary.
The same information must be provided to the individual, on
or before January 31 of the year following the calendar year to
which it relates, and must also include the name and address of
the person required to report and the phone number of the
information contact for that person.
Employer
Under the provision, an employer is required to report on
the Form W-2 of an employee each month with respect to which
the employee is eligible for other specified coverage in
connection with employment by the employer.
Penalty for claim of excess credit
The provision increases the penalty imposed on claims for
refund or credit in excess of the amount allowable to 25
percent in the case of a claim relating to the refundable tax
credit for health insurance coverage.
EFFECTIVE DATE
The provision is effective for months beginning after
December 31, 2019, in taxable years ending after that date.
N. Maximum Contribution Limit to Health Savings Account Increased to
Amount of Deductible and Out-of-Pocket Limitation (sec. __16 of the
committee print and sec. 223 of the Code)
PRESENT LAW
An individual with a high deductible health plan and no
other health plan (other than a plan that provides certain
permitted insurance or permitted coverage) may establish a
health savings account (``HSA''). Subject to limits,
contributions to an HSA made by or on behalf of an eligible
individual are deductible in determining adjusted gross income
of the individual (that is, an ``above-the-line'' deduction).
Contributions to an HSA by an employer for an employee
(including salary reduction contributions made through a
cafeteria plan) are excludible from income and from wages for
employment tax purposes.\117\ Distributions from an HSA for
qualified medical expenses are not includible in gross income.
---------------------------------------------------------------------------
\117\Secs. 106(d), 125, 3121(a)(2), 3231(e)(1), 3306(b)(2),
3401(a)(22).
---------------------------------------------------------------------------
HSA contributions for a year are subject to basic dollar
limits that are adjusted annually as needed to reflect annual
cost-of-living increases. For 2017, the basic limit on
contributions that can be made to an HSA for a year is $3,400
in the case of self-only coverage and $6,750 in the case of
family coverage.\118\ The basic contribution limits are
increased by $1,000 for an eligible individual who has attained
age 55 by the end of the taxable year (referred to as ``catch-
up contributions'').\119\ All HSA contributions are aggregated
for purposes of the contribution limits.\120\ The annual HSA
contribution limit for an individual is generally the sum of
the limits determined separately for each month (that is, 1/12
of the limit for the year, including the catch-up limit, if
applicable), based on the individual's status and health plan
coverage as of the first day of the month.\121\
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\118\Under section 4973, an excise tax applies to contributions in
excess of the maximum contribution amount for the HSA. The excise tax
generally is equal to six percent of the cumulative amount of excess
contributions that are not distributed from the HSA.
\119\Contributions, including catch-up contributions, cannot be
made once an individual is enrolled in Medicare.
\120\In addition, contributions to Archer MSAs under section 220
reduce the annual HSA contribution limit.
\121\Under a special rule, an individual who is an eligible
individual during the last month of a taxable year is treated as having
been an eligible individual for every month in the taxable year for
purposes of computing the annual limit. Thus, the individual may
contribute the maximum annual amount. However, if the individual ceases
to be an eligible individual within a certain period, contributions
that could not otherwise have been made are generally includible in
income and are subject to a 10-percent additional tax.
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A minimum annual deductible amount and a maximum on the sum
of the annual deductible and out-of-pocket expenses (such as
co-pays) apply to high deductible health plans, which are
adjusted annually as needed to reflect cost-of-living
increases. For 2017, the minimum deductible is $1,300 in the
case of self-only coverage and $2,600 in the case of family
coverage. In addition, for 2017, the sum of the deductible and
out-of-pocket expenses must be no more than $6,550 in the case
of self-only coverage and no more than $13,100 in the case of
family coverage.
REASONS FOR CHANGE
The Committee continues to believe that the combination of
high deductible health plans and HSA will help reduce health
care costs. In furtherance of that goal, increasing the limits
on HSA contributions will encourage more people to enroll in
high deductible health plans and contribute to HSAs.
EXPLANATION OF PROVISION
The provision increases the basic limit on aggregate HSA
contributions for a year to equal the maximum on the sum of the
annual deductible and out-of-pocket expenses permitted under a
high deductible health plan, which are, for 2017, $6,550 in the
case of self-only coverage and $13,100 in the case of family
coverage. As under present law, basic contribution limits are
increased by $1,000 for an eligible individual who has attained
age 55 by the end of the taxable year. In addition, as under
present law, the annual HSA contribution limit for an
individual is generally the sum of the limits determined
separately for each month (that is, 1/12 of the limit for the
year, including the catch-up limit, if applicable), based on
the individual's status and health plan coverage as of the
first day of the month.
EFFECTIVE DATE
The provision applies for taxable years beginning after
December 31, 2017.
O. Allow Both Spouses To Make Catch-Up Contributions to the Same Health
Savings Account (sec. __17 of the committee print and sec. 223 of the
Code)
PRESENT LAW
An individual with a high deductible health plan and no
other health plan (other than a plan that provides certain
permitted insurance or permitted coverage) may establish an
HSA. HSA contributions for a year are subject to basic dollar
limits that are adjusted annually as needed to reflect annual
cost-of-living increases. The basic contribution limits are
increased by $1,000 for an eligible individual who has attained
age 55 by the end of the taxable year (referred to as ``catch-
up contributions''). If eligible individuals are married to
each other and either spouse has family coverage, both spouses
are treated as having only family coverage, so that the
contribution limit for family coverage applies. The
contribution limit (without regard to any catch-up contribution
amounts) is divided equally between the spouses unless they
agree on a different division.
If both spouses of a married couple are eligible
individuals, each may contribute to an HSA, but they cannot
have a joint HSA.\122\ Under the rule described above, however,
the spouses may divide their basic contribution limit for the
year by allocating the entire amount to one spouse to be
contributed to that spouse's HSA.\123\ This rule does not apply
to catch-up contribution amounts. Thus, if both spouses are at
least age 55 and eligible to make catch-up contributions, each
must make the catch-up contribution to his or her own HSA.\124\
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\122\Notice 2004-50, 2004-2 C.B. 196, Q&A-63.
\123\Notice 2004-50, Q&A-32. Funds from that HSA can be used to pay
qualified medical expenses for either spouse on a tax-free basis.
Notice 2004-50, Q&A-36.
\124\Notice 2008-59, 2008-2 C.B. 123, Q&A-22.
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REASONS FOR CHANGE
The Committee continues to believe that the combination of
high deductible health plans and HSAs will help reduce health
care costs. The Committee has identified certain cases where it
believes that the operation of HSAs can be improved. One such
case involves the present-law obstacle that prevents both
otherwise eligible spouses from making catch-up contributions
if they have only one HSA account. The Committee wishes to make
the operation of HSAs more efficient by allowing both eligible
spouses to make catch-up contributions to a single HSA, rather
than the present law requirement that they each must have their
own HSA in order to make catch-up contributions.
EXPLANATION OF PROVISION
Under the provision, if both spouses of a married couple
are eligible for catch-up contributions and either has family
coverage, the annual contribution limit that can be divided
between them includes catch-up contribution amounts of both
spouses. Thus, for example, the spouses can agree that their
combined basic and catch-up contribution amounts are allocated
to one spouse to be contributed to that spouse's HSA. In other
cases, as under present law, a spouse's catch-up contribution
amount is not eligible for division between the spouses; the
catch-up contribution must be made to the HSA of that spouse.
EFFECTIVE DATE
The provision applies for taxable years beginning after
December 31, 2017.
P. Special Rule for Certain Medical Expenses Incurred Before
Establishment of Health Savings Account (sec. _18 of the committee
print and sec. 223 of the Code)
PRESENT LAW
Distributions from an HSA for qualified medical expenses
are not includible in gross income. Distributions from an HSA
that are not used for qualified medical expenses are includible
in gross income and are subject to an additional tax of 20
percent. The 20-percent additional tax does not apply if the
distribution is made after death, disability, or the individual
attains the age of Medicare eligibility (that is, age 65).
In order for a distribution from an HSA to be excludible as
a payment for a qualified medical expense, the medical expense
must be incurred on or after the date that the HSA is
established.\125\ Thus, a distribution from an HSA is not
excludible as a payment for a qualified medical expense if the
medical expense is incurred after a taxpayer enrolls in a high
deductible health plan but before the taxpayer establishes an
HSA.
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\125\Notice 2004-2, 2004-1 C.B. 269, Q&A-26.
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REASONS FOR CHANGE
The Committee has identified certain cases where it
believes that the operation of HSAs can be improved. One such
case involves the typical lag between obtaining coverage under
a high deductible health plan and the establishment of an HSA.
Recognizing this lag, the Committee believes it is appropriate
to allow medical expenses incurred after coverage is obtained
under a high deductible health plan but prior to the
establishment of the HSA to be paid for from the HSA and to be
excludible from income, provided the HSA is established within
60 days of obtaining coverage under a high deductible health
plan.
EXPLANATION OF PROVISION
Under the provision, if an HSA is established during the
60-day period beginning on the date that an individual's
coverage under a high deductible health plan begins, then the
HSA is treated as having been established on the date coverage
under the high deductible health plan begins for purposes of
determining if an expense incurred is a qualified medical
expense. Thus, if a taxpayer establishes an HSA within 60 days
of the date that the taxpayer's coverage under a high
deductible health plan begins, any distribution from an HSA
used as a payment for a medical expense incurred during that
60-day period after the high deductible health plan coverage
began is excludible from gross income as a payment for a
qualified medical expense even though the expense was incurred
before the date that the HSA was established.
EFFECTIVE DATE
The provision applies with respect to coverage beginning
after December 31, 2017.
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 the Reconciliation Legislative Recommendations
Relating to Repeal and Replace of Health-Related Tax Policy on
March 8, 2017.
The vote on the amendment by Mr. Neal to the amendment in
the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would strike
the repeal of the 0.9 percent Medicare tax increase, was not
agreed to by a roll call vote of 23 nays to 16 yeas (with a
quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Pascrell's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ ......... .................
Mr. Holding.................... X ........ ......... .................
Mr. Smith (MO)................. X ........ ......... .................
Mr. Rice....................... X ........ ......... .................
Mr. Schweikert................. X ........ ......... .................
Ms. Walorski................... X ........ ......... .................
Mr. Curbelo.................... X ........ ......... .................
Mr. Bishop..................... X ........ ......... .................
----------------------------------------------------------------------------------------------------------------
The vote on the amendment by Mr. Blumenauer to the
amendment in the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would allow
individual consumers the choice between the ACA's tax credits,
or the American Health Care Act's tax credits, was not agreed
to by a roll call vote of 23 nays to 16 yeas (with a quorum
being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The vote on the amendment by Ms. DelBene to the amendment
in the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would fully
repeal the excise tax on high-cost employee health plans
(``Cadillac tax''), was not agreed to by a roll call vote of 23
nays to 16 yeas (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The vote on the amendment by Ms. Sewell to the amendment in
the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would ensure
that the American Health Care Act does not result in an
increase in medical costs or taxes for certain farmers, was not
agreed to by a roll call vote of 23 nays to 15 yeas (with a
quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... ........ ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The vote on the amendment by Mr. Davis to the amendment in
the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would require
that the credit apply only to health plans that include
services from community providers, including rural providers,
community health centers, and child hospitals, was not agreed
to by a roll call vote of 23 nays to 16 yeas (with a quorum
being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The vote on the amendment by Ms. DelBene to the amendment
in the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would strike
and replace the underlying bill's repeal of the Small Business
Tax, was not agreed to by a roll call vote of 23 nays to 16
yeas (with a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The vote on the amendment by Ms. Sanchez to the amendment
in the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy, which would specify
that health plans cannot vary charges on the basis of gender,
was not agreed to by a roll call vote of 23 nays to 16 yeas
(with a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
Mr. Paulsen's motion to table Ms. Chu's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Amendment by Mr. Lewis to the amendment in the nature of a
substitute to Subtitle __: Budget Reconciliation Legislative
Recommendations Relating to Repeal and Replace of Health-
Related Tax Policy, which would strike the entire section and
replace it with a set of principles for health reform
legislation, was not agreed to by a roll call vote of 23 nays
to 16 yeas (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X .........
Mr. Holding.................... ........ X .........
Mr. Smith (MO)................. ........ X .........
Mr. Rice....................... ........ X .........
Mr. Schweikert................. ........ X .........
Ms. Walorski................... ........ X .........
Mr. Curbelo.................... ........ X .........
Mr. Bishop..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The legislation was ordered favorably transmitted to the
House Committee on the Budget as amended by a roll call vote of
23 yeas and 16 nays (with a quorum being present). The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... ........ ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE PROVISIONS
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 ``Budget
Reconciliation Legislative Recommendations Relating to Repeal
and Replace of Health-Related Tax Policy.''
The budget reconciliation legislative recommendations, as
transmitted, are estimated to have the following effects on
budget receipts for fiscal years 2017-2026:
ESTIMATED REVENUE EFFECTS OF BUDGET RECONCILIATION LEGISLATIVE RECOMMENDATIONS RELATING TO REPEAL AND REPLACEMENT OF CERTAIN HEALTH-RELATED TAX POLICY PROVISIONS CONTAINED IN THE ``AFFORDABLE
CARE ACT (`ACA'),'' AS REPORTED BY THE COMMITTEE ON WAYS AND MEANS
[Fiscal years 2017-2026, billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Provision Effective 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Revenue Provisions:
1. Modifications and repeal of premium tax (\1\)
credit:......................................
[Estimate included in CBO Estimate of Coverage Provisions]
2. Small business tax credit.................. (\2\)
[Estimate included in CBO Estimate of Coverage Provisions]
3. Repeal of individual mandate penalty....... mba 12/31/15
[Estimate included in CBO Estimate of Coverage Provisions]
4. Repeal of employer mandate penalty......... mba 12/31/15
[Estimate included in CBO Estimate of Coverage Provisions]
5. Repeal of tax on employee health insurance tyba 12/31/19 ....... ....... ....... -3.4 -6.9 -8.7 -10.7 -13.6 -5.5 ......... -10.3 -48.7
premiums and health plan benefits: repeal 40%
excise tax on health coverage in excess of
$10,200/$27,500 (subject to adjustment for
unexpected increase in medical costs prior to
effective date) and increased thresholds of
$1,650/$3,450 for over age 55 retirees or
certain high-risk professions, both indexed
for inflation by CPI-U (CPI-U plus 1% for
2019); adjustment based on age and gender
profile of employees; vision and dental
excluded from excise tax; levied at insurer
level; employer aggregates and issues
information return for insurers indicating
amount subject to the excise tax (repeal
sunsets 12/31/24)\3,4\.......................
6. Repeal exclusion of nonprescribed over-the- apaeiwrt tyba ....... -0.4 -0.5 -0.6 -0.6 -0.6 -0.6 -0.7 -0.7 -0.7 -2.1 -5.5
counter medicines from the definition of 12/31/17
medical expenses for health savings accounts
(``HSAs''), Archer MSAs, health flexible
spending arrangements, and health
reimbursement arrangements\4,5\..............
7. Repeal increase in additional tax on dma 12/31/17 ....... (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) -0.1
distributions from HSAs and Archer MSAs not
used for qualified medical expenses\5\.......
8. Repeal limitations on contributions to tyba 12/31/17 ....... -0.3 -1.2 -1.6 -1.7 -1.8 -2.2 -2.6 -3.3 -4.1 -4.7 -18.6
health flexible spending arrangements in
cafeteria plans\4,5\.........................
9. Repeal 2.3% excise tax on manufacturers and sa 12/31/17 ....... -1.4 -1.9 -2.0 -2.1 -2.2 -2.3 -2.4 -2.6 -2.7 -7.4 -19.6
importers of certain medical devices.........
10. Reinstate deduction for expenses allocable tyba 12/31/17 ....... -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.6 -1.7
to Medicare Part D subsidy...................
11. Extend the 7.5% AGI floor in 2017 for tyba 12/31/16 & -0.2 -2.0 -3.2 -3.4 -3.6 -3.9 -4.2 -4.5 -4.8 -5.1 -12.4 -34.9
elderly taxpayers and repeal increase in AGI tyba 12/31/17
floor on medical expenses deduction from 7.5%
to 10%; apply 7.5% floor for alternative
minimum tax purposes.........................
12. Repeal additional HI tax of 0.9% on earned rra & tyba 12/ -0.4 -6.5 -10.1 -11.4 -12.3 -13.2 -14.1 -15.2 -16.5 -17.6 -40.8 -117.3
income in excess of $200,000/$250,000 31/17
(unindexed)..................................
13. Refundable health credit for health mba 12/31/19 in
insurance coverage........................... tyea sd
[Estimate included in CBO Estimate
14. Maximum contribution limit to HSA tyba 12/31/17 ....... -1.0 -1.6 -1.7 -1.9 -2.1 -2.3 -2.5 -2.7 -2.9 -6.2 -18.6
increased to amount of deductible and out-of-
pocket limitation\4\.........................
15. Allow both spouses to make catch-up tyba 12/31/17 ....... (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) -0.1 -0.1 -0.1 -0.4
contributions to the same HSA\4\.............
16. Special rule for certain medical expenses cba 12/31/17 ....... (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) -0.1 -0.2
incurred before establishment of HSA\4\......
------------------------------------------------------------------------------------------------------------------------------
Net total................................... ............... -0.6 -11.7 -18.7 -24.3 -29.3 -32.7 -36.6 -41.7 -36.4 -33.4 -84.7 -265.6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. The date of enactment is assumed to be before April 1, 2017.
Legend for ``Effective'' column: apaeiwrt = amounts paid and expenses incurred with respect to; mba = months beginning after; sd = such date; cba = coverage beginning after; rra = remuneration
received after; tyba = taxable years beginning after; dma = distributions made after; sa = sales after; tyea = taxable years ending after.
\1\This provision is effective for months beginning after December 31, 2019, in taxable years ending after such date and subsection (b) shall take effect on January 1, 2020.
\2\This provision is effective for taxable years beginning after December 31, 2017, and taxable years beginning after December 31, 2019.
\3\This estimate does not include effects of interactions with other subsidies; those effects are included in estimates of other relevant provisions.
\4\Estimate includes the following off-budget effects:
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
Repeal 40% excise tax on health coverage......... -......--......--......-----0.8-----1.4-----1.9-----2.4-----3.0-----1.0--......-------2.3-------10.5
Repeal exclusion of nonprescribed over-the- ...... -0.1 -0.1 -0.1 -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.5 -1.3
counter medicines from the definition of medical
expenses........................................
Repeal limitation on health flexible spending ...... -0.3 -0.5 -0.5 -0.5 -0.6 -0.7 -0.9 -1.2 -1.1 -1.8 -6.4
arrangements to cafeteria plans.................
Maximum contribution limit to HSA increased to ...... -0.2 -0.4 -0.4 -0.4 -0.5 -0.5 -0.6 -0.6 -0.7 -1.4 -4.3
amount of deductible and out-of-pocket
limitation......................................
Allow both spouses to make catch-up contributions ...... (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) -0.1
to the same HSA.................................
Special rule for certain medical expenses ...... (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) (\6\) -0.1
incurred before establishment of HSA............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\5\This estimate includes the effects of interactions with the proposal to increase the maximum contribution limit to HSAs.
\6\Loss of less than $50 million.
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 budget reconciliation legislative recommendations amending
the Internal Revenue Code of 1986: While the bill meets the
standard of major legislation, it is not practicable to
incorporate the macroeconomic effects of the bill in the
official cost estimate, given current time constraints.
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
budget reconciliation legislative recommendations relating to a
refundable tax credit for the purchase of health insurance and
deposit of an amount into an individual's HSA involve new or
increased budget authority. The Committee states further that
the budget reconciliation legislative recommendations relating
to the premium tax credit and the small business tax credit
involve reduced tax expenditures. The Committee also states
that the budget reconciliation legislative recommendations
relating to repeal of limits on certain exclusions and
deductions, repeal of various taxes, provision of a new
refundable tax credit for the purchase of health insurance, and
changes to the rules for health savings accounts involve new or
increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, refer to Subtitle E.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated into
the description portions of this report.
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
budget reconciliation legislative recommendations contain no
measure that authorizes funding, so no statement of general
performance goals and objectives for which any measure
authorizing 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 budget reconciliation
legislative recommendations relating to recapture of excess
advance payments of premium tax credits and the small business
tax credit impose private sector mandates. The Committee has
determined that the budget reconciliation legislative
recommendations do not impose any Federal intergovernmental
mandates 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 provisions of the budget reconciliation
legislative recommendations and states that the provisions of
the legislative recommendations do 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 and has widespread applicability to
individuals or small businesses. For each such provision
identified by the staff of the Joint Committee on Taxation, a
summary description of the provision is provided below along
with an estimate of the number and type of affected taxpayers,
and a discussion regarding the relevant complexity and
administrative issues. Following the analysis of the staff of
the Joint Committee on Taxation are the comments of the IRS and
Treasury regarding each provision included in the complexity
analysis.
1. Repeal of Tax on Over-The-Counter Medications
Summary description of the provisions
The provision allows payment or reimbursement on a pretax
basis from a health flexible spending arrangement, health
reimbursement arrangement, health savings account or Archer
MSA, of the cost of an over-the-counter medicine without
requiring a prescription for the medicine.
Number of affected taxpayers
It is estimated that the provision will affect over ten
percent of individual tax returns.
Discussion
Taxpayers voluntarily claiming reimbursement for over-the-
counter medicines may have an increased burden in record-
keeping and claim submissions. It is expected that revisions to
IRS published guidance and tax publications will be required.
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 budget reconciliation legislative
recommendations and states that the provisions of the
legislative recommendations 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 clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
budget reconciliation legislative recommendation does not
establish or reauthorize: (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 section 6104 of title 31,
United States Code.
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee advises that the budget reconciliation
legislative recommendations require no directed rule makings
within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONILIATION
LEGISLATIVE RECOMMENDATION, AS TRANSMITTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes to existing law made by
the recommendations, as transmitted, are shown in Subtitle E of
title II.
VII. DISSENTING VIEWS
DISSENTING VIEWS ON RECOMMENDATION TO REPEAL AND REPLACE THE AFFORDABLE
CARE ACT, COMMITTEE PRINT 5
1. Donald Trump promised that ``we're going to have
insurance for everybody . . . [but it will be] much less
expensive and much better.'' This bill reveals those promises
for what they always were: empty campaign rhetoric.''--Families
USA\1\
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\1\http://familiesusa.org/blog/2017/03/healthy-and-wealthy-benefit-
under-house-republican-affordable-care-act repeal plan
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2. ``We cannot support the AHCA as drafted because of the
expected decline in health insurance coverage and the potential
harm it would cause to vulnerable patient populations.''--
American Medical Association \2\
---------------------------------------------------------------------------
\2\https://www.ama-assn.org/sites/default/files/media-browser/
public/washington/ama-letter-on-ahca.pdf
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3. ``Repeal-and-replace is a gigantic transfer of wealth
from the lowest-income Americans to the highest-income
Americans.''--Edward D. Kleinbard, former chief of staff for
the Joint Committee on Taxation and professor, University of
Southern California School of Law.\3\
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\3\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
care-act-repeal.html?_r=1
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The five reconciliation legislative recommendations
considered by the Committee on Ways and Means (the
``Committee'') and referred to the Committee on Budget
(collectively, the Ways and Means reconciliation package or the
``reconciliation package'') was a far-reaching attempt to
undermine our health systems from Medicare to employer
sponsored health insurance in order to give tax cuts to the
wealthiest and corporations. After almost 18 hours of debate,
the Committee mark-up ended with a party-line vote on the
reconciliation package, which is likely to take health
insurance away from millions of Americans. This reconciliation
package, coupled with what was passed out of the Energy and
Commerce Committee, would harm access to health care for
middle-class Americans and undermine Medicare's long-term
viability while cutting taxes for corporations and the
wealthiest Americans.
The Committee moved forward irresponsibly, without any
official accounting about the estimated effect of the
reconciliation package on health insurance coverage, out-of-
pocket costs, or premium increases. While the Joint Committee
on Taxation (JCT) estimated that the reconciliation package
includes nearly $600 billion worth of tax breaks, as of the
mark-up, the Congressional Budget Office (CBO) was unable to
provide estimates about the package's effect on American
families. Additionally the JCT score was incomplete as of the
mark-up and did not provide an official accounting of all of
the provisions considered by the Committee. Both the Ways and
Means and Energy and Commerce Committees moved forward to pass
recommendations out of each Committee without any sense from
CBO of coverage losses due to the severe cuts to Medicaid, the
repeal of the individual and employer-shared responsibility
provisions of current law, or the changes in the tax credits
available to help purchase health insurance on the individual
market.
CBO provided the Committee an estimate of the effects after
the reconciliation package was reported to the Committee on
Budget from the Ways and Means and Energy and Commerce
Committees. This estimate showed that 24 million Americans
would lose coverage, with 14 million Americans losing coverage
in the first year alone.
The Committee's reconciliation package provided generous
tax cuts to the wealthiest, while reducing health insurance
assistance for middle-class Americans. The tax breaks
considered by the Committee are focused on the wealthy
individuals and corporations, instead on middle-class
Americans. About $275 billion in tax breaks would benefit high-
income earners; about 62% of the tax breaks would go to
millionaires in 2020. Businesses and corporations are receive
nearly $192 billion in tax cuts. These and other tax breaks add
up to nearly $600 billion in lost revenue.
Democrats objected strenuously to the Republican approach
and instead believe the Committee should focus on policies that
matter to middle-class Americans under the jurisdiction of this
Committee, including financing long-term infrastructure,
reforming the tax system to address income inequality, and
further building on President Obama's record of job creation.
Democrats believe that the reconciliation package will
destabilize the health insurance market, which represents 18
percent of our gross domestic product.
The reconciliation package continues Republican efforts to
undermine and destabilize the health insurance market. It
undermines current law and the stability of both the individual
and group health insurance markets by gutting individual and
employer-shared responsibility provisions. The reconciliation
package would reduce the uptake of the premium tax credits and
the Medicaid expansion established in the Affordable Care Act
(ACA), which have made health care affordable for millions of
individuals. Reduced uptake of the Medicaid expansion and the
tax credits disproportionately impacts low- and middle-income
Americans and places them at risk for health insecurity and
unexpected medical expenses. Based on independent estimates,
roughly 24 million Americans would lose their insurance
coverage because of this reconciliation package when taken
together with the reconciliation recommendations passed by the
Energy and Commerce Committee.\4\ Further, this reconciliation
package reduces the life of the Medicare Trust Fund by three
years by reducing $170 billion from the Medicare Trust Fund,
which puts Medicare at risk for 57 million seniors and
individuals with disabilities.
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\4\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the-gop-health-care-plan/
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Individual and employer-shared responsibility provisions
are key to maintaining the robust and healthy risk pools that
allow the ACA health insurance reforms to improve consumer
protections while controlling health care costs. This is
because well-functioning insurance markets rely on
participation of both healthy and sick individuals to spread
risk across the pool.
The reconciliation package effectively would repeal the
individual and employer-shared responsibility penalty, leading
to premium increases of an estimated 20 percent in the
individual market alone. In spite of President Trump and
Congressional Republicans' efforts to sabotage the ACA,
millions of Americans have enrolled in the health insurance
Marketplaces, many using the available financial assistance,
and millions more have enrolled in expanded Medicaid programs.
Despite promises made by President Trump, the
reconciliation package would not cover more people or offer
more affordable coverage with comparable benefits. Instead,
this package leads to an estimated coverage loss of 24 million
people while gutting benefits and consumer protections as a
mechanism for affordability. When coupled with the legislation
passed out of the Energy and Commerce Committee, the
reconciliation package would return to a time when the market
once again discriminates against those with pre-existing
conditions and leaves those that might need medical care in the
future without meaningful coverage. The reconciliation package
provides for tax credits less generous than current law with no
assistance with out-of-pocket expenses. Instead, the
reconciliation package enshrines high deductible health plans
that would increase out-of-pocket expenses. However, these
plans do not address the underlying issues of access to quality
services and the cost of care.
Since January of 2009, the Republicans voted to repeal or
undermine the ACA more than 65 times. Democrats offered a
number of amendments in Committee to point out serious flaws
with the reconciliation package. For example, at the beginning
of the mark up, Democrats asked Republicans to postpone mark up
until CBO could provide a comprehensive report on costs,
coverage losses, and premium effects of the reconciliation
package.
In that regard, Congressman Lloyd Doggett (D-TX) offered a
motion to postpone the markup for one week to allow time for
review of the bill and the CBO estimate that was not available
prior to or during the mark up. For over four decades, CBO has
been recognized as the official referee of costs and effects of
legislation passed in the House and Senate. Congress relies on
CBO's non-partisan estimates to evaluate legislative proposals.
Democrats were concerned that Republicans deliberately moved
forward with the reconciliation package without a CBO score in
an effort to conceal the harmful effects of the reconciliation
package on nearly all Americans.
The contrast of this rushed process versus the lengthy and
transparent process of enacting the ACA is striking. In 2009,
House Committees posted a draft of the ACA legislation for
review and comment a month before the mark-up process began,
holding multiple hearings and providing the public with two
preliminary CBO estimates on July 8th and July 14th. Democrats
maintain that there is no reason to rush to mark-up this
reconciliation package without a CBO score, or without a
hearing to consider the implications of the package.
Congressman Doggett 's amendment was tabled on a party line
vote.
Since taking office President Trump has initiated a number
of actions that continue a pattern of trying to sabotage the
ACA. In January, President Trump issued an Executive Order to
direct agencies to take action to ``eliminate burden.'' The
Trump Administration cancelled ACA outreach in the last two
weeks of the 2017 individual market open enrollment period.
Prior to that, 2017 Marketplace enrollment was outpacing 2016
enrollment. Final enrollment came in slightly lower. On
February 15, 2017, CMS issued a proposed Marketplace rule that
makes it more expensive and more difficult to get coverage,
including cutting the open enrollment period in half. Per
President Trump's Executive Order, the Internal Revenue Service
(IRS) issued a February 14, 2017 statement on non-enforcement
of the individual mandate in processing tax returns. This
change in enforcement would undermine stability in the
marketplace by preventing the IRS from using new tools to
enforce the individual responsibility provision of the ACA--a
crucial part of keeping a healthier pool and keeping premiums
affordable.\5\
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\5\http://www.cbpp.erg/sabotage-watch-tracking-efforts-to-
undermine-the-aca
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Nevertheless, the current marketplace is benefitting
consumers. Of the approximately 10.4 million consumers who had
effectuated Marketplace enrollments: 84 percent, or about 8.8
million consumers, were receiving advance premium tax credits
and 56 percent or nearly 5.9 million consumers were benefiting
from cost sharing reductions (CSRs) to make their coverage and
covered services more affordable.
In addition to new coverage options Americans gained under
the ACA, the pace of health spending has been moderated under
the ACA. Overall, health care spending growth slowed from 5.8%
in 2015 to 4.8% in 2016 due to slowdowns in Medicaid and
prescription drug spending. Private health insurance spending
slowed from 7.2% in 2015 to 5.9% in 2016. Health spending is
projected to grow an average of 5.6 percent between 2016 and
2025; well below the average over the previous two decades
before 2008, which was nearly 8 percent.\6\
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\6\https://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-andReports/NationalHealthExpendData/Downloads/
proj2016.pdf
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While some areas of the country experienced atypical
premium increases, many analysts believed they were a one-time
correction: ``One factor contributing to faster growth is a
significant acceleration in premium growth for Marketplace
plans because of previous underpricing of premiums and
elimination of risk corridor payments.''\7\
---------------------------------------------------------------------------
\7\Keehan et al. ``National Health Expenditure Projections, 2016-
25: Price Increases, Aging Push Sector To 20 Percent Of Economy.''
Health Aff March 2017 vol. 36 no. 3 553-563.
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Concern is growing, however, that under the Republican plan
premiums will grow substantially. J. Mario Molina, chief
executive of Molina Healthcare Inc., believes that the recent
Republican actions to undo the mandate could help push
individual-plan premiums up by 30% or more next year and they
could rise considerably more in the future, when the reduced
federal assistance for low-income enrollees kicks in. He noted,
``You 're going to see big rate increases, and you're going to
see insurers exit markets . . . this is going to destabilize
the marketplace,'' he said.\8\
---------------------------------------------------------------------------
\8\https://www.wsj.com/articles/what-insurers-like-and-dread-about-
gops-plan-to-replace-obamacare-1488906247
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Other analysts concur that the Republican plan would result
in coverage losses. ``We conclude that CBO's analysis will
likely estimate that at least 15 million people will lose
coverage under the American Health Care Act (AHCA) by the end
of the ten-year scoring window. Estimates could be higher, but
it's is unlikely they will be significantly lower,'' wrote
Brookings Institute researchers who modeled the Republican
bill.\9\
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\9\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the-gop-health-care-plan/
#fn1
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Given the far-reaching impact on the Republican
reconciliation package to harm Medicare, Medicaid, employer-
sponsored insurance and the individual insurance market,
Democrats offered a series of amendments to address and
highlight the serious shortcomings of the Republican plan. All
amendments were defeated in partisan votes.
I offered an amendment to strike the repeal of the high-
earner tax that goes into the Medicare Trust Fund. The
independent Office of the Actuary at the Centers for Medicare &
Medicaid Services (CMS) found that repealing this tax would
take $170 billion from the Medicare Trust Fund, shortening the
program's solvency by three years. This tax cut for the highest
income earners hurts Medicare's long-term financial footing
just as America's baby boomers are becoming Medicare eligible.
The ACA, on the other hand, extended Medicare solvency by 11
years. Since Medicare was enacted, the poverty rate for seniors
dropped by 70 percent. In 1966, the first year of Medicare,
28.5 percent of seniors were in poverty; in 2015, that figure
dropped to 8.8 percent.\10\ Before Medicare was enacted, about
half of all seniors did not have health insurance.\11\ Since
the advent of Medicare and Medicaid, nearly all have Medicare
and/or Medicaid. Over three-quarters of Americans support
Medicare and believe it is very important. With low
administrative costs, broad choice of care, and affordable
cost-sharing, there is good reason for Medicare's popularity.
The Republicans are attacking Medicare, slashing Medicare
funding without providing anything to improve Medicare, or
access to care for seniors and individuals with disabilities.
Instead, this legislation provides tax cuts for the wealthy and
corporations, while cutting Medicare funding and taking three
years off of the life of the Medicare trust fund. This is
another provision that would increase costs for seniors and
older Americans. The Democratic amendment to restore the
funding to Medicare was defeated on a party line vote of 23-16.
---------------------------------------------------------------------------
\10\http://www.census.gov/data/tables/time-series/demo/income-
poverty/historica1-poverty-peopIe.html
\11\https://www.cms.gov/Outreach-and-Education/Look-Up-Topics/50th-
Anniversary/50-Facts-in-50-Days-Pt1.pdf
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Congressman Pascrell (D-NJ) offered an amendment to provide
a Sense of Congress that Congress should not cap Medicaid
funding and shift costs, and that Congress should protect the
Medicaid expansion. Medicaid, while not in the jurisdiction of
the Committee on Ways and Means, is an important part of
coverage for 16 million Medicare-eligible Americans. For
seniors and people with disabilities, Medicaid is the primary
source of long-term care coverage, and 70 percent of all
nursing home residents rely on Medicaid.\12\ The Republican
reconciliation recommendation to cap the Medicaid program
threatens this important safety-net for people needing long-
term services and support.
---------------------------------------------------------------------------
\12\ Families USA, Medicaid (http://familiesusa.org/issues/
medicaid).
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Medicaid expansion serves a critical role in providing
health insurance to those who otherwise cannot afford it and
would remain uninsured. Medicaid provides high quality coverage
that improves the lives of its beneficiaries. For individuals
gaining coverage because of the Medicaid expansion, access to
primary care and treatment for chronic conditions have
increased, and rates of skipping medications to save money have
decreased.\13\ This new coverage, combined with coverage
expansions through the Marketplaces and other coverage
improvements the ACA made, has helped drive the uninsured rate
to the lowest level in our nation's history.
---------------------------------------------------------------------------
\13\Benjamin D. Sommers, et al., Changes in utilization and health
among low-income adults after Medicaid expansion or expanded private
insurance, JAMA Internal Medicine (Oct. 2016 https://
www.ncbi.nlm.nih.gov/pubmed/27532694).
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Republicans refused to support a simple resolution calling
for the protection of coverage for more than 70 million
Americans. The nearly $600 billion in tax breaks for the
wealthiest individuals and corporations in the reconciliation
package are paid for by starving health coverage for 70 million
Americans and slashing funding by $370 billion. Nevertheless,
Chairman Brady ruled the amendment was not in order.
Congressman Blumenauer (D-OR) offered an amendment that
would provide Americans with the choice of keeping tax credits
provided under the ACA or receiving tax credits provided under
this Republican health care bill. Independent analyses show
that low-income people, older Americans, Americans with health
conditions and those who live in high-cost areas stand to lose
financial protection, benefits and choice under the Republican
plan.\14\ Moreover, the Republican tax credits are insufficient
and simply shift more costs onto middle-class Americans. Flat
tax credits diminish in value over time, decreasing the amount
of coverage that families can buy. This problem is particularly
acute in high-cost areas like rural communities where the value
of the tax credit would not keep up with the cost of care. The
Department of Health and Human Services conducted an analysis
on just this issue and informed me of the findings. This
analysis shows that under the ACA, nearly three-quarters of
Americans in 2017 can find health insurance coverage for $75 or
less a month in the ACA Marketplace. If we replace the analysis
with the Republican tax credits, the share drops from nearly 75
percent to 46 percent--a roughly sixty percent drop in the
number of Americans who are able to find affordable insurance
coverage. More Americans will have to pay more to get less
comprehensive coverage under the Republican plan. Americans
should not be forced into this one-size-fits-all approach. This
amendment would allow Americans to keep their coverage tax
credits and coverage if they prefer the tax credits they
currently have. This amendment was similarly defeated.
---------------------------------------------------------------------------
\14\https://www.nytimes.com/interactive/2017/03/08/upshot/who-wins-
and-who-loses-under-republicans-health-care-plan.html_? r=0
http://www.aarp.org/ppi/info-2017/affordable-care-act-protects-
millions-of-older-adults-with-pre-existing-conditions.html
http://www.vox.com/the-big-idea/2017/2/24/14722152/obamacare-aca-
health-care-costs-premiums-costs-increase
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Congresswoman DelBene (D-CA) offered an amendment to repeal
the high-cost plan excise tax (often called the ``Cadillac
tax''). As noted other dissenting views, Congresswoman Sanchez
(D-CA) offered an amendment to repeal the Cadillac Tax that was
ruled non-germane during the mark-up of Committee Print 1. The
amendment was germane when offered in Committee Print 5, as the
Republican bill delays implementation of the tax until 2025.
While Republicans have put forward a package with nearly $600
billion in tax cuts for corporations and wealthy Americans,
they have left in place the tax on employee benefits.
The tax unfairly reduces health benefits for employees who
have these plans, particularly those with expensive chronic
illnesses. The AFL-CIO noted, ``Far from providing an
improvement on the coverage provided by the ACA, this
Republican alternative will result in millions of Americans
losing their coverage. . . . Estimates from the Mercer Firm
find that by the time the AHCA imposes the tax in 2025, the
coverage provided by more than 40% of employers with 50+
workers would be impacted by the tax. CBO predicts that the
vast majority of 14 employers confronted with this tax are
expected to shift costs to their workers by increasing
deductibles, copays, co-insurance, and maximum out of pocket
limits to avoid paying the tax.''\15\ While in the 114th
Congress, 300 members of the House of Representatives, nearly
70 percent, have signed on to legislation to fully repeal the
Cadillac tax, the amendment was defeated 16-23.
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\15\AFL-CIO letter from William Samuels to Congresswoman Sanchez,
March 8, 2017.
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Congresswoman Sewell (D-AL) offered an amendment to protect
farmers in rural areas from coverage loss under the Republican
legislation. More than 50 million Americans live in rural areas
and have significantly benefitted from the ACA through greater
insurance coverage. Rural individuals saw greater gains in
insurance coverage compared with urban individuals (7.2
percentage point increase versus 6.3 percentage point increase
for urban areas)\16\ and some rural communities experienced
even larger decreases.\17\ This drop in uninsured occurred even
though uninsured rural individuals disproportionately live in
states that have not expanded Medicaid.\18\ Due to the
physically taxing and hazardous nature of their work, small
family farmers had a particularly tough time before the ACA
getting health insurance for themselves and their families. The
majority of them are self-employed and do not make enough to
cover the costs. The ACA provided family farmers with cost-
sharing subsidies, premium tax credits, and access to coverage
that they were not guaranteed before. Rural communities would
be among the hardest hit if Republicans repeal the ACA. This
amendment was defeated.
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\16\http://hrms.urban.org/quicktakes/Substantial-Gains-in-Health-
lnsurance-Coverage-Occurring-for-Adults-in-Both- Rural-and-Urban-
Areas.html
\17\http://www.npr.org/sections/health-shots/2016/11/19/502580120/
in-depressed-rural-kentucky-worries-mount-over-medicaid-cutbacks
\18\https://aspe.hhs.gov/sites/default/files/pdf/204986/
ACARuralbrief.pdf
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Congresswoman Sanchez (D-CA) offered an amendment that
would disallow health savings accounts (HSA) expenditures by
sex-offenders to purchase pharmaceuticals treating erectile
dysfunction. The Republican reconciliation package greatly
expands the amount of funds that can be contributed to tax-
preferred HSAs and the types of health related expenditures
that can be reimbursed through a health-related tax-preferred
account such as an HSA. The amendment was withdrawn.
Congresswoman Judy Chu (D-CA) offered an amendment that
would require the GOP health care bill to protect coverage for
abortion. This bill would create sweeping new restrictions on
abortion coverage for women who purchase health insurance using
their own money. The restrictions in this bill have no
meaningful exceptions to protect women's safety, and only
create exceptions for the life of the mother, or for rape and
incest, ignoring situations when the health of the mother is at
risk or serious complications would result from the pregnancy.
The amendment was defeated.
Democrats expressed concern that the Republican legislation
could jeopardize access to community providers and interfere
with patients getting access to the providers that they prefer
to see. Congressman Davis offered an amendment to require that
for an insurance plan to be tax credit eligible it must include
as participating providers essential community providers. The
Republicans' health plan does not guarantee access to local
community health centers and essential local providers.
Republicans want to let insurance companies go back to the days
when they could cut out local community health centers and
local doctors, and force Americans to drive for hours to find
care. Not only will this make it hard for Americans to get the
check-ups, vaccines, and prescriptions for antibiotics,
insulin, and heart medications that they need, but it will make
it hard for local providers who need paying customers to keep
their doors open. The amendment would require that any tax
credit only go to insurance plans that cover local community
health centers and family physicians, rural providers, and
other essential community providers.
Democrats expressed concern that the Republican
reconciliation package would make it more difficult for small
businesses to offer health coverage to their employees. The
reconciliation package repeals the tax credit small businesses
can receive under current law that is making health insurance
coverage more affordable. Congresswoman DelBene offered an
amendment that would reinstate the small business health tax
credit program and make improvements that make it easier for
small businesses to participate. More than half (55 percent) of
all jobs are through small businesses. Since the 1970s, about
two-thirds of net new jobs have been from small businesses.
Helping support small businesses that choose to offer health
coverage can help those businesses offer better paying jobs,
and provide benefits to their employees.
Congresswoman Sanchez (D-CA) offered an amendment that
would prohibit insurance companies from discriminating against
women in pricing. The ACA has dramatically increased coverage
for women, while also improving the accessibility,
affordability, and quality of care. Prior to the passage of the
ACA, women were charged significantly higher premiums if they
were able to obtain coverage, and often lacked access to
critical preventive care and maternity care services.\19\ The
ACA ended these discriminatory practices, and as a result,
millions of women now have access to affordable health coverage
for the first time. Since the implementation of the ACA, 9.5
million women that were previously uninsured have gained
affordable, comprehensive health coverage.\20\ The uninsured
rate among women ages 18 to 64 has decreased from 19.3 percent
in 2010 to 10.8 percent in 2015.\21\
---------------------------------------------------------------------------
\19\http://go.nationalpartnership.org/site/DocServer/SUMMARY.pdf/
?docID=1000
\20\https://aspe.hhs.gov/system/files/pdf/187551/ACA2010-2016.pdf
\21\https://aspe.hhs.gov/system/files/pdf/205066/
ACAWomenHealthIssueBrief.pdf
---------------------------------------------------------------------------
This amendment was based on the bipartisan Gender Equity in
Health Premiums Act introduced by Congresswoman Sanchez and
former Republican from Florida, Ginny Brown-Waite, which
prohibited health insurance companies from engaging in ``gender
rating.'' Gender rating is the practice of charging women more
for health insurance premiums than men. This practice was
prohibited as a result of the ACA. Under the Republican
legislation, women have the most to lose. Congresswoman Ginny
Brown-Waite said in 2009, ``It is ludicrous that in this day
and age, insurance companies can charge women more simply for
being women. That is the definition of discrimination and it
must end.'' The motion to table the amendment was approved 23-
16.
Congresswoman Chu (D-CA) offered an amendment that would
ensure that the Republican legislation did not disadvantage
minority health care. Specifically, the amendment would ensure
that if the National Academies of Science determine that
uninsured rates of minority communities would increase under
this bill, then the bill will not take effect. There were
significant decreases in the percentage of uninsured adults
between 2013, before the ACA was implemented, and 2016 for
Hispanic, non-Hispanic black, non-Hispanic white, and non
Hispanic Asian adults.\22\ Hispanic adults had the greatest
percentage point decrease (15.9 percentage points) in the
uninsured rate between 2013 and 2016.\23\ The coverage gained
by low income individuals because of the ACA halted the
decades-long widening of the coverage gap between the rich and
poor at a time when other disparities between rich and poor are
growing.\24\
---------------------------------------------------------------------------
\22\https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201702.pdf
\23\https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201702.pdf
\24\https://www.nytimes.com/2016/04/18/health/immigrants-the-poor-
and-minorities-gain-sharply-under-health-act.html?_r=0
---------------------------------------------------------------------------
Despite coverage gains from the ACA, data show that Asians,
Hispanics, Blacks, and American Indians and Alaska Natives
continue to face significant disparities in access to and
utilization of care, health status and health outcomes, and
health coverage.\25\ However, the scope and types of
disparities vary across racial and ethnic groups. The
Republican legislation would likely harm the coverage gains
made as a result of the ACA and increase barriers to care. The
motion to table the amendment was approved 23-16.
---------------------------------------------------------------------------
\25\http://kff.org/disparities-policy/report/key-facts-on-health-
and-health-care-by-race-and-ethnicity/
---------------------------------------------------------------------------
After 18 hours of debate, at almost 4:00 a.m., Congressman
Lewis offered an amendment to strike the Republican repeal and
replace reconciliation package and establish a set of
principles to develop legislation that would not harm the
American people. Congressman Lewis stated that under the
Republican legislation, ``Tax cuts for the rich, wealthy, and
corporations are the priority. The sick, the elderly, the
middle class, and working Americans are left out and left
behind. The American people cannot--must not--bear the burden.
This is not right; this is not just. You can do better; you
must do better.'' This final amendment highlighted that
Committee Republicans had rejected every single Democratic
attempt to protect and assist America's seniors and people with
disabilities and middle-class Americans who rely on employer-
sponsored insurance, Medicare and Medicaid. The amendment set
forth a set of principles where people take priority over the
rich and corporations.
In conclusion, Democrats strongly oppose the Republicans'
package of reconciliation bills. These bills decimate health
coverage for middle and lower income Americans to pay for
nearly $600 billion in tax giveaways to millionaires and
corporations.
Richard E. Neal,
Ranking Member.
COMMITTEE PRINT
Budget Reconciliation Legislative Recommendations Relating to Repeal and
Replace of Health-Related Tax Policy
Subtitle __--Repeal and Replace of Health-Related Tax Policy
SEC. _01. RECAPTURE EXCESS ADVANCE PAYMENTS OF PREMIUM TAX CREDITS.
Subparagraph (B) of section 36B(f)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
clause:
``(iii) Nonapplicability of
limitation.--This subparagraph shall
not apply to taxable years beginning
after December 31, 2017, and before
January 1, 2020.''.
SEC. _02. ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT.
(a) Modification of Definition of Qualified Health Plan.--
(1) In general.--Section 36B(c)(3)(A) of the Internal
Revenue Code of 1986 is amended--
(A) by inserting ``(determined without regard
to subparagraphs (A), (C)(ii), and (C)(iv) of
paragraph (1) thereof and without regard to
whether the plan is offered on an Exchange)''
after ``1301(a) of the Patient Protection and
Affordable Care Act'', and
(B) by striking ``shall not include'' and all
that follows and inserting ``shall not include
any health plan that--
``(i) is a grandfathered health plan
or a grandmothered health plan, or
``(ii) includes coverage for
abortions (other than any abortion
necessary to save the life of the
mother or any abortion with respect to
a pregnancy that is the result of an
act of rape or incest).''.
(2) Definition of grandmothered health plan.--Section
36B(c)(3) of such Code is amended by adding at the end
the following new subparagraph:
``(C) Grandmothered health plan.--
``(i) In general.--The term
`grandmothered health plan' means
health insurance coverage which is
offered in the individual health
insurance market as of October 1, 2013,
and is permitted to be offered in such
market after January 1, 2014, as a
result of CCIIO guidance.
``(ii) CCIIO guidance defined.--The
term `CCIIO guidance' means the letter
issued by the Centers for Medicare &
Medicaid Services on November 14, 2013,
to the State Insurance Commissioners
outlining a transitional policy for
non-grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified
(including by a communication entitled
`Insurance Standards Bulletin Series--
INFORMATION--Extension of Transitional
Policy through Calendar Year 2017'
issued on February 29, 2016, by the
Director of the Center for Consumer
Information & Insurance Oversight of
such Centers).
``(iii) Individual health insurance
market.--The term `individual health
insurance market' means the market for
health insurance coverage (as defined
in section 9832(b)) offered to
individuals other than in connection
with a group health plan (within the
meaning of section 5000(b)(1)).''.
(3) Conforming amendment related to abortion
coverage.--Section 36B(c)(3) of such Code, as amended
by paragraph (2), is amended by adding at the end the
following new subparagraph:
``(D) Certain rules related to abortion.--
``(i) Option to purchase separate
coverage or plan.--Nothing in
subparagraph (A) shall be construed as
prohibiting any individual from
purchasing separate coverage for
abortions described in such
subparagraph, or a health plan that
includes such abortions, so long as no
credit is allowed under this section
with respect to the premiums for such
coverage or plan.
``(ii) Option to offer coverage or
plan.--Nothing in subparagraph (A)
shall restrict any health insurance
issuer offering a health plan from
offering separate coverage for
abortions described in such
subparagraph, or a plan that includes
such abortions, so long as premiums for
such separate coverage or plan are not
paid for with any amount attributable
to the credit allowed under this
section (or the amount of any advance
payment of the credit under section
1412 of the Patient Protection and
Affordable Care Act).
``(iii) Other treatments.--The
treatment of any infection, injury,
disease, or disorder that has been
caused by or exacerbated by the
performance of an abortion shall not be
treated as an abortion for purposes of
subparagraph (A).''.
(4) Conforming amendments related to off-exchange
coverage.--
(A) Advance payment not applicable.--Section
1412 of the Patient Protection and Affordable
Care Act is amended by adding at the end the
following new subsection:
``(f) Exclusion of Off-Exchange Coverage.--Advance payments
under this section, and advance determinations under section
1411, with respect to any credit allowed under section 36B
shall not be made with respect to any health plan which is not
enrolled in through an Exchange.''.
(B) Reporting.--Section 6055(b) of the
Internal Revenue Code of 1986 is amended by
adding at the end the following new paragraph:
``(3) Information relating to off-exchange premium
credit eligible coverage.--If minimum essential
coverage provided to an individual under subsection (a)
consists of a qualified health plan (as defined in
section 36B(c)(3)) which is not enrolled in through an
Exchange established under title I of the Patient
Protection and Affordable Care Act, a return described
in this subsection shall include--
``(A) a statement that such plan is a
qualified health plan (as defined in section
36B(c)(3)),
``(B) the premiums paid with respect to such
coverage,
``(C) the months during which such coverage
is provided to the individual,
``(D) the adjusted monthly premium for the
applicable second lowest cost silver plan (as
defined in section 36B(b)(3)) for each such
month with respect to such individual, and
``(E) such other information as the Secretary
may prescribe.
This paragraph shall not apply with respect to coverage
provided for any month beginning after December 31,
2019.''.
(C) Other conforming amendments.--
(i) Section 36B(b)(2)(A) is amended
by striking ``and which were enrolled''
and all that follows and inserting ``,
or''.
(ii) Section 36B(b)(3)(B)(i) is
amended by striking ``the same
Exchange'' and all that follows and
inserting ``the Exchange through which
such taxpayer is permitted to obtain
coverage, and''.
(b) Modification of Applicable Percentage.--Section
36B(b)(3)(A) of such Code is amended to read as follows:
``(A) Applicable percentage.--
``(i) In general.--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 percentage to the final
percentage specified in such table for
such income tier with respect to a
taxpayer of the age involved:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``In the case of Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59
household income ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(expressed as a
percent of the
poverty line)
within the Initial % Final % Initial % Final % Initial % Final % Initial % Final % Initial % Final %
following income
tier:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Up to 133% 2............... 2............... 2............... 2.............. 2.............. 2.............. 2.............. 2.............. 2.............. 2
133%-150% 3............... 4............... 3............... 4.............. 3.............. 4.............. 3.............. 4.............. 3.............. 4
150%-200% 4............... 4.3............. 4............... 5.3............ 4.............. 6.3............ 4.............. 7.3............ 4.............. 8.3
200%-250% 4.3............. 4.3............. 5.3............. 5.9............ 6.3............ 8.05........... 7.3............ 9.............. 8.3............ 10
250%-300% 4.3............. 4.3............. 5.9............. 5.9............ 8.05........... 8.35........... 9.............. 10.5........... 10............. 11.5
300%-400% 4.3............. 4.3............. 5.9............. 5.9............ 8.35........... 8.35........... 10.5........... 10.5........... 11.5........... 11.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``(ii) Age determinations.--
``(I) In general.--For
purposes of clause (i), the age
of the taxpayer taken into
account under clause (i) with
respect to any taxable year is
the age attained by such
taxpayer before the close of
such taxable year.
``(II) Joint returns.--In the
case of a joint return, the age
of the older spouse shall be
taken into account under clause
(i).
``(iii) Indexing.--In the case of any
taxable year beginning in calendar year
2019, the initial and final percentages
contained in clause (i) shall be
adjusted to reflect--
``(I) the excess (if any) of
the rate of premium growth for
the period beginning with
calendar year 2013 and ending
with calendar year 2018, over
the rate of income growth for
such period, and
``(II) in addition to any
adjustment under subclause (I),
the excess (if any) of the rate
of premium growth for calendar
year 2018, over the rate of
growth in the consumer price
index for calendar year 2018.
``(iv) Failsafe.--Clause (iii)(II)
shall apply 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 calendar year 2018 exceeds an
amount equal to 0.504 percent of the
gross domestic product for such
calendar year.''.
(b) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall
apply to taxable years beginning after December 31,
2017.
(2) Advance payment not applicable to off-exchange
coverage.--The amendment made by subsection (a)(4)(A)
shall take effect on January 1, 2018.
(3) Reporting.--The amendment made by subsection
(a)(4)(B) shall apply to coverage provided for months
beginning after December 31, 2017.
(4) Modification of applicable percentage.--The
amendment made by subsection (b) shall apply to taxable
years beginning after December 31, 2018.
SEC. _03. PREMIUM TAX CREDIT.
(a) Repeal of Premium Tax Credit.--Section 36B of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subsection:
``(h) Termination.--No credit shall be allowed under this
section with respect to any coverage month which begins after
December 31, 2019.''.
(b) Repeal of Advance Payment of, and Eligibility
Determination for, Premium Tax Credit.--Section 1412 of the
Patient Protection and Affordable Care Act, as amended by the
preceding provisions of this subtitle, is amended by adding at
the end the following new subsection:
``(g) Termination With Respect to Premium Tax Credit.--
Effective January 1, 2020, no provision of this section or
section 1411 shall apply to the credit allowed under section
36B of the Internal Revenue Code of 1986 (or to the advance
payment of, or determination of eligibility for, such credit or
payment).''.
(c) Effective Dates.--
(1) Premium tax credit.--The amendment made by
subsection (a) shall apply to months beginning after
December 31, 2019, in taxable years ending after such
date.
(2) Eligibility determinations.--The amendment made
by subsection (b) shall take effect on January 1, 2020.
SEC. _04. SMALL BUSINESS TAX CREDIT.
(a) In General.--Section 45R of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(j) Shall Not Apply.--This section shall not apply with
respect to amounts paid or incurred in taxable years beginning
after December 31, 2019.''.
(b) Disallowance of Small Employer Health Insurance Expense
Credit for Plan Which Includes Coverage for Abortion.--
Subsection (h) of section 45R of the Internal Revenue Code of
1986 is amended--
(1) by striking ``Any term'' and inserting the
following:
``(1) In general.--Any term''; and
(2) by adding at the end the following new paragraph:
``(2) Exclusion of health plans including coverage
for abortion.--
``(A) In general.--The term `qualified health
plan' does not include any health plan that
includes coverage for abortions (other than any
abortion necessary to save the life of the
mother or any abortion with respect to a
pregnancy that is the result of an act of rape
or incest).
``(B) Certain rules related to abortion.--
``(i) Option to purchase separate
coverage or plan.--Nothing in
subparagraph (A) shall be construed as
prohibiting any employer from
purchasing for its employees separate
coverage for abortions described in
such subparagraph, or a health plan
that includes such abortions, so long
as no credit is allowed under this
section with respect to the employer
contributions for such coverage or
plan.
``(ii) Option to offer coverage or
plan.--Nothing in subparagraph (A)
shall restrict any health insurance
issuer offering a health plan from
offering separate coverage for
abortions described in such
subparagraph, or a plan that includes
such abortions, so long as such
separate coverage or plan is not paid
for with any employer contribution
eligible for the credit allowed under
this section.
``(iii) Other treatments.--The
treatment of any infection, injury,
disease, or disorder that has been
caused by or exacerbated by the
performance of an abortion shall not be
treated as an abortion for purposes of
subparagraph (A).''.
(c) Effective Dates.--
(1) In general.--The amendment made by subsection (a)
shall apply to taxable years beginning after December
31, 2019.
(2) Disallowance of small employer health insurance
expense credit for plan which includes coverage for
abortion.--The amendments made by subsection (b) shall
apply to taxable years beginning after December 31,
2017.
SEC. _05. INDIVIDUAL MANDATE.
(a) In General.--Section 5000A(c) of the Internal Revenue
Code of 1986 is amended--
(1) in paragraph (2)(B)(iii), by striking ``2.5
percent'' and inserting ``Zero percent'', and
(2) in paragraph (3)--
(A) by striking ``$695'' in subparagraph (A)
and inserting ``$0'', and
(B) by striking subparagraph (D).
(b) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2015.
SEC. _06. EMPLOYER MANDATE.
(a) In General.--
(1) Paragraph (1) of section 4980H(c) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in
the case of months beginning after December 31, 2015)''
after ``$2,000''.
(2) Paragraph (1) of section 4980H(b) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in
the case of months beginning after December 31, 2015)''
after ``$3,000''.
(b) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2015.
SEC. _07. REPEAL OF THE TAX ON EMPLOYEE HEALTH INSURANCE PREMIUMS AND
HEALTH PLAN BENEFITS.
Section 4980I of the Internal Revenue Code of 1986 is amended
by adding at the end the following new subsection:
``(h) Shall Not Apply.--No tax shall be imposed under this
section with respect to any taxable period beginning after
December 31, 2019, and before January 1, 2025.''.
SEC. _08. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS.
(a) HSAs.--Subparagraph (A) of section 223(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``Such
term'' and all that follows through the period.
(b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of
the Internal Revenue Code of 1986 is amended by striking ``Such
term'' and all that follows through the period.
(c) Health Flexible Spending Arrangements and Health
Reimbursement Arrangements.--Section 106 of the Internal
Revenue Code of 1986 is amended by striking subsection (f) and
by redesignating subsection (g) as subsection (f).
(d) Effective Dates.--
(1) Distributions from savings accounts.--The
amendments made by subsections (a) and (b) shall apply
to amounts paid with respect to taxable years beginning
after December 31, 2017.
(2) Reimbursements.--The amendment made by subsection
(c) shall apply to expenses incurred with respect to
taxable years beginning after December 31, 2017.
SEC. _09. REPEAL OF INCREASE OF TAX ON HEALTH SAVINGS ACCOUNTS.
(a) HSAs.--Section 223(f)(4)(A) of the Internal Revenue Code
of 1986 is amended by striking ``20 percent'' and inserting
``10 percent''.
(b) Archer MSAs.--Section 220(f)(4)(A) of the Internal
Revenue Code of 1986 is amended by striking ``20 percent'' and
inserting ``15 percent''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions made after December 31, 2017.
SEC. _10. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO FLEXIBLE SPENDING
ACCOUNTS.
(a) In General.--Section 125 of the Internal Revenue Code of
1986 is amended by striking subsection (i).
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. _11. REPEAL OF MEDICAL DEVICE EXCISE TAX.
Section 4191 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new subsection:
``(d) Applicability.--The tax imposed under subsection (a)
shall not apply to sales after December 31, 2017.''.
SEC. _12. REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO
MEDICARE PART D SUBSIDY.
(a) In General.--Section 139A of the Internal Revenue Code of
1986 is amended by adding at the end the following new
sentence: ``This section shall not be taken into account for
purposes of determining whether any deduction is allowable with
respect to any cost taken into account in determining such
payment.''.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. _13. REPEAL OF INCREASE IN INCOME THRESHOLD FOR DETERMINING
MEDICAL CARE DEDUCTION.
(a) In General.--Subsection (a) of section 213 of the
Internal Revenue Code of 1986 is amended by striking ``10
percent'' and inserting ``7.5 percent''.
(b) Extension of Special Rule.--Subsection (f) of section 213
of such Code is amended--
(1) by striking ``2017'' and inserting ``2018'', and
(2) by striking ``and 2016'' and inserting ``2016,
and 2017''.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a)
shall apply to taxable years beginning after December
31, 2017.
(2) Extension of special rule.--The amendments made
by subsection (b) shall apply to taxable years
beginning after December 31, 2016.
SEC. _14. REPEAL OF MEDICARE TAX INCREASE.
(a) In General.--Subsection (b) of section 3101 of the
Internal Revenue Code of 1986 is amended to read as follows:
``(b) Hospital Insurance.--In addition to the tax imposed by
the preceding subsection, there is hereby imposed on the income
of every individual a tax equal to 1.45 percent of the wages
(as defined in section 3121(a)) received by such individual
with respect to employment (as defined in section 3121(b)).''.
(b) SECA.--Subsection (b) of section 1401 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Hospital Insurance.--In addition to the tax imposed by
the preceding subsection, there shall be imposed for each
taxable year, on the self-employment income of every
individual, a tax equal to 2.9 percent of the amount of the
self-employment income for such taxable year.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to remuneration received after, and
taxable years beginning after, December 31, 2017.
SEC. _15. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COVERAGE.
(a) In General.--Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 36B the following new section:
``SEC. 36C. HEALTH INSURANCE COVERAGE.
``(a) In General.--In the case of an individual, there shall
be allowed as a credit against the tax imposed by this subtitle
for the taxable year the sum of the monthly credit amounts with
respect to such taxpayer for calendar months during such
taxable year.
``(b) Monthly Credit Amounts.--
``(1) In general.--The monthly credit amount with
respect to any taxpayer for any calendar month is the
lesser of--
``(A) the sum of the monthly limitation
amounts determined under subsection (c) with
respect to the taxpayer and the taxpayer's
qualifying family members for such month, or
``(B) the amount paid for eligible health
insurance for the taxpayer and the taxpayer's
qualifying family members for such month.
``(2) Eligible coverage month requirement.--No amount
shall be taken into account under subparagraph (A) or
(B) of paragraph (1) with respect to any individual for
any month unless such month is an eligible coverage
month with respect to such individual.
``(c) Monthly Limitation Amounts.--
``(1) In general.--The monthly limitation amount with
respect to any individual for any eligible coverage
month during any taxable year is \1/12\ of--
``(A) $2,000 in the case of an individual who
has not attained age 30 as of the beginning of
such taxable year,
``(B) $2,500 in the case of an individual who
has attained age 30 but who has not attained
age 40 as of such time,
``(C) $3,000 in the case of an individual who
has attained age 40 but who has not attained
age 50 as of such time,
``(D) $3,500 in the case of an individual who
has attained age 50 but who has not attained
age 60 as of such time, and
``(E) $4,000 in the case of an individual who
has attained age 60 as of such time.
``(2) Limitation based on modified adjusted gross
income.--
``(A) In general.--The amount otherwise
determined under subsection (b)(1)(A) (without
regard to this subparagraph but after any other
adjustment of such amount under this section)
for the taxable year shall be reduced (but not
below zero) by 10 percent of the excess (if
any) of--
``(i) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(ii) $75,000 (twice such amount in
the case of a joint return).
``(B) Modified adjusted gross income.--For
purposes of this paragraph, 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) Other limitations.--
``(A) Aggregate dollar limitation.--The sum
of the monthly limitation amounts taken into
account under this section with respect to any
taxpayer for any taxable year shall not exceed
$14,000.
``(B) Maximum number of individuals taken
into account.--With respect to any taxpayer for
any month, monthly limitation amounts shall be
taken into account under this section only with
respect to the 5 oldest individuals with
respect to whom monthly limitation amounts
could (without regard to this subparagraph)
otherwise be so taken into account.
``(d) Eligible Coverage Month.--For purposes of this section,
the term `eligible coverage month' means, with respect to any
individual, any month if, as of the first day of such month,
the individual--
``(1) is covered by eligible health insurance,
``(2) is not eligible for other specified coverage,
``(3) is either--
``(A) a citizen or national of the United
States, or
``(B) a qualified alien (within the meaning
of section 431 of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1641)), and
``(4) is not incarcerated, other than incarceration
pending the disposition of charges.
``(e) Qualifying Family Member.--For purposes of this
section, the term `qualifying family member' means--
``(1) in the case of a joint return, the taxpayer's
spouse,
``(2) any dependent of the taxpayer, and
``(3) with respect to any eligible coverage month,
any child (as defined in section 152(f)(1)) of the
taxpayer who as of the end of the taxable year has not
attained age 27 if such child is covered for such month
under eligible health insurance which also covers the
taxpayer (in the case of a joint return, either
spouse).
``(f) Eligible Health Insurance.--For purposes of this
section--
``(1) In general.--The term `eligible health
insurance' means any health insurance coverage (as
defined in section 9832(b)) if--
``(A) such coverage is either--
``(i) offered in the individual
health insurance market within a State,
or
``(ii) is unsubsidized COBRA
continuation coverage,
``(B) such coverage is not a grandfathered
health plan (as defined in section 1251 of the
Patient Protection and Affordable Care Act) or
a grandmothered health plan,
``(C) substantially all of such coverage is
not of excepted benefits described in section
9832(c),
``(D) such coverage does not include coverage
for abortions (other than any abortion
necessary to save the life of the mother or any
abortion with respect to a pregnancy that is
the result of an act of rape or incest),
``(E) such coverage does not consist of
short-term limited duration insurance (as
defined by the Secretary), and
``(F) the State in which such insurance is
offered certifies that such coverage meets the
requirements of this paragraph.
``(2) Rules related to state certification.--
``(A) Certification made available to
public.--A certification shall not be taken
into account under paragraph (1)(E) unless such
certification is made available to the public
and meets such other requirements as the
Secretary may provide.
``(B) Special rule for unsubsidized cobra
continuation coverage.--In the case of
unsubsidized COBRA continuation coverage--
``(i) paragraph (1)(E) shall be
applied by substituting `the plan
administrator (as defined in section
414(g)) of the health plan' for `the
State in which such insurance is
offered', and
``(ii) the requirements of
subparagraph (A) shall be treated as
satisfied if the certification meets
such requirements as the Secretary may
provide.
``(3) Grandmothered health plan.--
``(A) In general.--The term `grandmothered
health plan' means health insurance coverage
which is offered in the individual health
insurance market as of January 1, 2013, and is
permitted to be offered in such market after
January 1, 2014, as a result of CCIIO guidance.
``(B) CCIIO guidance defined.--The term
`CCIIO guidance' means the letter issued by the
Centers for Medicare & Medicaid Services on
November 14, 2013, to the State Insurance
Commissioners outlining a transitional policy
for non-grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified (including
by a communication entitled `Insurance
Standards Bulletin Series--INFORMATION--
Extension of Transitional Policy through
Calendar Year 2017' issued on February 29,
2016, by the Director of the Center for
Consumer Information & Insurance Oversight of
such Centers).
``(4) Individual health insurance market.--The term
`individual health insurance market' means the market
for health insurance coverage (as defined in section
9832(b)) offered to individuals other than in
connection with a group health plan (within the meaning
of section 5000(b)(1)).
``(g) Other Specified Coverage.--For purposes of this
section--
``(1) In general.--The term `other specified
coverage' means any of the following:
``(A) Coverage under a group health plan
(within the meaning of section 5000(b)(1))
other than--
``(i) coverage under a plan
substantially all of the coverage of
which is of excepted benefits described
in section 9832(c), and
``(ii) COBRA continuation coverage.
``(B) Coverage under the Medicare program
under part A of title XVIII of the Social
Security Act.
``(C) Coverage under the Medicaid program
under title XIX of the Social Security Act.
``(D) Coverage under the CHIP program under
title XXI of the Social Security Act.
``(E) Medical coverage under chapter 55 of
title 10, United States Code, including
coverage under the TRICARE program.
``(F) Coverage under a health care program
under chapter 17 or 18 of title 38, United
States Code, as determined by the Secretary of
Veterans Affairs, in coordination with the
Secretary of Health and Human Services and the
Secretary of the Treasury.
``(G) Coverage under a health plan under
section 2504(e) of title 22, United States Code
(relating to Peace Corps volunteers).
``(H) Coverage under the Nonappropriated Fund
Health Benefits Program of the Department of
Defense, established under section 349 of the
National Defense Authorization Act for Fiscal
Year 1995 (Public Law 103-337; 10 U.S.C. 1587
note).
``(2) Special rule with respect to veterans health
programs.--In the case of other specified coverage
described in paragraph (1)(F), an individual shall not
be treated as eligible for such coverage unless such
individual is enrolled in such coverage.
``(h) Unsubsidized COBRA Continuation Coverage.--For purposes
of this section--
``(1) In general.--The term `unsubsidized COBRA
continuation coverage' means COBRA continuation
coverage no portion of the premiums for which are
subsidized by the employer.
``(2) COBRA continuation coverage.--The term `COBRA
continuation coverage' means continuation coverage
provided pursuant to part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974
(other than under section 609), title XXII of the
Public Health Service Act, section 4980B of the
Internal Revenue Code of 1986 (other than subsection
(f)(1) of such section insofar as it relates to
pediatric vaccines), or section 8905a of title 5,
United States Code, or under a State program that
provides comparable continuation coverage. Such term
shall not include coverage under a health flexible
spending arrangement.
``(i) Special Rules.--
``(1) Married couples must file joint return.--If the
taxpayer is married (within the meaning of section
7703) at the close of the taxable year, no credit shall
be allowed under this section to such taxpayer unless
such taxpayer and the taxpayer's spouse file a joint
return for such taxable year.
``(2) Denial of credit to dependents.--
``(A) In general.--No credit shall be allowed
under this section to any individual who is a
dependent with respect to another taxpayer for
a taxable year beginning in the calendar year
in which such individual's taxable year begins.
``(B) Coordination with rule for older
children.--In the case of any individual who is
a qualifying family member described in
subsection (e)(3) with respect to another
taxpayer for any month, in determining the
amount of any credit allowable to such
individual under this section for any taxable
year of such individual which includes such
month, the monthly limitation amount with
respect to such individual for such month shall
be zero and no amount paid for eligible health
insurance with respect to such individual for
such month shall be taken into account.
``(3) Coordination with medical expense deduction.--
Amounts described in subsection (b)(1)(B) with respect
to any month shall not be taken into account in
determining the deduction allowed under section 213
except to the extent that such amounts exceed the
amount described in subsection (b)(1)(A) with respect
to such month.
``(4) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any
contract for eligible health insurance under which
amounts are payable for coverage of an individual other
than the taxpayer and the taxpayer's qualifying family
members.
``(5) Coordination with advance payments of credit.--
With respect to any taxable year--
``(A) the amount which would (but for this
subsection) be allowed as a credit to the
taxpayer under subsection (a) shall be reduced
(but not below zero) by the aggregate amount
paid on behalf of such taxpayer under section
7529 for months beginning in such taxable year,
and
``(B) the tax imposed by section 1 for such
taxable year shall be increased by the excess
(if any) of--
``(i) the aggregate amount paid on
behalf of such taxpayer under section
7529 for months beginning in such
taxable year, over
``(ii) the amount which would (but
for this subsection) be allowed as a
credit to the taxpayer under subsection
(a).
``(6) Special rules for qualified small employer
health reimbursement arrangements.--
``(A) In general.--If the taxpayer or any
qualifying family member of the taxpayer is
provided a qualified small employer health
reimbursement arrangement for any eligible
coverage month, the sum determined under
subsection (b)(1)(A) with respect to the
taxpayer for such month shall be reduced (but
not below zero) by \1/12\ of the permitted
benefit (as defined in section 9831(d)(3)(C))
under such arrangement.
``(B) 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).
``(C) 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 (A) shall be applied by
substituting `the number of months during the
year for which such arrangement was provided'
for `12'.
``(7) Certain rules related to abortion.--
``(A) Option to purchase separate coverage or
plan.--Nothing in subsection (f)(1)(D) shall be
construed as prohibiting any individual from
purchasing separate coverage for abortions
described in such subparagraph, or a health
plan that includes such abortions, so long as
no credit is allowed under this section with
respect to the premiums for such coverage or
plan.
``(B) Option to offer coverage or plan.--
Nothing in subsection (f)(1)(D) shall restrict
any health insurance issuer offering a health
plan from offering separate coverage for
abortions described in such clause, or a plan
that includes such abortions, so long as
premiums for such separate coverage or plan are
not paid for with any amount attributable to
the credit allowed under this section.
``(C) Other treatments.--The treatment of any
infection, injury, disease, or disorder that
has been caused by or exacerbated by the
performance of an abortion shall not be treated
as an abortion for purposes of subsection
(f)(1)(D).
``(8) Inflation adjustment.--
``(A) In general.--In the case of any taxable
year beginning in a calendar year after 2020,
each dollar amount in subsection (c)(1), the
$75,000 amount in subsection (c)(2)(A)(ii), and
the dollar amount in subsection (c)(3)(A),
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--
``(I) by substituting
`calendar year 2019' for
`calendar year 1992' in
subparagraph (B) thereof, and
``(II) by substituting for
the CPI referred to section
1(f)(3)(A) the amount that such
CPI would have been if the
annual percentage increase in
CPI with respect to each year
after 2019 had been one
percentage point greater.
``(B) Terms related to cpi.--
``(i) Annual percentage increase.--
For purposes of subparagraph
(A)(ii)(II), the term `annual
percentage increase' means the
percentage (if any) by which CPI for
any year exceeds CPI for the prior
year.
``(ii) Other terms.--Terms used in
this paragraph which are also used in
section 1(f)(3) shall have the same
meanings as when used in such section.
``(C) Rounding.--Any increase determined
under subparagraph (A) shall be rounded to the
nearest multiple of $50.
``(9) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section, section 6050X,
and section 7529.''.
(b) Advance Payment of Credit; Excess Health Insurance
Coverage Credit Payable to Health Savings Account.--Chapter 77
of such Code is amended by adding at the end the following:
``SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE COVERAGE CREDIT.
``(a) General Rule.--Not later than January 1, 2020, the
Secretary, in consultation with the Secretary of Health and
Human Services, the Secretary of Homeland Security, and the
Commissioner of Social Security, shall establish a program
(hereafter in this section referred to as the `advance payment
program') for making payments to providers of eligible health
insurance on behalf of taxpayers eligible for the credit under
section 36C.
``(b) Limitation.--The aggregate payments made under this
section with respect to any taxpayer, determined as of any time
during any calendar year, shall not exceed the monthly credit
amounts determined with respect to such taxpayer under section
36C for months during such calendar year which have ended as of
such time.
``(c) Administration.--
``(1) In general.--The advance payment program shall,
to the greatest extent practicable, use the methods and
procedures used to administer the programs created
under sections 1411 and 1412 of the Patient Protection
and Affordable Care Act (determined without regard to
section 1412(f) of such Act) and each entity that is
authorized to take any actions under the programs
created under such sections (as so determined) shall,
at the request of the Secretary, take such actions to
the extent necessary to carry out this section.
``(2) Application to off-exchange coverage.--Except
as otherwise provided by the Secretary, for purposes of
applying this subsection in the case of eligible health
insurance which is not enrolled in through an Exchange
established under title I of the Patient Protection and
Affordable Care Act, the sections referred to in
paragraph (1) shall be applied by treating references
in such sections to an Exchange as references to the
provider of such eligible health insurance (or, as the
Secretary determines appropriate, to the licensed agent
or broker with respect to such insurance), except that
the Secretary of Health and Human Services shall carry
out the responsibilities of the Exchange under section
1411(e)(4) of the Patient Protection and Affordable
Care Act (determined without regard to section 1412(f)
of such Act) in the case of such insurance.
``(3) Documentation regarding other specified
coverage.--
``(A) In general.--The advance payment
program shall provide that any individual
applying to have payments made on their behalf
under such program shall, if such individual
(or any qualifying family member of such
individual taken into account in determining
the amount of the credit allowable under
section 36C) is employed, submit a written
statement from each employer of such individual
or such qualifying family member stating
whether such individual or qualifying family
member (as the case may be) is eligible for
other specified coverage in connection with
such employment.
``(B) Issuance of statements.--An employer
shall, at the request of any employee, provide
the statement under subparagraph (A) at such
time, and in such form and manner, as the
Secretary may provide.
``(d) Definitions.--For purposes of this section, terms used
in this section which are also used in section 36C shall have
the same meaning as when used in section 36C.
``SEC. 7530. EXCESS HEALTH INSURANCE COVERAGE CREDIT PAYABLE TO HEALTH
SAVINGS ACCOUNT.
``(a) In General.--At the request of an eligible taxpayer,
the Secretary shall make a payment to the trustee of the
designated health savings account with respect to such taxpayer
in an amount equal to the sum of the excesses (if any)
described in subsection (c)(2) with respect to months in the
taxable year.
``(b) Designated Health Savings Account.--The term
`designated health savings account' means a health savings
account of an individual described in subsection (c)(3) which
is identified by the eligible taxpayer for purposes of this
section.
``(c) Eligible Taxpayer.--The term `eligible taxpayer' means,
with respect to any taxable year, any taxpayer if--
``(1) such taxpayer is allowed a credit under section
36C for such taxable year,
``(2) the amount described in subparagraph (A) of
section 36C(b)(1) exceeds the amount described in
subparagraph (B) of such section with respect to such
taxpayer applied with respect to any month during such
taxable year, and
``(3) the taxpayer or one or more of the taxpayer's
qualifying family members (as defined in section
36C(e)) were eligible individuals (as defined in
section 223(c)(1)) for one or more months during such
taxable year.
``(d) Contributions Treated as Rollovers, etc.--
``(1) In general.--Any amount paid the Secretary to a
health savings account under this section shall be
treated for purposes of this title in the same manner
as a rollover contribution described in section
223(f)(5).
``(2) Coordination with limitation on rollovers.--Any
amount described in paragraph (1) shall not be taken
into account in applying section 223(f)(5)(B) with
respect to any other amount and the limitation of
section 223(f)(5)(B) shall not apply with respect to
the application of paragraph (1).
``(e) Form and Manner of Request.--The request referred to in
subsection (a) shall be made at such time and in such form and
manner as the Secretary may provide. To the extent that the
Secretary determines feasible, such request may identify more
than one designated health savings account (and the amount to
be paid to each such account) provided that the aggregate of
such payments with respect to any taxpayer for any taxable year
do not exceed the excess described in subsection (c)(2).
``(f) Taxpayers With Seriously Delinquent Tax Debt.--In the
case of an individual who has a seriously delinquent tax debt
(as defined in section 7345(b)) which has not been fully
satisfied--
``(1) if such individual is the eligible taxpayer
(or, in the case of a joint return, either spouse), the
Secretary shall not make any payment under this section
with respect to such taxpayer, and
``(2) if such individual is the account beneficiary
(as defined in section 223(d)(3)) of any health savings
account, the Secretary shall not make any payment under
this section to such health savings account.
``(g) Advance Payment.--To the extent that the Secretary
determines feasible, payment under this section may be made in
advance on a monthly basis under rules similar to the rules of
sections 7529 and 36C(i)(5)(B).''.
(c) Information Reporting.--
(1) Reporting by health insurance providers.--Subpart
B of part III of subchapter A of chapter 61 of such
Code is amended by adding at the end the following new
section:
``SEC. 6050X. RETURNS BY HEALTH INSURANCE PROVIDERS RELATING TO HEALTH
INSURANCE COVERAGE CREDIT.
``(a) Requirement of Reporting.--Every person who provides
eligible health insurance for any month of any calendar year
with respect to any individual shall, at such time as the
Secretary may prescribe, make the return described in
subsection (b) with respect to each such individual. With
respect to any individual with respect to whom payments under
section 7529 are made by the Secretary, the reporting under
subsection (b) shall be made on a monthly basis.
``(b) Form and Manner of Returns.--A return is described in
this subsection if such return--
``(1) is in such form as the Secretary may prescribe,
and
``(2) contains, with respect to each policy of
eligible health insurance--
``(A) the name, address, and TIN of each
individual covered under such policy,
``(B) the premiums paid with respect to such
policy,
``(C) the amount of advance payments made on
behalf of the individual under section 7529,
``(D) the months during which such health
insurance is provided to the individual,
``(E) whether such policy constitutes a high
deductible health plan (as defined in section
223(c)(2)), and
``(F) such other information as the Secretary
may prescribe.
``(c) Statements to Be Furnished to Individuals With Respect
to Whom Information Is Required.--Every person required to make
a return under subsection (a) shall furnish to each individual
whose name is required to be set forth in such return a written
statement showing--
``(1) the name and address of the person required to
make such return and the phone number of the
information contact for such person, and
``(2) the information required to be shown on the
return with respect to such individual.
The written statement required under the preceding sentence
shall be furnished on or before January 31 of the year
following the calendar year to which such statement relates.
``(d) Definitions.--For purposes of this section, terms used
in this section which are also used in section 36C shall have
the same meaning as when used in section 36C.''.
(2) Reporting by employers.--Section 6051(a) of such
Code is amended by striking ``and'' at the end of
paragraph (14), by striking the period at the end of
paragraph (15) and inserting ``, and'', and by
inserting after paragraph (15) the following new
paragraph:
``(16) each month with respect to which the employee
is eligible for other specified coverage (as defined in
section 36C(g)) in connection with employment with the
employer.''.
(3) Assessable penalties.--
(A) Section 6724(d)(1)(B) of such Code is
amended by striking ``or'' at the end of clause
(xxiv), by inserting ``or'' at the end of
clause (xxv), and by inserting after clause
(xxv) the following new clause:
``(xxvi) section 6050X (relating to
returns relating to health insurance
coverage credit),''.
(B) Section 6724(d)(2) of such Code is
amended by striking ``or'' at the end of
subparagraph (HH), by striking the period at
the end of subparagraph (II) and inserting a
comma, and by adding after subparagraph (II)
the following new subparagraphs:
``(JJ) section 6050X (relating to returns
relating to health insurance coverage credit),
or
``(KK) section 7529(c)(3) (relating to
documentation regarding other specified
coverage).''.
(d) Disclosures.--Paragraph (21) of section 6103(l) of the
Internal Revenue Code of 1986 is amended--
(1) in subparagraph (A)--
(A) by striking ``any premium tax credit
under section 36B or any cost-sharing reduction
under section 1402 of the Patient Protection
and Affordable Care Act or'' and inserting
``any credit under section 36C'',
(B) by striking ``, a State's children's
health insurance program under title XXI of the
Social Security Act, or a basic health program
under section 1331 of Patient Protection and
Affordable Care Act'' and inserting ``or a
State's children's health insurance program
under title XXI of the Social Security Act'',
(C) by striking ``(as defined in section
36B)'' in clause (iv) and inserting ``(as
defined in section 36C(c)(2)(B))'', and
(D) by striking ``or reduction'' in clause
(v),
(2) in subparagraph (B)--
(A) by striking ``may disclose to an
Exchange'' and inserting ``may disclose--
``(i) to an Exchange'', and
(B) by striking the period at the end and
inserting ``, and'', and
(C) by adding at the end the following new
clause:
``(ii) in the case of any credit
under section 36C with respect to any
health insurance, the amount of such
credit (or the amount of any advance
payment of such credit) to the provider
of such insurance (or, as the Secretary
determines appropriate, the licensed
agent or broker with respect to such
insurance).'', and
(3) in subparagraph (C)(i), by striking ``amount of,
any credit or reduction'' and inserting ``amount of any
credit''.
(e) Increased Penalty on Erroneous Claims of Credit.--Section
6676(a) of such Code is amended by inserting ``(25 percent in
the case of a claim for refund or credit relating to the health
insurance coverage credit under section 36C)'' after ``20
percent''.
(f) Conforming Amendments.--
(1) Section 35(g) of such Code is amended by adding
at the end the following new paragraph:
``(14) Coordination with health insurance coverage
credit.--
``(A) In general.--An eligible coverage month
to which the election under paragraph (11)
applies shall not be treated as an eligible
coverage month (as defined in section 36C(d))
for purposes of section 36C with respect to the
taxpayer or any of the taxpayer's qualifying
family members (as defined in section 36C(e)).
``(B) Coordination with advance payments of
health insurance coverage credit.--In the case
of a taxpayer who makes the election under
paragraph (11) with respect to any eligible
coverage month in a taxable year or on behalf
of whom any advance payment is made under
section 7527 with respect to any month in such
taxable year--
``(i) the tax imposed by this chapter
for the taxable year shall be increased
by the excess, if any, of--
``(I) the sum of any advance
payments made on behalf of the
taxpayer under sections 7527
and 7529 for months during such
taxable year, over
``(II) the sum of the credits
allowed under this section
(determined without regard to
paragraph (1)) and section 36C
(determined without regard to
subsection (i)(5)(A) thereof)
for such taxable year, and
``(ii) section 36C(i)(5)(B) shall not
apply with respect to such taxpayer for
such taxable year.''.
(2) Section 162(l) of such Code is amended by adding
at the end the following new paragraph:
``(6) Coordination with health insurance coverage
credit.--The deduction otherwise allowable to a
taxpayer under paragraph (1) for any taxable year shall
be reduced (but not below zero) by the sum of--
``(A) the amount of the credit allowable to
such taxpayer under section 36C (determined
without regard to subsection (i)(5)(A) thereof)
for such taxable year, plus
``(B) the aggregate payments made with
respect to the taxpayer under section 7530 for
months during such taxable year.''.
(3) Section 1324(b)(2) of title 31, United States
Code is amended--
(A) by inserting ``36C,'' after ``36B,'', and
(B) by striking ``or 6431'' and inserting
``6431, or 7530''.
(4) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code
of 1986 is amended by inserting after the item relating
to section 36B the following new item:
``Sec. 36C. Health insurance coverage.''.
(5) The table of sections for subpart B of part III
of subchapter A of chapter 61 of such Code is amended
by adding at the end the following new item:
``Sec. 6050X. Returns by health insurance providers relating to health
insurance coverage credit.''.
(6) The table of sections for chapter 77 of such Code
is amended by adding at the end the following new
items:
``Sec. 7529. Advance payment of health insurance coverage credit.
``Sec. 7530. Excess health insurance coverage credit payable to health
savings account.''.
(g) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2019, in
taxable years ending after such date.
SEC. _16. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT
INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET
LIMITATION.
(a) Self-Only Coverage.--Section 223(b)(2)(A) of the Internal
Revenue Code of 1986 is amended by striking ``$2,250'' and
inserting ``the amount in effect under subsection
(c)(2)(A)(ii)(I)''.
(b) Family Coverage.--Section 223(b)(2)(B) of such Code is
amended by striking ``$4,500'' and inserting ``the amount in
effect under subsection (c)(2)(A)(ii)(II)''.
(c) Conforming Amendments.--Section 223(g)(1) of such Code is
amended--
(1) by striking ``subsections (b)(2) and'' both
places it appears and inserting ``subsection'', and
(2) in subparagraph (B), by striking ``determined
by'' and all that follows through ```calendar year
2003'.'' and inserting ``determined by substituting
`calendar year 2003' for `calendar year 1992' in
subparagraph (B) thereof .''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2017.
SEC. _17. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME
HEALTH SAVINGS ACCOUNT.
(a) In General.--Section 223(b)(5) of the Internal Revenue
Code of 1986 is amended to read as follows:
``(5) Special rule for married individuals with
family coverage.--
``(A) In general.--In the case of individuals
who are married to each other, if both spouses
are eligible individuals and either spouse has
family coverage under a high deductible health
plan as of the first day of any month--
``(i) the limitation under paragraph
(1) shall be applied by not taking into
account any other high deductible
health plan coverage of either spouse
(and if such spouses both have family
coverage under separate high deductible
health plans, only one such coverage
shall be taken into account),
``(ii) such limitation (after
application of clause (i)) shall be
reduced by the aggregate amount paid to
Archer MSAs of such spouses for the
taxable year, and
``(iii) such limitation (after
application of clauses (i) and (ii))
shall be divided equally between such
spouses unless they agree on a
different division.
``(B) Treatment of additional contribution
amounts.--If both spouses referred to in
subparagraph (A) have attained age 55 before
the close of the taxable year, the limitation
referred to in subparagraph (A)(iii) which is
subject to division between the spouses shall
include the additional contribution amounts
determined under paragraph (3) for both
spouses. In any other case, any additional
contribution amount determined under paragraph
(3) shall not be taken into account under
subparagraph (A)(iii) and shall not be subject
to division between the spouses.''.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. _18. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.
(a) In General.--Section 223(d)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:
``(D) Treatment of certain medical expenses
incurred before establishment of account.--If a
health savings account is established during
the 60-day period beginning on the date that
coverage of the account beneficiary under a
high deductible health plan begins, then,
solely for purposes of determining whether an
amount paid is used for a qualified medical
expense, such account shall be treated as
having been established on the date that such
coverage begins.''.
(b) Effective Date.--The amendment made by this section shall
apply with respect to coverage beginning after December 31,
2017.
CONTENTS
Page
SUBTITLE [B]--REPEAL OF CERTAIN CONSUMER TAXES................... 454
I. SUMMARY AND BACKGROUND.........................................454
II. EXPLANATION OF PROVISIONS......................................455
III. VOTES OF THE COMMITTEE.........................................458
IV. BUDGET EFFECTS OF THE PROVISIONS...............................459
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.....461
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED....................463
VII. DISSENTING VIEWS...............................................464
SUBTITLE [B]--REPEAL OF CERTAIN CONSUMER TAXES
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
In fulfillment of the reconciliation instructions included
in section 2002 of the Concurrent Resolution on the Budget for
Fiscal Year 2017 (S. Con. Res. 3), the Committee on Ways and
Means ordered favorably transmitted (with a quorum being
present) the Budget Reconciliation Legislative Recommendations
Relating to Repeal of Certain Consumer Taxes. The Committee
recommends repeal of the tax on branded prescription
pharmaceutical manufacturers and importers and the health
insurance provider tax imposed by the Patient Protection and
Affordable Care Act of 2010 (``PPACA''), Pub. L. No. 111-148
(March 23, 2010), as amended by the Health Care and Education
Reconciliation Act of 2010 (``HCERA''), Pub. L. No. 111-152
(March 30, 2010).\1\
---------------------------------------------------------------------------
\1\PPACA and HCERA are collectively referred to as the Affordable
Care Act (``ACA'').
---------------------------------------------------------------------------
B. Background and Need for Legislation
In the Committee's pursuit of comprehensive health care
reform to relieve unnecessary burdens on insurance markets, the
broader economy, and taxpayers in need of access to quality
health care, the Committee wishes to provide relief from taxes
imposing excessive constraints on choice and innovation. The
Committee believes that repeal of the tax on branded
prescription pharmaceutical manufacturers and importers and the
health insurance provider tax will further these goals.
C. Legislative History
Budget resolution
On January 13, 2017, the House of Representatives approved
S. Con. Res. 3, the budget resolution for fiscal year 2017.
Pursuant to section 2002(a)(3) of S. Con. Res. 3, the Committee
on Ways and Means was directed to submit to the Committee on
the Budget recommendations for changes in law within the
jurisdiction of the Committee on Ways and Means sufficient to
reduce the deficit by $1,000,000,000 for the period of fiscal
years 2017 through 2026.
Committee action
Beginning on March 8, 2017, in response to its instructions
under the budget resolution, the Committee on Ways and Means
marked up the budget reconciliation legislative recommendations
relating to repeal of the tax on branded prescription
pharmaceutical manufacturers and importers and the health
insurance provider tax and ordered the legislative
recommendations, as amended, favorably transmitted (with a
quorum being present) on March 9, 2017.
Committee hearings
The Committee on Ways and Means held hearings regarding the
President's Fiscal Year 2017 budget submission on February 11,
2016, and February 10, 2016 with Secretary of the Treasury
Jacob J. Lew and Secretary of Health and Human Services Sylvia
Burwell, respectively, in which the harmful effects of ACA
taxes were discussed. Moreover, the Oversight Subcommittee held
a hearing on March 5, 2013, discussing the tax-related
provisions of the ACA.
II. EXPLANATION OF PROVISIONS
A. Repeal of Annual Fee on Branded Prescription Pharmaceutical
Manufacturers and Importers (sec. _01 of the committee print and sec.
9008 of PPACA)
PRESENT LAW
An annual fee is imposed on covered entities engaged in the
business of manufacturing or importing branded prescription
drugs for sale to any specified government program or pursuant
to coverage under any such program.\2\ Fees collected are
credited to the Medicare Part B trust fund.
---------------------------------------------------------------------------
\2\Sec. 9008 of PPACA, as amended.
---------------------------------------------------------------------------
The aggregate annual fee imposed on all covered entities is
$4 billion for calendar year 2017, $4.1 billion for calendar
year 2018, and $2.8 billion for calendar year 2019 and
thereafter. The aggregate fee is apportioned among the covered
entities each year based on their relative share of branded
prescription drug sales taken into account during the previous
calendar year.
A covered entity's relative market share for a calendar
year is the entity's branded prescription drug sales taken into
account during the preceding calendar year as a percentage of
the aggregate branded prescription drug sales of all covered
entities taken into account during the preceding calendar year.
Sales taken into account during any calendar year with respect
to a covered entity are: (1) zero percent of sales not more
than $5 million; (2) 10 percent of sales over $5 million but
not more than $125 million; (3) 40 percent of sales over $125
million but not more than $225 million; (4) 75 percent of sales
over $225 million but not more than $400 million; and (5) 100
percent of sales over $400 million.
A covered entity is any manufacturer or importer with gross
receipts from branded prescription drug sales. All persons
treated as a single employer under section 52(a) or (b) or
under section 414(m) or (o) are treated as a single covered
entity. In applying the single employer rules under 52(a) and
(b), foreign corporations are not excluded. If more than one
person is liable for payment of the fee, all such persons are
jointly and severally liable for payment of such fee.
Branded prescription drug sales are sales of branded
prescription drugs made to any specified government program, or
pursuant to coverage under any such program. The term branded
prescription drugs includes any drug which is subject to
section 503(b) of the Federal Food, Drug, and Cosmetic Act and
for which an application was submitted under section 351(a) of
such Act. Branded prescription drug sales do not include sales
of any drug or biological product with respect to which an
orphan drug tax credit was allowed for any taxable year under
section 45C. The exclusion for orphan drug sales does not apply
to any drug or biological product after such drug or biological
product is approved by the Food and Drug Administration for
marketing for any indication other than the rare disease or
condition with respect to which the section 45C credit was
allowed.
Specified government programs include: (1) the Medicare
Part D program under part D of title XVIII of the Social
Security Act; (2) the Medicare Part B program under part B of
title XVIII of the Social Security Act; (3) the Medicaid
program under title XIX of the Social Security Act; (4) any
program under which branded prescription drugs are procured by
the Department of Veterans Affairs; (5) any program under which
branded prescription drugs are procured by the Department of
Defense; or (6) the TRICARE retail pharmacy program under
section 1074g of title 10, United States Code.
The fees are treated in the same manner as those excise
taxes identified in subtitle F, ``Procedure and
Administration'' for which the only avenue for judicial review
is a civil action for refund. Thus, the fees may be assessed
and collected using the procedures in subtitle F without regard
to the restrictions on assessment in section 6213.
The fee is required to be paid no later than an annual
payment date determined by the Secretary of the Treasury, but
in no event later than September 30th each calendar year.
For purposes of section 275, relating to the
nondeductibility of specified taxes, the fee is considered to
be a nondeductible tax described in section 275(a)(6).
REASONS FOR CHANGE
The U.S. pharmaceutical industry is a leader in innovation.
The industry is an important contributor to the nation's
economy, employing thousands of people and manufacturing
pharmaceutical drugs both for the U.S. and foreign markets. The
Committee believes that the annual fee on branded prescription
pharmaceutical manufacturers and importers adversely affects
the industry. The Committee believes that repealing the annual
fee on branded prescription pharmaceutical manufacturers and
importers will decrease the cost of healthcare.
EXPLANATION OF PROVISION
Under the provision, the annual fee on branded prescription
pharmaceutical manufacturers and importers applies for calendar
years ending before 2018. Thus, the annual fee does not apply
for any calendar year beginning after 2017.
EFFECTIVE DATE
The provision is effective upon enactment.
B. Repeal of Annual Fee on Health Insurance Providers (sec. _02 of the
committee print and sec. 9010 of PPACA)
PRESENT LAW
An annual fee applies to any covered entity engaged in the
business of providing health insurance with respect to United
States (``U.S.'') health risks.\3\ The aggregate annual fee for
all covered entities is the applicable amount. The applicable
amount is $8 billion for calendar year 2014, $11.3 billion for
calendar years 2015 and 2016, $13.9 billion for calendar year
2017, and $14.3 billion for calendar year 2018. However, a one-
year moratorium applies to the annual fee on health insurance
providers for calendar year 2017. For calendar years after
2018, the applicable amount is indexed to the rate of premium
growth.
---------------------------------------------------------------------------
\3\Sec. 9010 of PPACA.
---------------------------------------------------------------------------
The aggregate annual fee is apportioned among the providers
based on a ratio designed to reflect relative market share of
U.S. health insurance business. For each covered entity, the
fee for a calendar year is an amount that bears the same ratio
to the applicable amount as (1) the covered entity's net
premiums written during the preceding calendar year with
respect to health insurance for any U.S. health risk, bears to
(2) the aggregate net written premiums of all covered entities
during such preceding calendar year with respect to such health
insurance.
REASONS FOR CHANGE
The Committee understands that the annual fee on health
insurance providers is passed through to a large extent by
insurers to consumers in the form of higher health insurance
premiums. Consumers may bear this burden by paying a higher
price for the breadth of health coverage they would prefer, or
by selecting more restricted health coverage for a lower price.
The Committee believes that health insurance premiums will be
reduced in the absence of the health insurer fee, and
therefore, the bill terminates the annual fee on health
insurance providers.
EXPLANATION OF PROVISION
Under the provision, the annual fee on health insurance
providers applies only for calendar years beginning after 2013
and before 2017. Thus, the annual fee does not apply for any
calendar year beginning after 2016.
EFFECTIVE DATE
The provision is effective upon enactment.
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 the Reconciliation Legislative Recommendations
Relating to Repeal of Certain Consumer Taxes on March 8, 2017.
The vote on the amendment by Mr. Blumenauer to the
amendment in the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
of Certain Consumer Taxes, which would strike the repeal of the
pharmaceutical company fee and transfer the revenues to the
Federal Supplemental Medical Insurance trust fund, was not
agreed to by a roll call vote of 24 nays to 16 yeas (with a
quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady........................ ....... X ......... Mr. Neal........... X ....... .........
Mr. Johnson...................... ....... X ......... Mr. Levin.......... X ....... .........
Mr. Nunes........................ ....... X ......... Mr. Lewis.......... X ....... .........
Mr. Tiberi....................... ....... X ......... Mr. Doggett........ X ....... .........
Mr. Reichert..................... ....... X ......... Mr. Thompson....... X ....... .........
Mr. Roskam....................... ....... X ......... Mr. Larson......... X ....... .........
Mr. Buchanan..................... ....... X ......... Mr. Blumenauer..... X ....... .........
Mr. Smith (NE)................... ....... X ......... Mr. Kind........... X ....... .........
Ms. Jenkins...................... ....... X ......... Mr. Pascrell....... X ....... .........
Mr. Paulsen...................... ....... X ......... Mr. Crowley........ X ....... .........
Mr. Marchant..................... ....... X ......... Mr. Davis.......... X ....... .........
Ms. Black........................ ....... X ......... Ms. Sanchez........ X ....... .........
Mr. Reed......................... ....... X ......... Mr. Higgins........ X ....... .........
Mr. Kelly........................ ....... X ......... Ms. Sewell......... X ....... .........
Mr. Renacci...................... ....... X ......... Ms. DelBene........ X ....... .........
Mr. Meehan....................... ....... X ......... Ms. Chu............ X ....... .........
Ms. Noem......................... ....... X .........
Mr. Holding...................... ....... X .........
Mr. Smith (MO)................... ....... X .........
Mr. Rice......................... ....... X .........
Mr. Schweikert................... ....... X .........
Ms. Walorski..................... ....... X .........
Mr. Curbelo...................... ....... X .........
Mr. Bishop....................... ....... X .........
----------------------------------------------------------------------------------------------------------------
Mr. Reichert's motion to table Ms. DelBene's appeal of the
ruling of the Chair was agreed to by a roll call vote of 24
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady........................ X ....... ......... Mr. Neal........... ....... X .........
Mr. Johnson...................... X ....... ......... Mr. Levin.......... ....... X .........
Mr. Nunes........................ X ....... ......... Mr. Lewis.......... ....... X .........
Mr. Tiberi....................... X ....... ......... Mr. Doggett........ ....... X .........
Mr. Reichert..................... X ....... ......... Mr. Thompson....... ....... X .........
Mr. Roskam....................... X ....... ......... Mr. Larson......... ....... X .........
Mr. Buchanan..................... X ....... ......... Mr. Blumenauer..... ....... X .........
Mr. Smith (NE)................... X ....... ......... Mr. Kind........... ....... X .........
Ms. Jenkins...................... X ....... ......... Mr. Pascrell....... ....... X .........
Mr. Paulsen...................... X ....... ......... Mr. Crowley........ ....... X .........
Mr. Marchant..................... X ....... ......... Mr. Davis.......... ....... X .........
Ms. Black........................ X ....... ......... Ms. Sanchez........ ....... X .........
Mr. Reed......................... X ....... ......... Mr. Higgins........ ....... X .........
Mr. Kelly........................ X ....... ......... Ms. Sewell......... ....... X .........
Mr. Renacci...................... X ....... ......... Ms. DelBene........ ....... X .........
Mr. Meehan....................... X ....... ......... Ms. Chu............ ....... X .........
Ms. Noem......................... X ....... .........
Mr. Holding...................... X ....... .........
Mr. Smith (MO)................... X ....... .........
Mr. Rice......................... X ....... .........
Mr. Schweikert................... X ....... .........
Ms. Walorski..................... X ....... .........
Mr. Curbelo...................... X ....... .........
Mr. Bishop....................... X ....... .........
----------------------------------------------------------------------------------------------------------------
The legislation was ordered favorably transmitted to the
House Committee on the Budget as amended by a roll call vote of
24 yeas and 16 nays (with a quorum being present). The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady........................ X ....... ......... Mr. Neal........... ....... X .........
Mr. Johnson...................... X ....... ......... Mr. Levin.......... ....... X .........
Mr. Nunes........................ X ....... ......... Mr. Lewis.......... ....... X .........
Mr. Tiberi....................... X ....... ......... Mr. Doggett........ ....... X .........
Mr. Reichert..................... X ....... ......... Mr. Thompson....... ....... X .........
Mr. Roskam....................... X ....... ......... Mr. Larson......... ....... X .........
Mr. Buchanan..................... X ....... ......... Mr. Blumenauer..... ....... X .........
Mr. Smith (NE)................... X ....... ......... Mr. Kind........... ....... X .........
Ms. Jenkins...................... X ....... ......... Mr. Pascrell....... ....... X .........
Mr. Paulsen...................... X ....... ......... Mr. Crowley........ ....... X .........
Mr. Marchant..................... X ....... ......... Mr. Davis.......... ....... X .........
Ms. Black........................ X ....... ......... Ms. Sanchez........ ....... X .........
Mr. Reed......................... X ....... ......... Mr. Higgins........ ....... X .........
Mr. Kelly........................ X ....... ......... Ms. Sewell......... ....... X .........
Mr. Renacci...................... X ....... ......... Ms. DelBene........ ....... X .........
Mr. Meehan....................... X ....... ......... Ms. Chu............ ....... X .........
Ms. Noem......................... X ....... .........
Mr. Holding...................... X ....... .........
Mr. Smith (MO)................... X ....... .........
Mr. Rice......................... X ....... .........
Mr. Schweikert................... X ....... .........
Ms. Walorski..................... X ....... .........
Mr. Curbelo...................... X ....... .........
Mr. Bishop....................... X ....... .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE PROVISIONS
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 ``Budget
Reconciliation Legislative Recommendations Relating to Repeal
of Certain Consumer Taxes.''
The budget reconciliation legislative recommendations, as
transmitted, are estimated to have the following effects on
budget receipts for fiscal years 2017-2026:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in billions of dollars--
Item ---------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Repeal annual fee on branded prescription pharmaceutical - - - -3.1 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -11.2 -24.8
manufacturers and importers............................
Repeal of annual fee on health insurance providers...... - - - -12.8 -13.5 -14.3 -15.1 -15.9 -16.8 -17.8 -18.7 -19.7 -55.7 -144.7
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details may not add to totals due to rounding.
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 budget reconciliation legislative recommendation 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
budget reconciliation legislative recommendations involve no
new or increased budget authority. The Committee states further
that the budget reconciliation legislative recommendations
involve no new or increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, refer to Subtitle E.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated into
the description portions of this report.
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
budget reconciliation legislative recommendations contain no
measures that authorize funding, so no statement of general
performance goals and objectives for which any measure
authorizing 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 budget reconciliation
legislative recommendations do not contain any private sector
mandates. The Committee has determined that the budget
reconciliation legislative recommendations do not impose any
Federal intergovernmental mandates 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 provisions of the budget reconciliation
legislative recommendations and states that the provisions of
the legislative recommendations do 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 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 budget reconciliation legislative recommendations contain
no provisions that amend the Code 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 budget reconciliation legislative
recommendations and states that the provisions of the
legislative recommendations 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 clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
budget reconciliation legislative recommendations do not
establish or reauthorize: (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 section 6104 of title 31,
United States Code.
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee advises that the budget reconciliation
legislative recommendations require no directed rule makings
within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes to existing law made by
the recommendations, as transmitted, are shown in subtitle E of
title II.
VII. DISSENTING VIEWS
DISSENTING VIEWS ON RECOMMENDATION TO REPEAL THE HEALTH INSURANCE FEE
AND PHARMACEUTICAL FEE, COMMITTEE PRINT 3
1. Donald Trump promised that ``we're going to have
insurance for everybody . . . [but it will be] much less
expensive and much better.'' This bill reveals those promises
for what they always were: empty campaign rhetoric.''--Families
USA\1\
---------------------------------------------------------------------------
\1\http://familiesusa.org/blog/2017/03/healthy-and-wealthy-benefit-
under-house-republican-affordable-care-act-repeal-plan.
---------------------------------------------------------------------------
2. ``We cannot support the AHCA as drafted because of the
expected decline in health insurance coverage and the potential
harm it would cause to vulnerable patient populations.''--
American Medical Association\2\
---------------------------------------------------------------------------
\2\https://www.ama-assn.org/sites/default/files/media-browser/
public/washington/ama-letter-on-ahca.pdf.
---------------------------------------------------------------------------
3. ``Repeal-and-replace is a gigantic transfer of wealth
from the lowest-income Americans to the highest-income
Americans.''--Edward D. Kleinbard, former chief of staff for
the Joint Committee on Taxation and professor, University of
Southern California School of Law.\3\
---------------------------------------------------------------------------
\3\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
care-act-repeal.html?_r=1.
---------------------------------------------------------------------------
The five reconciliation legislative recommendations
considered by the Committee on Ways and Means (the
``Committee'') and referred to the Committee on Budget
(collectively, the Ways and Means reconciliation package or the
``reconciliation package'') was a far-reaching attempt to
undermine our health systems from Medicare to employer
sponsored health insurance in order to give tax cuts to the
wealthiest and corporations. After almost 18 hours of debate,
the Committee mark-up ended with a party-line vote on the
reconciliation package, which is likely to take health
insurance away from millions of Americans. This reconciliation
package, coupled with what was passed out of the Energy and
Commerce Committee, would harm access to health care for
middle-class Americans and undermine Medicare's long-term
viability while cutting taxes for corporations and the
wealthiest Americans.
The Committee moved forward irresponsibly, without any
official accounting about the estimated effect of the
reconciliation package on health insurance coverage, out-of-
pocket costs, or premium increases. While the Joint Committee
on Taxation (JCT) estimated that the reconciliation package
includes nearly $600 billion worth of tax breaks, as of the
mark-up, the Congressional Budget Office (CBO) was unable to
provide estimates about the package's effect on American
families. Additionally the JCT score was incomplete as of the
mark-up and did not provide an official accounting of all of
the provisions considered by the Committee. Both the Ways and
Means and Energy and Commerce Committees moved forward to pass
recommendations out of each Committee without any sense from
CBO of coverage losses due to the severe cuts to Medicaid, the
repeal of the individual and employer-shared responsibility
provisions of current law, or the changes in the tax credits
available to help purchase health insurance on the individual
market.
CBO provided the Committee an estimate of the effects after
the reconciliation package was reported to the Committee on
Budget from the Ways and Means and Energy and Commerce
Committees. This estimate showed that 24 million Americans
would lose coverage, with 14 million Americans losing coverage
in the first year alone.
The Committee's reconciliation package provided generous
tax cuts to the wealthiest, while reducing health insurance
assistance for middle-class Americans. The tax breaks
considered by the Committee are focused on the wealthy
individuals and corporations, instead on middle-class
Americans. About $275 billion in tax breaks would benefit high-
income earners; about 62% of the tax breaks would go to
millionaires in 2020. Businesses and corporations are receive
nearly $192 billion in tax cuts. These and other tax breaks add
up to nearly $600 billion in lost revenue.
Democrats objected strenuously to the Republican approach
and instead believe the Committee should focus on policies that
matter to middle-class Americans under the jurisdiction of this
Committee, including financing long-term infrastructure,
reforming the tax system to address income inequality, and
further building on President Obama's record of job creation.
Democrats believe that the reconciliation package will
destabilize the health insurance market, which represents 18
percent of our gross domestic product.
The reconciliation package continues Republican efforts to
undermine and destabilize the health insurance market. It
undermines current law and the stability of both the individual
and group health insurance markets by gutting individual and
employer-shared responsibility provisions. The reconciliation
package would reduce the uptake of the premium tax credits and
the Medicaid expansion established in the Affordable Care Act
(ACA), which have made health care affordable for millions of
individuals. Reduced uptake of the Medicaid expansion and the
tax credits disproportionately impacts low- and middle-income
Americans and places them at risk for health insecurity and
unexpected medical expenses. Based on independent estimates,
roughly 24 million Americans would lose their insurance
coverage because of this reconciliation package when taken
together with the reconciliation recommendations passed by the
Energy and Commerce Committee.\4\ Further, this reconciliation
package reduces the life of the Medicare Trust Fund by three
years by reducing $170 billion from the Medicare Trust Fund,
which puts Medicare at risk for 57 million seniors and
individuals with disabilities.
---------------------------------------------------------------------------
\4\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the-gop-health-care-plan/.
---------------------------------------------------------------------------
Individual and employer-shared responsibility provisions
are key to maintaining the robust and healthy risk pools that
allow the ACA health insurance reforms to improve consumer
protections while controlling health care costs. This is
because well-functioning insurance markets rely on
participation of both healthy and sick individuals to spread
risk across the pool. The reconciliation package effectively
would repeal the individual and employer-shared responsibility
penalty, leading to premium increases of an estimated 20
percent in the individual market alone. In spite of President
Trump and Congressional Republicans' efforts to sabotage the
ACA, millions of Americans have enrolled in the health
insurance Marketplaces, many using the available financial
assistance, and millions more have enrolled in expanded
Medicaid programs.
Despite promises made by President Trump, the
reconciliation package would not cover more people or offer
more affordable coverage with comparable benefits. Instead,
this package leads to an estimated coverage loss of 24 million
people while gutting benefits and consumer protections as a
mechanism for affordability. When coupled with the legislation
passed out of the Energy and Commerce Committee, the
reconciliation package would return to a time when the market
once again discriminates against those with pre-existing
conditions and leaves those that might need medical care in the
future without meaningful coverage. The reconciliation package
provides for tax credits less generous than current law with no
assistance with out-of-pocket expenses. Instead, the
reconciliation package enshrines high deductible health plans
that would increase out-of-pocket expenses. However, these
plans do not address the underlying issues of access to quality
services and the cost of care.
Since January of 2009, the Republicans voted to repeal or
undermine the ACA more than 65 times. Democrats offered a
number of amendments in Committee to point out serious flaws
with the reconciliation package. For example, at the beginning
of the mark up, Democrats asked Republicans to postpone mark up
until CBO could provide a comprehensive report on costs,
coverage losses, and premium effects of the reconciliation
package.
In that regard, Congressman Lloyd Doggett (D-TX) offered a
motion to postpone the markup for one week to allow time for
review of the bill and the CBO estimate that was not available
prior to or during the mark up. For over four decades, CBO has
been recognized as the official referee of costs and effects of
legislation passed in the House and Senate. Congress relies on
CBO's non-partisan estimates to evaluate legislative proposals.
Democrats were concerned that Republicans deliberately moved
forward with the reconciliation package without a CBO score in
an effort to conceal the harmful effects of the reconciliation
package on nearly all Americans.
The contrast of this rushed process versus the lengthy and
transparent process of enacting the ACA is striking. In 2009,
House Committees posted a draft of the ACA legislation for
review and comment a month before the mark-up process began,
holding multiple hearings and providing the public with two
preliminary CBO estimates on July 8th and July 14th Democrats
maintain that there is no reason to rush to mark-up this
reconciliation package without a CBO score, or without a
hearing to consider the implications of the package.
Congressman Doggett's amendment was tabled on a party line
vote.
This Committee print provided $169.5 billion in tax breaks
to prescription drug and insurance companies. At the same time,
Republicans cut Medicaid by more than $370 billion\5\ to help
pay for this giveaway which would result in millions of low-
income working families to lose their health insurance
coverage, forcing them to rely on emergency room care that
Americans all end up paying for in higher health insurance
premiums.
---------------------------------------------------------------------------
\5\``House GOP Medicaid Provisions Would Shift $370 Billion in
Costs To States,'' Center on Budget and Policy Priorities, March 7,
2017.
---------------------------------------------------------------------------
Congressman Blumenauer (D-OR) offered an amendment to
retain current law with respect to taxation of brand
pharmaceutical companies and invest those tax revenues in
lowering seniors' drug costs by filling the Medicare Part D
donut hole. Medicare beneficiaries, even with Medicare Part D
coverage, still struggle to pay for medications when they reach
the coverage gap, known as the donut hole. While the ACA filled
in part of this gap and saved America's seniors and people with
disabilities an average of $1,200 each year, it should remain a
priority to continue to reduce the financial burdens for
seniors and people with disabilities rather than providing
pharmaceutical companies huge tax breaks. Democrats unanimously
supported the amendment, but all Committee Republicans voted
against improving drug coverage under Part D and lowering costs
for seniors.
Congresswoman Suzan DelBene (D-WA) offered an amendment
striking provisions that would restrict women's choice of
health care providers. Her amendment sought to protect access
to women's health care, including access to Planned Parenthood.
Every year, 2.5 million people rely on Planned Parenthood
health centers for essential health services, and studies
consistently show that proposals to ``defund'' Planned
Parenthood would result in people losing access to quality
health care.\6\ The American Medical Association raised
concerns with these provisions, saying, ``The AMA cannot
support provisions that prevent Americans from choosing to
receive care from physicians and other qualified providers, in
this specific case, those associated with Planned Parenthood
affiliates, for otherwise covered services.''\7\ Democrats
unanimously supported the amendment, but all Committee
Republicans voted against supporting women's access to health
care services.
\6\http://www.cnn.com/2015/08/04/health/planned-parenthood-by-the-
numbers/.
\7\https://www.ama-assn.org/sites/default/files/media-browser/
public/washington/ama-letter-on-ahca.pdf.
Richard E. Neal,
Ranking Member.
COMMITTEE PRINT
Budget Reconciliation Legislative Recommendations Relating to Repeal of
Certain Consumer Taxes
Subtitle __--Repeal of Certain Consumer Taxes
SEC. _1. REPEAL OF TAX ON PRESCRIPTION MEDICATIONS.
Section 9008 of the Patient Protection and Affordable Care
Act is amended by adding at the end the following new
subsection:
``(l) Termination.--No fee shall be imposed under subsection
(a)(1) with respect to any calendar year beginning after
December 31, 2017.''.
SEC. _2. REPEAL OF HEALTH INSURANCE TAX.
Section 9010 of the Patient Protection and Affordable Care
Act is amended by adding at the end the following new
subsection:
``(k) Termination.--No fee shall be imposed under subsection
(a)(1) with respect to any calendar year beginning after
December 31, 2017.''.
CONTENTS
Page
SUBTITLE C--REPEAL OF TANNING TAX................................ 472
I. SUMMARY AND BACKGROUND.........................................472
II. EXPLANATION OF PROVISION.......................................473
III. VOTES OF THE COMMITTEE.........................................474
IV. BUDGET EFFECTS OF THE PROVISIONS...............................475
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.....476
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED....................477
VII. DISSENTING VIEWS...............................................478
SUBTITLE C--REPEAL OF TANNING TAX
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
In fulfillment of the reconciliation instructions included
in section 2002 of the Concurrent Resolution on the Budget for
Fiscal Year 2017 (S. Con. Res. 3), the Committee on Ways and
Means ordered favorably transmitted (with a quorum being
present) the Budget Reconciliation Legislative Recommendations
Relating to Repeal of Tanning Tax. The Committee recommends
repeal of the indoor tanning tax imposed by the Patient
Protection and Affordable Care Act of 2010 (``PPACA''), Pub. L.
No. 111-148 (March 23, 2010), as amended by the Health Care and
Education Reconciliation Act of 2010 (``HCERA''), Pub. L. No.
111-152 (March 30, 2010).\1\
---------------------------------------------------------------------------
\1\PPACA and HCERA are collectively referred to as the Affordable
Care Act (``ACA'').
---------------------------------------------------------------------------
B. Background and Need for Legislation
In the Committee's pursuit of comprehensive health care
reform to relieve unnecessary burdens on insurance markets, the
broader economy, and taxpayers in need of access to quality
health care, the Committee wishes to provide relief from taxes
imposing excessive constraints on choice and innovation. The
Committee believes that repeal of the indoor tanning tax will
further these goals.
C. Legislative History
Budget resolution
On January 13, 2017, the House of Representatives approved
S. Con. Res. 3, the budget resolution for fiscal year 2017.
Pursuant to section 2002(a)(3) of S. Con. Res. 3, the Committee
on Ways and Means was directed to submit to the Committee on
the Budget recommendations for changes in law within the
jurisdiction of the Committee on Ways and Means sufficient to
reduce the deficit by $1,000,000,000 for the period of fiscal
years 2017 through 2026.
Committee action
Beginning March 8, 2017, in response to its instructions
under the budget resolution, the Committee on Ways and Means
marked up the budget reconciliation legislative recommendations
relating to repeal of the tanning tax and ordered the
legislative recommendations, as amended, favorably transmitted
(with a quorum being present) on March 9, 2017.
Committee hearings
The Committee on Ways and Means held hearings regarding the
President's Fiscal Year 2017 budget submission on February 11,
2016, and February 10, 2016 with Secretary of the Treasury
Jacob J. Lew and Secretary of Health and Human Services Sylvia
Burwell, respectively, in which the harmful effects of ACA
taxes were discussed. Moreover, the Oversight Subcommittee held
a hearing on March 5, 2013, discussing the tax-related
provisions of the ACA.
II. EXPLANATION OF PROVISION
A. Repeal of Tanning Tax (Sec. _01 of the Committee Print and Sec.
5000B of the Code\2\)
---------------------------------------------------------------------------
\2\All section references herein are to the Internal Revenue Code
of 1986, as amended, (``Code'') unless otherwise stated.
---------------------------------------------------------------------------
PRESENT LAW
A retail sales tax is imposed on indoor tanning
services.\3\ The tax rate is 10 percent of the amount paid for
such services, including any amount paid by insurance.\4\ If a
payment covers charges for indoor tanning services as well as
other goods and services, the charges for other goods and
services may be excluded in computing the tax payable on the
amount paid.\5\
---------------------------------------------------------------------------
\3\Sec. 5000B.
\4\The total amount paid is presumed to include the tax if the tax
is not separately stated. Treas. Reg. sec. 48.5000B-1(d)(1)(i).
\5\Treas. Reg. sec. 48.5000B-1(c)(2), (d)(2), and (d)(3).
---------------------------------------------------------------------------
Consumers are liable for the tax, with service providers
being responsible for collecting and remitting the tax to the
Federal Government on a quarterly basis.
Indoor tanning services are services employing any
electronic product designed to induce skin tanning and which
incorporates one or more ultraviolet lamps with wavelengths in
air between 200 and 400 nanometers.\6\ Taxable services do not
include phototherapy services\7\ performed by a licensed
medical professional. There is also an exemption for qualified
physical fitness facilities that meet certain criteria and
offer tanning as an incidental service to members without a
separately identifiable fee.\8\
---------------------------------------------------------------------------
\6\Treas. Reg. sec. 48.5000B-1(c)(1).
\7\Phototherapy services are services that expose an individual to
specific wavelengths of light for the treatment of (i) dermatological
conditions, such as acne, psoriasis, and eczema; (ii) sleep disorders;
(iii) seasonal affective disorder or other psychiatric disorder; (iv)
neonatal jaundice; (v) wound healing; and (vi) other medical conditions
determined by a licensed medical professional to be treatable by
exposing the individual to specific wavelengths of light. Treas. Reg.
sec. 48.5000B-1(c)(3).
\8\Treas. Reg. sec. 48.5000B-1(d)(4).
---------------------------------------------------------------------------
REASONS FOR CHANGE
The indoor tanning industry is an important contributor to
the nation's economy, employing thousands of people. The
Committee believes that the tanning tax adversely affects the
industry. The Committee believes that repealing the tax will
decrease costs for the industry and for consumers.
EXPLANATION OF PROVISION
Under the provision, the tax on indoor tanning services
applies for services performed prior to January 1, 2018. Thus,
the tax does not apply to services performed after December 31,
2017.
EFFECTIVE DATE
The provision is effective for services performed after
December 31, 2017.
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 the Reconciliation Legislative Recommendation
Relating to Repeal of Tanning Tax on March 8, 2017.
The vote on the amendment by Ms. Sanchez to the amendment
in the nature of a substitute to Subtitle _: Budget
Reconciliation Legislative Recommendations Relating to Repeal
of Tanning Tax, which would strike the repeal of the Tanning
Tax and express the sense of Congress that the Tanning Tax
should not be repealed, was not agreed to by a roll call vote
of 24 nays to 16 yeas (with a quorum being present). The vote
was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... ........ X ......... Mr. Neal......... X ........ .........
Mr. Johnson.................... ........ X ......... Mr. Levin........ X ........ .........
Mr. Nunes...................... ........ X ......... Mr. Lewis........ X ........ .........
Mr. Tiberi..................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Reichert................... ........ X ......... Mr. Thompson..... X ........ .........
Mr. Roskam..................... ........ X ......... Mr. Larson....... X ........ .........
Mr. Buchanan................... ........ X ......... Mr. Blumenauer... X ........ .........
Mr. Smith (NE)................. ........ X ......... Mr. Kind......... X ........ .........
Ms. Jenkins.................... ........ X ......... Mr. Pascrell..... X ........ .........
Mr. Paulsen.................... ........ X ......... Mr. Crowley...... X ........ .........
Mr. Marchant................... ........ X ......... Mr. Davis........ X ........ .........
Ms. Black...................... ........ X ......... Ms. Sanchez...... X ........ .........
Mr. Reed....................... ........ X ......... Mr. Higgins...... X ........ .........
Mr. Kelly...................... ........ X ......... Ms. Sewell....... X ........ .........
Mr. Renacci.................... ........ X ......... Ms. DelBene...... X ........ .........
Mr. Meehan..................... ........ X ......... Ms. Chu.......... X ........ .........
Ms. Noem....................... ........ X ......... .................
Mr. Holding.................... ........ X ......... .................
Mr. Smith (MO)................. ........ X ......... .................
Mr. Rice....................... ........ X ......... .................
Mr. Schweikert................. ........ X ......... .................
Ms. Walorski................... ........ X ......... .................
Mr. Curbelo.................... ........ X ......... .................
Mr. Bishop..................... ........ X ......... .................
----------------------------------------------------------------------------------------------------------------
The legislation was ordered favorably transmitted to the
House Committee on the Budget as amended by a roll call vote of
24 yeas and 15 nays (with a quorum being present). The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ ........ .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE PROVISIONS
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 ``Budget
Reconciliation Legislative Recommendation Relating to Repeal of
Tanning Tax.''
The budget reconciliation legislative recommendation, as
transmitted, is estimated to have the following effects on
budget receipts for fiscal years 2017-2026:
----------------------------------------------------------------------------------------------------------------
Fiscal years in billions of dollars
-----------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
----------------------------------------------------------------------------------------------------------------
- - - [1] -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.6
----------------------------------------------------------------------------------------------------------------
Note: Details do not add to totals due to rounding.
\1\ Loss of less than $50 million.
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 budget reconciliation legislative recommendation 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
budget reconciliation legislative recommendation involves no
new or increased budget authority. The Committee states further
that the budget reconciliation legislative recommendation
involves no new or increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, refer to Subtitle E.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated into
the description portions of this report.
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
budget reconciliation legislative recommendation contains no
measure that authorizes funding, so no statement of general
performance goals and objectives for which any measure
authorizing 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 budget reconciliation
legislative recommendation does not contain any private sector
mandates. The Committee has determined that the budget
reconciliation legislative recommendation does not impose any
Federal intergovernmental mandates 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 provisions of the budget reconciliation
legislative recommendation and states that the provisions of
the legislative recommendation 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 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 budget reconciliation legislative recommendation contains
no provisions that amend the Code 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 budget reconciliation legislative
recommendation and states that the provisions of the
legislative recommendation 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 clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
budget reconciliation legislative recommendation does not
establish or reauthorize: (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 section 6104 of title 31,
United States Code.
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee advises that the budget reconciliation
legislative recommendation requires no directed rule makings
within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes to existing law made by
the recommendations, as reported, are shown in Subtitle E of
title II.
VII. DISSENTING VIEWS
DISSENTING VIEWS ON RECOMMENDATION TO REPEAL THE TANNING TAX, COMMITTEE
PRINT 2
1. Donald Trump promised that ``we're going to have
insurance for everybody . . . [but it will be] much less
expensive and much better.'' This bill reveals those promises
for what they always were: empty campaign rhetoric.''--Families
USA\1\
---------------------------------------------------------------------------
\1\ http://familiesusa.org/blog/2017/03/healthy-and-wealthy-
benefit-under-house-republican-affordable-care-act-repeal-plan
---------------------------------------------------------------------------
2. ``We cannot support the AHCA as drafted because of the
expected decline in health insurance coverage and the potential
harm it would cause to vulnerable patient populations.''--
American Medical Association\2\
---------------------------------------------------------------------------
\2\https://www.ama-assn.org/sites/defaultlfiles/media-browser/
public/washington/ama-letter-on-ahca.pdf.
---------------------------------------------------------------------------
3. ``Repeal-and-replace is a gigantic transfer of wealth
from the lowest-income Americans to the highest-income
Americans.''--Edward D. Kleinbard, former chief of staff for
the Joint Committee on Taxation and professor, University of
Southern California School of Law.\3\
---------------------------------------------------------------------------
\3\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
ca re-act-repeal.html?--r=I.
---------------------------------------------------------------------------
The five reconciliation legislative recommendations
considered by the Committee on the Ways and Means (the
``Committee'') and referred to the Committee on Budget
(collectively, the Ways and Means reconciliation package or the
``reconciliation package'') was a far-reaching attempt to
undermine our health systems from Medicare to employer
sponsored health insurance in order to give tax cuts to the
wealthiest and corporations. After almost 18 hours of debate,
the Committee mark-up ended with a party-line vote on the
reconciliation package, which is likely to take health
insurance away from millions of Americans. This reconciliation
package, coupled with what was passed out of the Energy and
Commerce Committee, would harm access to health care for
middle-class Americans and undermine Medicare's long-term
viability while cutting taxes for corporations and the
wealthiest Americans.
The Committee moved forward irresponsibly, without any
official accounting about the estimated effect of the
reconciliation package on health insurance coverage, out-of-
pocket costs, or premium increases. While the Joint Committee
on Taxation (JCT) estimated that the reconciliation package
includes nearly $600 billion worth of tax breaks, as of the
mark-up, the Congressional Budget Office (CBO) was unable to
provide estimates about the package's effect on American
families. Additionally the JCT score was incomplete as of the
mark-up and did not provide an official accounting of all of
the provisions considered by the Committee. Both the Ways and
Means and Energy and Commerce Committees moved forward to pass
recommendations out of each Committee without any sense from
CBO of coverage losses due to the severe cuts to Medicaid, the
repeal of the individual and employer-shared responsibility
provisions of current law, or the changes in the tax credits
available to help purchase health insurance on the individual
market.
CBO provided the Committee an estimate of the effects after
the reconciliation package was reported to the Committee on
Budget from the Ways and Means and Energy and Commerce
Committees. This estimate showed that 24 million Americans
would lose coverage, with 14 million Americans losing coverage
in the first year alone.
The Committee's reconciliation package provided generous
tax cuts to the wealthiest, while reducing health insurance
assistance for middle-class Americans. The tax breaks
considered by the Committee are focused on wealthy individuals
and corporations, instead of on middle-class Americans. About
$275 billion in tax breaks would benefit high-income earners;
about 62% of the tax breaks would go to millionaires in 2020.
Businesses and corporations receive nearly $192 billion in tax
cuts. These and other tax breaks add up to nearly $600 billion
in lost revenue.
Democrats objected strenuously to the Republican approach
and instead believe the Committee should focus on policies that
matter to middle-class Americans under the jurisdiction of this
Committee, including financing long-term infrastructure,
reforming the tax system to address income inequality, and
further building on President Obama's record of job creation.
Democrats believe that the reconciliation package will
destabilize the health insurance market, which represents 18
percent of our gross domestic product.
The reconciliation package continues Republican efforts to
undermine and destabilize the health insurance market. It
undermines current law and the stability of both the individual
and group health insurance markets by gutting individual and
employer-shared responsibility provisions. The reconciliation
package would reduce the uptake of the premium tax credits and
the Medicaid expansion established in the Affordable Care Act
(ACA), which have made health care affordable for millions of
individuals. Reduced uptake of the Medicaid expansion and the
tax credits disproportionately impacts low- and middle-income
Americans and places them at risk for health insecurity and
unexpected medical expenses. Based on independent estimates,
roughly 24 million Americans would lose their insurance
coverage because of this reconciliation package when taken
together with the reconciliation recommendations passed by the
Energy and Commerce Committee.\4\ Further, this reconciliation
package reduces the life of the Medicare Trust Fund by three
years by reducing $170 billion from the Medicare Trust Fund,
which puts Medicare at risk for 57 million seniors and
individuals with disabilities.
---------------------------------------------------------------------------
\4\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the-gop-health-care-plan/.
---------------------------------------------------------------------------
Individual and employer-shared responsibility provisions
are key to maintaining the robust and healthy risk pools that
allow the ACA health insurance reforms to improve consumer
protections while controlling health care costs. This is
because well-functioning insurance markets rely on
participation of both healthy and sick individuals to spread
risk across the pool. The reconciliation package effectively
would repeal the individual and employer-shared responsibility
penalty, leading to premium increases of an estimated 20
percent in the individual market alone. In spite of President
Trump's and Congressional Republicans' efforts to sabotage the
ACA, millions of Americans have enrolled in the health
insurance Marketplaces, many using the available financial
assistance, and millions more have enrolled in expanded
Medicaid programs.
Despite promises made by President Trump, the
reconciliation package would not cover more people or offer
more affordable coverage with comparable benefits. Instead,
this package leads to an estimated coverage loss of 24 million
people while gutting benefits and consumer protections as a
mechanism for affordability. When coupled with the legislation
passed out of the Energy and Commerce Committee, the
reconciliation package would return to a time when the market
once again discriminates against those with pre-existing
conditions and leaves those that might need medical care in the
future without meaningful coverage. The reconciliation package
provides for tax credits less generous than current law with no
assistance with out-of-pocket expenses. Instead, the
reconciliation package enshrines high deductible health plans
that would increase out-of-pocket expenses. However, these
plans do not address the underlying issues of access to quality
services and the cost of care.
Since January of 2009, the Republicans voted to repeal or
undermine the ACA more than 65 times. Democrats offered a
number of amendments in Committee to point out serious flaws
with the reconciliation package. For example, at the beginning
of the markup, Democrats asked Republicans to postpone markup
until CBO could provide a comprehensive report on costs,
coverage losses, and premium effects of the reconciliation
package.
In that regard, Congressman Lloyd Doggett (D-TX) offered a
motion to postpone the markup for one week to allow time for
review of the bill and the CBO estimate that was not available
prior to or during the markup. For over four decades, CBO has
been recognized as the official referee of costs and effects of
legislation passed in the House and Senate. Congress relies on
CBO's non-partisan estimates to evaluate legislative proposals.
Democrats were concerned that Republicans deliberately moved
forward with the reconciliation package without a CBO score in
an effort to conceal the harmful effects of the reconciliation
package on nearly all Americans.
The contrast of this rushed process versus the lengthy and
transparent process of enacting the ACA is striking. In 2009,
House Committees posted a draft of the ACA legislation for
review and comment a month before the mark-up process began,
holding multiple hearings and providing the public with two
preliminary CBO estimates on July 8th and July 14th. Democrats
maintain that there is no reason to rush to mark-up this
reconciliation package without a CBO score, or without a
hearing to consider the implications of the package.
Congressman Doggett's amendment was tabled on a party line
vote.
The Republican legislation would repeal a 10 percent tax on
tanning beds. Tanning salons have been the subject of much
controversy for dishonest and misleading marketing, not to
mention that improper use can be a health hazard. The World
Health Organization and the National Toxicology Program
classify indoor tanning beds as a ``known'' human
carcinogen.\5\ The Melanoma Research Foundation found that as
many as 90 percent of all melanoma cases are estimated to be
caused by ultraviolet (UV) exposure. This includes UV exposure
from the sun and from artificial sources, such as tanning
beds.\6\ The Centers for Disease Control and Prevention warns
that people who begin tanning during adolescence or early
adulthood have a higher risk of melanoma, the deadliest type of
skin cancer.
---------------------------------------------------------------------------
\5\False and Misleading Health Information Provided to Teens by the
Indoor Tanning Industry: Investigative Report, U.S. House of
Representatives Committee on Energy and Commerce Minority Staff,
February 1, 2012.
\6\https://www.melanoma.org/understand-melanoma/preventing-
melanoma/why-is-tanning-dangerous
---------------------------------------------------------------------------
According to the 2015 Youth Risk Behavior Surveillance
System, indoor tanning is used by 7 percent of all high school
students, 11 percent of high school girls, 16 percent of girls
in the 12th grade and 15 percent of all white high school
girls.\7\ Using tanning beds before age 30 has been found to
increase one's risk of developing melanoma by 75 percent.\8\
The American Academy of Dermatology said in a letter to the
Committee, ``The tanning tax appropriately reflects the
carcinogenic effects of indoor tanning, and it is the desire of
the Academy that the current federal tax on this activity
remains in place as a deterrent to harmful behavior.'' Citing
these and other public health concerns, Congresswoman Sanchez
(D-CA) offered an amendment to strike the repeal of the tanning
tax, which was defeated on party lines.
\7\https://www.cdc.gov/cancer/skin_basic_info/indoor_tanning.htm
\8\https://www.melanoma.org/understand-melanoma/preventing-
melanoma/why-is-tanning-dangerous
---------------------------------------------------------------------------
Richard E. Neal,
Ranking Member.
COMMITTEE PRINT
Budget Reconciliation Legislative Recommendations Relating to Repeal of
Tanning Tax
Subtitle __--Repeal of Tanning Tax
SEC. _1. REPEAL OF TANNING TAX.
(a) In General.--The Internal Revenue Code of 1986 is amended
by striking chapter 49.
(b) Effective Date.--The amendment made by this section shall
apply to services performed after December 31, 2017.
CONTENTS
Page
SUBTITLE [D]--REMUNERATION FROM CERTAIN INSURERS................. 486
I. SUMMARY AND BACKGROUND.........................................486
II. EXPLANATION OF PROVISION.......................................487
III. VOTES OF THE COMMITTEE.........................................489
IV. BUDGET EFFECTS OF THE PROVISION................................496
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.....497
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED....................498
VII. DISSENTING VIEWS...............................................499
SUBTITLE [D]--REMUNERATION FROM CERTAIN INSURERS
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
In fulfillment of the reconciliation instructions included
in section 2002 of the Concurrent Resolution on the Budget for
Fiscal Year 2017 (S. Con. Res. 3), the Committee on Ways and
Means ordered favorably transmitted (with a quorum being
present) the Budget Reconciliation Legislative Recommendations
Relating to Remuneration from Certain Insurers. The Committee
recommends repeal of section 162(m)(6) of the Internal Revenue
Code of 1986 (``Code''),\1\ which precludes a health insurer
from deducting compensation provided to a service provider for
a year to the extent the compensation exceeds $500,000.
---------------------------------------------------------------------------
\1\All section references herein are to the Code unless otherwise
stated.
---------------------------------------------------------------------------
B. Background and Need for Legislation
As the Committee continues to actively pursue comprehensive
health care reform to relieve unnecessary burdens on the
broader economy and on taxpayers in need of access to quality
health care, the Committee believes that providing immediate
relief from taxes imposing excessive constraints on choices and
innovation serves as an important first step toward its broader
goals. The Committee believes that repealing the deduction
limit on compensation provided by certain health insurers to
service providers will better enable such insurers to obtain
the services needed to operate efficiently without reducing
after-tax profits for investors or limiting additional benefits
from being passed onto consumers. The Committee believes that
health insurance providers should not be treated differently
than other types of businesses for the purposes of deducting
compensation.
C. Legislative History
Budget resolution
On January 13, 2017, the House of Representatives approved
S. Con. Res. 3, the budget resolution for fiscal year 2017.
Pursuant to section 2002(a)(3) of S. Con. Res. 3, the Committee
on Ways and Means was directed to submit to the Committee on
the Budget recommendations for changes in law within the
jurisdiction of the Committee on Ways and Means sufficient to
reduce the deficit by $1,000,000,000 for the period of fiscal
years 2017 through 2026.
Committee action
Beginning March 8, 2017, in response to its instructions
under the budget resolution, the Committee on Ways and Means
marked up the budget reconciliation legislative recommendations
relating to remuneration from certain insurers and ordered the
legislative recommendations, as amended, favorably transmitted
(with a quorum being present) on March 9, 2017.
Committee hearings
The Committee on Ways and Means held hearings regarding the
President's Fiscal Year 2017 budget submission on February 11,
2016, and February 10, 2016 with Secretary of the Treasury
Jacob J. Lew and Secretary of Health and Human Services Sylvia
Burwell, respectively, in which the harmful effects of ACA
taxes were discussed. Moreover, the Oversight Subcommittee held
a hearing on March 5, 2013, discussing the tax-related
provisions of the ACA.
II. EXPLANATION OF PROVISION
A. Repeal of Deduction Limit on Remuneration From Health Insurance
Providers
PRESENT LAW
An employer generally may deduct reasonable compensation
for personal services as an ordinary and necessary business
expense.\2\ However, in the case of a covered health insurance
provider, the deduction allowable for compensation attributable
to services performed by an applicable individual during a
taxable year (``applicable individual remuneration'') is
limited to $500,000.\3\ In general, an insurance provider is a
covered health insurance provider if at least 25 percent of the
insurance provider's gross premium income from health business
is derived from health insurance plans that provide minimum
essential coverage.\4\ Applicable individuals include all
officers, employees, directors, and other workers or service
providers (such as consultants) performing services for or on
behalf of a covered health insurance provider.
---------------------------------------------------------------------------
\2\Sec. 162. However, under section 162(m)(1), in the case of a
publicly held corporation, a deduction limit of $1 million generally
applies to compensation of the principal executive officer or the three
most highly compensated officers for the taxable year other than the
principal executive officer. Certain types of compensation are excepted
from the limit, including remuneration payable on a commission basis
(``commission compensation'') and, if certain outside director and
shareholder approval requirements are met, remuneration payable solely
on account of the attainment of one or more performance goals
(``performance-based compensation'').
\3\Sec. 162(m)(6). All members of any controlled group of
corporations (within the meaning of section 414(b)), other businesses
under common control (within the meaning of section 414(c)), or
affiliated service group (within the meaning of section 414(m) and (o))
are generally treated as a single employer for purposes of the
deduction limit.
\4\Minimum essential coverage is defined in section 5000A(f).
---------------------------------------------------------------------------
Applicable individual remuneration includes all otherwise
deductible compensation for a year except for payments to a
qualified retirement plan (including salary reduction
contributions) and benefits that are excludable from the
applicable individual's gross income.\5\ The deduction limit
applies without regard to whether compensation is otherwise
deductible for the taxable year during which services are
performed or a subsequent taxable year. In the case of
compensation that relates to services that an applicable
individual performs during a taxable year, but that is not
deductible until a later year, such as nonqualified deferred
compensation, the unused portion (if any) of the $500,000 limit
for the year is carried forward until the year in which the
compensation is otherwise deductible, and the remaining unused
limit is then applied to the compensation.
---------------------------------------------------------------------------
\5\Exceptions for commission compensation and performance-based
compensation do not apply for purposes of this limit.
---------------------------------------------------------------------------
REASONS FOR CHANGE
The Committee believes that the limit on the amount of
compensation that a covered health insurer may deduct with
respect to a service provider interferes with the insurer's
ability to retain the services needed to operate most
efficiently. In some cases, an insurer must either provide
lower compensation, which limits its choice of service
providers, or forego a compensation deduction, which reduces
after-tax profits for investors or limits additional benefits
from being passed onto consumers. The Committee believes that
health insurance providers should not be treated differently
than other types of businesses for the purposes of deducting
compensation.
EXPLANATION OF PROVISION
Under the provision, the limit on the deduction of a
covered health insurance provider for compensation attributable
to services performed by an applicable individual no longer
applies.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2017.
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 the Reconciliation Legislative Recommendations
Relating to Remuneration from Certain Insurers on March 8,
2017.
Mr. Tiberi's motion to table Mr. Doggett's motion to
postpone was agreed to by a roll call vote of 22 yeas to 16
nays (with a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. ..... ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Blumenauer's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... .... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Doggett's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Levin's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Crowley's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Kind's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Neal's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Higgins's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 15 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ ..... .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Thompson's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Lewis's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 15 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ ........ .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Pascrell's appeal of the
ruling of the Chair was agreed to by a roll call vote of 22
yeas and 15 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... ..... ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ ..... .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Mr. Davis's appeal of the
ruling of the Chair was agreed to by a roll call vote of 20
yeas and 16 nays (with a quorum being present). The vote was as
follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... ..... ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X
Mr. Holding.................... X
Mr. Smith (MO)................. .....
Mr. Rice....................... X
Mr. Schweikert................. X
Ms. Walorski................... X
Mr. Curbelo.................... .....
Mr. Bishop..................... X
----------------------------------------------------------------------------------------------------------------
Mr. Tiberi's motion to table Ms. Sewell's appeal of the
ruling of the Chair was agreed to by a roll call vote of 23
yeas and 16 nays (with a quorum being present). The vote was as
follows:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Mr. Brady............................ X....................... ..................................... ........ Mr. Neal ......... X....................... ........
Mr. Johnson.......................... X....................... ..................................... ........ Mr. Levin ......... X....................... ........
Mr. Nunes............................ X....................... ..................................... ........ Mr. Lewis ......... X....................... ........
Mr. Tiberi........................... X....................... ..................................... ........ Mr. Doggett ......... X....................... ........
Mr. Reichert......................... X....................... ..................................... ........ Mr. Thompson ......... X....................... ........
Mr. Roskam........................... X....................... ..................................... ........ Mr. Larson ......... X....................... ........
Mr. Buchanan......................... X....................... ..................................... ........ Mr. Blumenauer ......... X....................... ........
Mr. Smith (NE)....................... X....................... ..................................... ........ Mr. Kind ......... X....................... ........
Ms. Jenkins.......................... ........................ ..................................... ........ Mr. Pascrell ......... X....................... ........
Mr. Paulsen.......................... X....................... ..................................... ........ Mr. Crowle......... X....................... ........
Mr. Marchant......................... X....................... ..................................... ........ Mr. Davis ......... X....................... ........
Ms. Black............................ X....................... ..................................... ........ Ms. Sanchez ......... X....................... ........
Mr. Reed............................. X....................... ..................................... ........ Mr. Higgins ......... X....................... ........
Mr. Kelly............................ X....................... ..................................... ........ Ms. Sewell ......... X....................... ........
Mr. Renacci.......................... X....................... ..................................... ........ Ms. DelBene ......... X....................... ........
Mr. Meehan........................... X....................... ..................................... ........ Ms. Chu ......... X....................... ........
Ms. Noem............................. X....................... ..................................... ........
Mr. Holding.......................... X....................... ..................................... ........
Mr. Smith (MO)....................... X....................... ..................................... ........
Mr. Rice............................. X....................... ..................................... ........
Mr. Schweikert....................... X....................... ..................................... ........
Ms. Walorski......................... X....................... ..................................... ........
Mr. Curbelo.......................... X....................... ..................................... ........
Mr. Bishop........................... X....................... ..................................... ........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The legislation was ordered favorably transmitted to the
House Committee on the Budget as amended by a roll call vote of
23 yeas and 16 nays (with a quorum being present). The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Roskam..................... X ........ ......... Mr. Larson....... ........ X .........
Mr. Buchanan................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Smith (NE)................. X ........ ......... Mr. Kind......... ........ X .........
Ms. Jenkins.................... ..... ........ ......... Mr. Pascrell..... ........ X .........
Mr. Paulsen.................... X ........ ......... Mr. Crowley...... ........ X .........
Mr. Marchant................... X ........ ......... Mr. Davis........ ........ X .........
Ms. Black...................... X ........ ......... Ms. Sanchez...... ........ X .........
Mr. Reed....................... X ........ ......... Mr. Higgins...... ........ X .........
Mr. Kelly...................... X ........ ......... Ms. Sewell....... ........ X .........
Mr. Renacci.................... X ........ ......... Ms. DelBene...... ........ X .........
Mr. Meehan..................... X ........ ......... Ms. Chu.......... ........ X .........
Ms. Noem....................... X ........ .........
Mr. Holding.................... X ........ .........
Mr. Smith (MO)................. X ........ .........
Mr. Rice....................... X ........ .........
Mr. Schweikert................. X ........ .........
Ms. Walorski................... X ........ .........
Mr. Curbelo.................... X ........ .........
Mr. Bishop..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE PROVISION
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 ``Budget
Reconciliation Legislative Recommendations Relating to
Remuneration from Certain Insurers.''
The budget reconciliation legislative recommendations, as
transmitted, are estimated to have the following effects on
budget receipts for fiscal years 2017-2026:
----------------------------------------------------------------------------------------------------------------
By fiscal years, in billions of dollars--
-----------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
----------------------------------------------------------------------------------------------------------------
- - - [1] [1] [1] -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.4
----------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.
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
budget reconciliation legislative recommendation involves no
new or increased budget authority. The Committee states further
that the budget reconciliation legislative recommendation
involves no new or increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, refer to Subtitle E.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated into
the description portions of this report.
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
budget reconciliation legislative recommendations contain no
measure that authorizes funding, so no statement of general
performance goals and objectives for which any measure
authorizing 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 budget reconciliation
legislative recommendations do not contain any private sector
mandates. The Committee has determined that the budget
reconciliation legislative recommendations do not impose any
Federal intergovernmental mandates 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 provisions of the budget reconciliation
legislative recommendations and states that the provisions of
the legislative recommendations do 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 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 budget reconciliation legislative recommendation contains
no provisions that amend the Code 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 budget reconciliation legislative
recommendations and states that the provisions of the
legislative recommendations 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 clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
budget reconciliation legislative recommendation does not
establish or reauthorize: (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 section 6104 of title 31,
United States Code.
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee advises that the budget reconciliation
legislative recommendations require no directed rule makings
within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATION, AS TRANSMITTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes to existing law made by
the recommendations, as reported, are shown in Subtitle E of
title II.
VII. DISSENTING VIEWS
DISSENTING VIEWS ON RECOMMENDATION TO PROVIDE A TAX BREAK TO HEALTH
INSURANCE COMPANIES THAT PAY EXCESSIVE EXECUTIVE COMPENSATION,
COMMITTEE PRINT 1
1. Donald Trump promised that ``we're going to have
insurance for everybody . . . [but it will be] much less
expensive and much better.'' This bill reveals those promises
for what they always were: empty campaign rhetoric.''--Families
USA\1\
---------------------------------------------------------------------------
\1\http://familiesusa.org/blog/2017/03/healthy-and-wealthy-benefit-
under-house-repubican-affordable-care-act-repeal-plan
---------------------------------------------------------------------------
2. ``We cannot support the AHCA as drafted because of the
expected decline in health insurance coverage and the potential
harm it would cause to vulnerable patient populations.''--
American Medical Association\2\
---------------------------------------------------------------------------
\2\https://www.ama-assn.org/sites/default/files/media-browser/
public/washington/ama-letter-on-ahca.pdf
---------------------------------------------------------------------------
3. ``Repeal-and-replace is a gigantic transfer of wealth
from the lowest-income Americans to the highest-income
Americans.''--Edward D. Kleinbard, former chief of staff for
the Joint Committee on Taxation and professor, University of
Southern California School of Law.\3\
---------------------------------------------------------------------------
\3\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
care-act-repeal.html?_r=l
---------------------------------------------------------------------------
The five reconciliation legislative recommendations
considered by the Committee on Ways and Means (the
``Committee'') and referred to the Committee on Budget
(collectively, the Ways and Means reconciliation package or the
``reconciliation package'') was a far-reaching attempt to
undermine our health systems from Medicare to employer
sponsored health insurance in order to give tax cuts to the
wealthiest and corporations. After almost 18 hours of debate,
the Committee mark-up ended with a party-line vote on the
reconciliation package, which is likely to take health
insurance away from millions of Americans. This reconciliation
package, coupled with what was passed out of the Energy and
Commerce Committee, would harm access to health care for
middle-class Americans and undermine Medicare's long-term
viability while cutting taxes for corporations and the
wealthiest Americans.
The Committee moved forward irresponsibly, without any
official accounting about the estimated effect of the
reconciliation package on health insurance coverage, out-of-
pocket costs, or premium increases. While the Joint Committee
on Taxation (JCT) estimated that the reconciliation package
includes nearly $600 billion worth of tax breaks, as of the
mark-up, the Congressional Budget Office (CBO) was unable to
provide estimates about the package's effect on American
families. Additionally the JCT score was incomplete as of the
mark-up and did not provide an official accounting of all of
the provisions considered by the Committee. Both the Ways and
Means and Energy and Commerce Committees moved forward to pass
recommendations out of each Committee without any sense from
CBO of coverage losses due to the severe cuts to Medicaid, the
repeal of the individual and employer-shared responsibility
provisions of current law, or the changes in the tax credits
available to help purchase health insurance on the individual
market.
CBO provided the Committee an estimate of the effects after
the reconciliation package was reported to the Committee on
Budget from the Ways and Means and Energy and Commerce
Committees. This estimate showed that 24 million Americans
would lose coverage, with 14 million Americans losing coverage
in the first year alone.
The Committee's reconciliation package provided generous
tax cuts to the wealthiest, while reducing health insurance
assistance for middle-class Americans. The tax breaks
considered by the Committee are focused on the wealthy
individuals and corporations, instead on middle-class
Americans. About $275 billion in tax breaks would benefit high-
income earners; about 62% of the tax breaks would go to
millionaires in 2020. Businesses and corporations would receive
nearly $192 billion in tax cuts. These and other tax breaks add
up to nearly $600 billion in lost revenue.
Democrats objected strenuously to the Republican approach
and instead believe the Committee should focus on policies that
matter to middle-class Americans under the jurisdiction of this
Committee, including financing long-term infrastructure,
reforming the tax system to address income inequality, and
further building on President Obama's record of job creation.
Democrats believe that the reconciliation package will
destabilize the health insurance market, which represents 18
percent of our gross domestic product.
The reconciliation package continues Republican efforts to
undermine and destabilize the health insurance market. It
undermines current law and the stability of both the individual
and group health insurance markets by gutting individual and
employer-shared responsibility provisions. The reconciliation
package would reduce the uptake of the premium tax credits and
the Medicaid expansion established in the Affordable Care Act
(ACA), which have made health care affordable for millions of
individuals. Reduced uptake of the Medicaid expansion and the
tax credits disproportionately impacts low- and middle-income
Americans and places them at risk for health insecurity and
unexpected medical expenses. Based on independent estimates,
roughly 24 million Americans would lose their insurance
coverage because of this reconciliation package when taken
together with the reconciliation recommendations passed by the
Energy and Commerce Committee.\4\ Further, this reconciliation
package reduces the life of the Medicare Trust Fund by three
years by reducing $170 billion from the Medicare Trust Fund,
which puts Medicare at risk for 57 million seniors and
individuals with disabilities.
---------------------------------------------------------------------------
\4\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the-gop-health-care-plan/
---------------------------------------------------------------------------
Individual and employer-shared responsibility provisions
are key to maintaining the robust and healthy risk pools that
allow the ACA health insurance reforms to improve consumer
protections while controlling health care costs. This is
because well-functioning insurance markets rely on
participation of both healthy and sick individuals to spread
risk across the pool. The reconciliation package effectively
would repeal the individual and employer-shared responsibility
penalty, leading to premium increases of an estimated 20
percent in the individual market alone. In spite of President
Trump and Congressional Republicans' efforts to sabotage the
ACA, millions of Americans have enrolled in the health
insurance Marketplaces, many using the available financial
assistance, and millions more have enrolled in expanded
Medicaid programs.
Despite promises made by President Trump, the
reconciliation package would not cover more people or offer
more affordable coverage with comparable benefits. Instead,
this package leads to an estimated coverage loss of 24 million
people while gutting benefits and consumer protections as a
mechanism for affordability. When coupled with the legislation
passed out of the Energy and Commerce Committee, the
reconciliation package would return to a time when the market
once again discriminates against those with pre-existing
conditions and leaves those that might need medical care in the
future without meaningful coverage. The reconciliation package
provides for tax credits less generous than current law with no
assistance with out-of-pocket expenses. Instead, the
reconciliation package enshrines high deductible health plans
that would increase out-of-pocket expenses. However, these
plans do not address the underlying issues of access to quality
services and the cost of care.
Since January of 2009, the Republicans voted to repeal or
undermine the ACA more than 65 times. Democrats offered a
number of amendments in Committee to point out serious flaws
with the reconciliation package. For example, at the beginning
of the mark up, Democrats asked Republicans to postpone mark up
until CBO could provide a comprehensive report on costs,
coverage losses, and premium effects of the reconciliation
package.
In that regard, Congressman Lloyd Doggett (D-TX) offered a
motion to postpone the markup for one week to allow time for
review of the bill and the CBO estimate that was not available
prior to or during the mark up. For over four decades, CBO has
been recognized as the official referee of costs and effects of
legislation passed in the House and Senate. Congress relies on
CBO's non-partisan estimates to evaluate legislative proposals.
Democrats were concerned that Republicans deliberately moved
forward with the reconciliation package without a CBO score in
an effort to conceal the harmful effects of the reconciliation
package on nearly all Americans.
The contrast of this rushed process versus the lengthy and
transparent process of enacting the ACA is striking. In 2009,
House Committees posted a draft of the ACA legislation for
review and comment a month before the mark-up process began,
holding multiple hearings and providing the public with two
preliminary CBO estimates on July 8th and July 14th. Democrats
maintain that there is no reason to rush to mark-up this
reconciliation package without a CBO score, or without a
hearing to consider the implications of the package.
Congressman Doggett's amendment was tabled on a party line
vote.
The reconciliation recommendation contained in this
Committee Print gives a $400 million tax break to corporations
by providing a deduction for health insurance company executive
salaries in excess of $500,000. In 2013, the 10 biggest health
insurance companies paid their top 57 executives a total of
$300 million. Democrats expressed significant concerns that
this reconciliation recommendation was a boondoggle for health
insurance company executives. Because the ACA capped the amount
insurance companies could deduct for executive salaries at a
lower amount, these companies were able to deduct only 27% of
this total. If the Republicans reopen this loophole, these
insurance companies would be able to deduct 96%.\5\ Opening a
tax loophole for executive compensation would do nothing to
make insurance more affordable for middle-class Americans.
---------------------------------------------------------------------------
\5\http://www.ips-dc.org/wp-content/uploads/2014/08/EE14_Final1.pdf
---------------------------------------------------------------------------
The reconciliation recommendations before the Committee
were structured in such a way to significantly curtail the
germaneness of amendments that Democrats might wish to offer.
Nevertheless, Democrats offered a series of amendments to
highlight the reconciliation package's serious shortcomings,
virtually all of which were ruled non-germane by Chairman Kevin
Brady (R-TX) and appealed by Democrat Members. The appeals were
then defeated by party-line votes.
Congressman Earl Blumenauer (D-OR) offered an amendment to
ensure the reconciliation package met the test that President
Trump laid out for his health care plan. The amendment stated
that the reconciliation package does not take effect unless the
CBO certifies that everybody gets health insurance as a result
of the package. President Trump noted, ``Everybody's got to be
covered. This is an un-Republican thing for me to say because a
lot of times they say, `No, no, the lower 25 percent that can't
afford private.' But--I am going to take care of everybody. I
don't care if it costs me votes or not. Everybody's going to be
taken care of much better than they're taken care of now . . .
They're going to be taken care of.''\6\ Chairman Brady ruled
the amendment not in order.
---------------------------------------------------------------------------
\6\http://www.cbsnews.com/news/donald-trump-60-minutes-scott-
pelley/
---------------------------------------------------------------------------
Tax Policy Subcommittee Ranking Member Congressman Doggett
(D-TX) offered an amendment to request that the Ways and Means
Committee use its oversight authority to obtain and review
President Trump's tax returns from the Treasury Department in
accordance with 6103(f)(1). Chairman Brady ruled the amendment
not in order.
Health Subcommittee Ranking Member Levin (D-MI) offered an
amendment to require that a CBO score of the GOP health care
bill be made public for at least 7 days before a vote on the
bill in the House, to allow for transparency and time for
Members and the public to understand the effects of the
legislation. Despite Chairman Brady's call for transparency,
Chairman Brady ruled the amendment not in order.
Congressman Joe Crowley (D-NY) offered an amendment
identical to one that Chairman Brady offered in the 2009 mark
up of the health care bill relating to transparency. The
amendment would have expressed the Sense of the Congress that
prior to voting on this bill, each Member certifies in the
Congressional Record that he or she has read the entire bill.
The amendment would further express the sense that the bill
should be available to the public for 72 hours prior to the
vote. Although this exact amendment was ruled germane in 2009
by then Chairman Charles Rangel (D-NY), Chairman Brady ruled
the amendment not in order.
Given the reconciliation package proposes enormous tax cuts
of nearly $600 billion and likely dramatic declines in the
number of Americans with health insurance, Congressman Ron Kind
(D-WI) offered an amendment to promote fiscal and moral
responsibility. His amendment would have required the
Republican health care bill to be fully paid for and not
increase the number of uninsured Americans. This amendment was
again ruled not in order by Chairman Brady.
I offered an amendment to protect against job loss at local
hospitals. Hospital associations have noted that repealing the
ACA combined with the loss of health insurance for millions of
Americans would lead to a large increase in uncompensated care
that could threaten hospital viability. Uninsured people often
must pay ``up front'' before services will be rendered. Between
2013 and 2014, total uncompensated care costs for hospitals
(including charity care costs and bad debt) dropped from $34.9
billion to $28.9 billion, a $6 billion or 17% drop, with nearly
all of the decrease occurring in expansion states. One hospital
association stated in response to this bill that, ``Our
hospitals could not sustain such reductions without scaling
back services or eliminating jobs.''\7\ Repealing all or part
of the ACA would increase the number of uninsured, increasing
hospital uncompensated care costs and bad debt from unpaid
medical bills. Chairman Brady ruled the amendment non-germane.
---------------------------------------------------------------------------
\7\https://essentialhospitals.org/general/statement-on-house-
reconciliation-legislation/
---------------------------------------------------------------------------
Congressman Brian Higgins (D-NY) offered an amendment to
protect older Americans from increased costs or reduced
benefits. Independent analysis indicated that under the GOP
bill, in 2020 the average enrollee who purchases their own
insurance would see costs increase by $2,409. For those age 55-
64, they would see costs increase $6,971. Independent analyses
found that this price increase for older Americans will cause
nearly half-a-million older Americans to become uninsured.
Organizations representing older Americans have expressed
serious concerns with the Republican proposal. AARP noted, ``We
write today to express our opposition to the American Health
Care Act. This bill would weaken Medicare's fiscal
sustainability, dramatically increase health care costs for
Americans aged 50-64, and put at risk the health care of
millions of children and adults with disabilities, and poor
seniors who depend on the Medicaid program for long-term
services and supports and other benefits.'' The organization
continues to observe that, ``Age rating plus premium increases
equal an unaffordable age tax.'' Chairman Brady ruled
Congressman Higgins' amendment out of order.
Congressman Mike Thompson (D-CA) offered an amendment that
would enable states to opt out of the GOP health care bill and
keep the health care options provided under the ACA. Millions
of Americans across the nation have benefitted from the past
seven years of the Affordable Care Act. Others have
comprehensive coverage today that they would like to keep. The
Republican legislation replaces current flexible and consumer-
friendly law with a one-size-fits-all Republican mandated plan
that would impose significant hardship on states. Many
Governors have expressed concern that repealing the ACA would
harm their residents. Regarding the GOP plan, the Democratic
Governors Association noted, ``Yet the only flexibility being
offered is deciding which of our vulnerable communities to
deprive of health coverage--those battling opioid addiction,
low-income families, senior citizens, or people with
disabilities.''
Further building on the theme of ensuring Americans do not
lose what they have today, Congressman John Lewis (D-GA)
offered an amendment that would require that the Republican
bill not result in loss of coverage or an increase in the
number of uninsured individuals. The Brookings Institution
estimates that coverage loss under the legislation could range
from a low of 15 million to more than 20 million Americans.\8\
Adults who are uninsured are three times more likely than
insured adults to say they have not seen or spoken with a
medical provider about their health in the past year.\9\
Uninsured Americans are less likely to receive recommended
screening tests such as blood pressure checks, cholesterol
checks, blood sugar screening, pap smear or mammogram (among
women), and colon cancer screening.\10\ Lacking insurance also
is a major factor driving individuals into debt. Uninsured
people are more likely than those with insurance (53% vs. 20%)
to report having trouble paying or being unable to pay medical
bills in the past year.\11\ In 2015, 27% of uninsured adults
reported that medical bills caused them to use up all or most
of their savings, 21% said they led to difficulties paying for
basic necessities, 22% said it led them to borrow money, and
27% said it led to being contacted by a collection agency.\12\
Democrats believe it is impotiant for health and financial
security that Americans are able to retain insurance coverage.
The coverage losses under the Republican bill are likely to
worsen health outcomes and drive millions into debt. Chairman
Brady ruled Congressman Thompson's amendment out of order.
---------------------------------------------------------------------------
\8\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the gop-health-care-plan/
\9\http://files.kff.org/attachment/Report-The-Uninsured-A%20Primer-
Key-Facts-about-Health-lns urance-and-the Unisured-in-America-in-the-
Era-of-Health-Reform
\10\http://files.kff.org/attachment/Report-The-Uninsured-
A%20Primer-Key-Facts-about-Health-Insurance-and-the-Unisured-in-
America-in-the-Era-of-Health-Reform
\11\http://kff.org/uninsured/fact-sheet/key-facts-about-the-
uninsured-population/
\12\http://kff.org/report-section/the-uninsured-a-primer-key-facts-
about-health-insurance-and-the-uninsured-in-the-wake-of-national-
health-reform-what-are-the-financial-implications-of-lacking-coverage/
---------------------------------------------------------------------------
Congressman Bill Pascrell (D-NJ) offered an amendment to
prevent middle-class tax increases and require the GOP health
care bill to not increase taxes on families earning less than
$250,000 per year. This amendment was nearly identical to an
amendment offered by Rep. Cathy McMorris Rodgers (R-WA) during
the passage of the ACA in 2009. Democrats are concerned that
while more than 60 percent of the tax giveaways in the
Republican package go to millionaires, ordinary Americans will
suffer tax increases as Republicans dramatically reduce the
value of the tax subsidy for individuals purchasing their own
health insurance. Chairman Brady again ruled this amendment out
of order.
Congressman Danny Davis (D-IL) offered an amendment to
prohibit provisions of the bill from taking effect if the
Institute of Medicine certified that coverage for individuals
with mental health and substance abuse issues would decrease,
or out-of-pocket costs would increase. The United States is
struggling to improve access to mental health treatment and
also with an epidemic of opiate addiction. Numerous studies
have documented that repealing current law, including
provisions that extend coverage to working Americans, would set
efforts to improve treatment for mental health and substance
abuse back significantly.\13\ Chairman Brady ruled Congressman
Davis' amendment out of order.
---------------------------------------------------------------------------
\13\http://thehill.com/blogs/pundits-blog/healthcare/313672-keep-
obamacare-to-keep-progress-on-treating-opioiddisorders; https://
www.acponline.org/system/files/documents/advocacy/where_we_stand/
assets/fact_sheet_impact_a ca_repeal_2016.pdf
---------------------------------------------------------------------------
Recognizing that rural America has benefitted
significantly from the current law, Congresswoman Terri Sewell
(D-AL) offered an amendment to protect rural hospitals and jobs
from the negative effects of the Republican bill. Rural
individuals saw greater gains in insurance coverage under the
Affordable Care Act compared with urban individuals (7.2
percentage point increase versus 6.3 percentage point increase
for urban areas) and some rural communities experienced even
larger decreases in the number of uninsured. Historically,
rural residents are not only more likely to be uninsured but
also suffer longer periods of uninsurance, leading rural
residents to be denied coverage or charged more for pre-
existing conditions. Further, rural communities tend to be
high-cost areas for insurance coverage. As a result, the flat
tax credits not pegged to local affordability would
particularly harm rural communities. Decreased stability in
insurance markets would make insurance companies less likely to
offer comprehensive coverage in rural areas. The Republican
bill undermines current law protections on access to affordable
coverage and could disproportionately harm those in rural
areas. Chairman Brady ruled Congressman Sewell's amendment out
of order.
Congresswoman Linda Sanchez (D-CA) offered an amendment to
repeal the high-cost plan excise tax (often called the Cadillac
tax). The tax unfairly reduces health benefits for employees
who have these plans, particularly those with expensive chronic
illnesses. The AFL-CIO noted, ``Far from providing an
improvement on the coverage provided by the ACA, this
Republican alternative will result in millions of Americans
losing their coverage. . . . Estimates from the Mercer Firm
find that by the time the AHCA imposes the tax in 2025, the
coverage provided by more than 40% of employers with 50+
workers would be impacted by the tax. CBO predicts that the
vast majority of employers confronted with this tax are
expected to shift costs to their workers by increasing
deductibles, copays, co-insurance, and maximum out of pocket
limits to avoid paying the tax.''\14\ One study notes, ``The
tax subsidy is a big help for people with (2009) family incomes
of $38,550 to $100,000, but not for those with lower or higher
incomes.'' The authors further comment that the new tax on
benefits ``will hit the middle class hardest and spare the
wealthy.''\15\ The Republican bill repeals the revenue raisers
in the Affordable Care Act that affect the wealthy and
corporations, but would not repeal the tax that could affect
middle-class workers. Chairman Brady ruled Congresswoman
Sanchez's amendment out of order.
---------------------------------------------------------------------------
\14\AFL-CIO letter from William Samuels to Congresswoman Sanchez,
March 8, 2017.
\15\``The `Cadillac Tax' on Health Benefits in the United States
Will Hit the Middle Class Hardest: Refuting the Myth that Health
Benefit Tax Subsidies Are Regressive,'' by Steffie Woolhandler, M.D.,
M.P.H., and David U. Himmelstein, M.D., International Journal of Health
Services, OnlineFirst ahead of print, first published on March 9, 2016,
as doi:10.1177/0020731416637163
---------------------------------------------------------------------------
Finally, once all amendments were voted down on partisan
votes, Republicans defeated an amendment on party lines that
would have struck the provision providing a tax break to health
insurance companies.
Richard E. Neal,
Ranking Member.
Ranking Member Richard Neal
Opening Statement
Ways and Means Committee ACA Repeal Markup
Wednesday, March 8, 2017
Mr. Chairman, I am disappointed we are here today to
consider legislation that reflects not only bad policy, but bad
process. And a number of important groups agree: AARP, AMA and
AHA all oppose this bill. This bill suffers from an identity
crisis. Is this a health care bill or a tax cut bill?
Does it lower costs? No.
Does it bend the cost curve? No.
Does it cover more Americans? No.
Does it cut the deficit? No.
Even the President wants more information--earlier this
year he called it an ``unbelievably complex subject. Nobody
knew healthcare could be so complicated.'' This Republican
bill--which they cleverly broke up into separate parts to try
to distract the American public--fails to protect 152 million
Americans with pre-existing conditions and would allow insurers
to charge older people five times as much as younger people,
essentially implementing an ``age tax''. It forces millions to
pay more for less care.
Transparency is clearly lacking in this process. As
recently as last week, I called upon House Republicans to
provide an open and transparent process when they consider any
health care legislation aimed at repealing or replacing the
Affordable Care Act. The goal: to ensure all Americans had the
opportunity to fully understand and consider how any Republican
health care plan could impact them. Instead, the Republicans
hid a draft bill somewhere in the basement of the Capitol with
armed police officers. That is as far as you can get from
transparency. The American public deserve better from their
representatives. Also to consider a bill of this magnitude
without a CBO score is not only puzzling and concerning, but
also irresponsible. When the Democrats created the Affordable
Care Act, it was a thoroughly transparent and open process.
Let's look at the numbers:
In the House
79 bipartisan health insurance reform hearings
and markups over 2 years
100 hours in hearings
181 witnesses from both sides of the aisle
239 Republican and Democrat amendments--121 were
accepted
30 days of online review of the original House
bill before the first markup
72 hours--number of hours the House bill was
online for review before final vote
3,000 health care town halls and public events
In the Senate
53 health insurance reform hearings in the
Senate Finance Committee
8 days of markups with 135 amendments considered
in Senate Finance Committee
47 bipartisan hearings and other open dialogues
with 300 amendments during a 13 day markup in the Senate HELP
Committee
25 consecutive days in session to discuss health
reform in the Senate
160 hours total in the Senate considering health
reform legislation
147 Republican amendments in the final Senate
bill
This bill sabotages the Marketplaces where close to 10
million Americans today get coverage and starts a death spiral
from which we will never recover. Healthy people won't bother
with coverage or only buy bare bones policies. Sick people who
need coverage would buy policies--if they are even available--
that will undoubtedly become more and more expensive and
unaffordable, especially in light of the inadequate tax
credits.
The most egregious part of the Republican plan slashes
Medicaid funding to pay for tax cuts that benefit the rich.
Medicaid helps pay the costs for more than 60% of all nursing
home residents nationwide, and helps families afford quality
nursing home care for their elderly parents and family members
with disabilities. The Republican Medicaid proposal makes it
harder and much costlier for families to find long-term care
for elderly parents or children with severe disabilities.
In addition, it would end the Medicaid expansion--a move
that would have devastating consequences in my state of
Massachusetts where it has been a critical tool for thousands
of individuals and families with loved ones in long-term care
facilities or who have dementia. It also provides
rehabilitation options for individuals and families in the
grips of opioid addiction. The reality is that Medicaid is now
a middle-class benefit.
The measure also would cut the span of Medicare by two
years at a time when millions of baby boomers are joining and
will rely heavily on this critical program. It's a $170 billion
tax giveaway to the wealthy, while starving the Medicare trust
fund.
Hospitals would face crippling debt as they face increased
uncompensated care and lower reimbursement rates. In turn, this
would lead to job loss in many hospitals and have a negative
ripple effect in communities where hospitals are the largest
employer. For example, in Western Massachusetts, Baystate
Healthy provides 12,000 jobs and has a $4 billion statewide
economic impact.
Let's call this bill what it is: a plan that creates chaos
in the insurance market that directly impacts patients and
providers, hurts hospitals, the communities they serve and
their regional economies.
Before concluding, I would like to note that today's markup
is really the Republicans' first step on tax reform. This
legislation is a tax bill; almost every provision amends the
Internal Revenue Code. So, we need to view this bill through
the lens of tax reform as well. And through that lens, the bill
fails the test set out by Secretary Mnuchin for tax reform
that, ``there will be no absolute tax cut for the upper
class.'' The Republican bill absolutely provides a tax cut for
the wealthy and health care industry of almost $600 billion
dollars. In fact, it has been estimated that 400 households
with the highest-income would receive tax cuts averaging about
$7 million apiece each year. At the same time, the bill hurts
the middle-class through less generous tax credits, cuts to
Medicaid and higher premiums with less quality care.
Bottom line: this is ultimately about affordability. If
Republicans take away critical coverage benefits in the ACA
coupled with hurting the middle-class, it would drastically
increase costs and lower coverage and quality care. As the
Republicans have heard loud and clear during town halls, people
are afraid of losing their health insurance. It would be
irresponsible for Republicans to take away health care programs
on which their constituents across a broad age and economic
spectrum depend.
COMMITTEE PRINT
Budget Reconciliation Legislative Recommendations Relating to
Remuneration from Certain Insurers
Subtitle __--Remuneration From Certain Insurers
SEC. _1. REMUNERATION FROM CERTAIN INSURERS.
Paragraph (6) of section 162(m) of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subparagraph:
``(I) Termination.--This paragraph shall not
apply to taxable years beginning after December
31, 2017.''.
CONTENTS
Page
SUBTITLE E--REVENUE PROVISIONS................................... 514
I. SUMMARY AND BACKGROUND.........................................514
II. EXPLANATION OF PROVISION.......................................515
III. VOTES OF THE COMMITTEE.........................................517
IV. BUDGET EFFECTS OF THE PROVISION................................518
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.....553
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED....................555
VII. DISSENTING VIEWS...............................................731
SUBTITLE [E]--REPEAL OF NET INVESTMENT INCOME TAX
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
In fulfillment of the reconciliation instructions included
in section 2002 of the Concurrent Resolution on the Budget for
Fiscal Year 2017 (S. Con. Res. 3), the Committee on Ways and
Means ordered favorably transmitted (with a quorum being
present) the Budget Reconciliation Legislative Recommendations
Relating to Repeal of the Net Investment Income Tax. The
Committee recommends the repeal of the net investment income
tax. The Patient Protection and Affordable Care Act of 2010
(``PPACA''), Pub. L. No. 111-148 (March 23, 2010), as amended
by the Health Care and Education Reconciliation Act of 2010
(``HCERA''), Pub. L. No. 111-152 (March 30, 2010),\1\ imposes a
tax of 3.8-percent on net investment income for taxpayers whose
modified adjusted gross income exceeds $250,000 (in the case of
joint filers) and $200,000 (in the case of other filers). The
Committee's recommendation strikes chapter 2A of subtitle A of
the Internal Revenue Code of 1986, as added and amended by
PPACA and HCERA.
---------------------------------------------------------------------------
\1\PPACA and HCERA are collectively referred to as the Affordable
Care Act (``ACA'').
---------------------------------------------------------------------------
B. Background and Need for Legislation
As the Committee continues to actively pursue comprehensive
health care reform to relieve unnecessary burdens on the
broader economy and on taxpayers in need of access to quality
health care, the Committee believes that repealing the
additional 3.8-percent tax on net investment income will
improve the efficiency of capital markets and promote long-run
economic growth.
C. Legislative History
Budget resolution
On January 13, 2017, the House of Representatives approved
S. Con. Res. 3, the budget resolution for fiscal year 2017.
Pursuant to section 2002(a)(3) of S. Con. Res. 3, the Committee
on Ways and Means was directed to submit to the Committee on
the Budget recommendations for changes in law within the
jurisdiction of the Committee on Ways and Means sufficient to
reduce the deficit by $1,000,000,000 for the period of fiscal
years 2017 through 2026.
Committee action
Beginning March 8, 2017, in response to its instructions
under the budget resolution, the Committee on Ways and Means
marked up the budget reconciliation legislative recommendations
relating to repeal of the tax on net investment income under
PPACA and ordered the legislative recommendations, as amended,
favorably transmitted (with a quorum being present) on March 9,
2017.
Committee hearings
The Committee on Ways and Means held hearings regarding the
President's Fiscal Year 2017 budget submission on February 11,
2016, and February 10, 2016, with Secretary of the Treasury
Jacob J. Lew and Secretary of Health and Human Services Sylvia
Burwell, respectively, in which the harmful effects of ACA
taxes were discussed. Moreover, the Oversight Subcommittee held
a hearing on March 5, 2013, discussing the tax-related
provisions of the ACA.
II. EXPLANATION OF PROVISION
A. Repeal of Net Investment Income Tax
PRESENT LAW
In general
A tax is imposed with respect to the net investment income
of certain high-income individuals, estates and trusts.\2\ In
the case of an individual, the tax is 3.8 percent of the lesser
of net investment income or the excess of modified adjusted
gross income over the threshold amount.
---------------------------------------------------------------------------
\2\Sec. 1411.
---------------------------------------------------------------------------
The threshold amount is $250,000 in the case of a joint
return or surviving spouse, $125,000 in the case of a married
individual filing a separate return, and $200,000 in any other
case.
Modified adjusted gross income is adjusted gross income
increased by the amount excluded from income as foreign earned
income under section 911(a)(1) (net of the deductions and
exclusions disallowed with respect to the foreign earned
income).
In the case of an estate or trust, the tax is 3.8 percent
of the lesser of undistributed net investment income or the
excess of adjusted gross income (as defined in section 67(e))
over the dollar amount at which the highest income tax bracket
applicable to an estate or trust begins.
The tax does not apply to a nonresident alien or to a
trust, all the unexpired interests in which are devoted to
charitable purposes. The tax also does not apply to a trust
that is exempt from tax under section 501 or a charitable
remainder trust exempt from tax under section 664.
The tax is subject to the individual estimated tax
provisions. The tax is not deductible in computing any tax
imposed by subtitle A of the Internal Revenue Code (relating to
income taxes).
Net investment income
Net investment income is investment income reduced by the
deductions properly allocable to such income.
Investment income is the sum of (i) gross income from
interest, dividends, annuities, royalties, and rents (other
than income derived from any trade or business to which the tax
does not apply), (ii) other gross income derived from any
business to which the tax applies, and (iii) net gain (to the
extent taken into account in computing taxable income)
attributable to the disposition of property other than property
held in a trade or business to which the tax does not apply.\3\
---------------------------------------------------------------------------
\3\Gross income does not include items, such as interest on tax-
exempt bonds, veterans' benefits, and excluded gain from the sale of a
principal residence, which are excluded from gross income under the
income tax.
---------------------------------------------------------------------------
In the case of a trade or business, the tax applies if the
trade or business is a passive activity with respect to the
taxpayer or the trade or business consists of trading financial
instruments or commodities (as defined in section 475(e)(2)).
The tax does not apply to other trades or businesses conducted
by a sole proprietor, partnership, or S corporation.
In the case of the disposition of a partnership interest or
stock in an S corporation, gain or loss is taken into account
only to the extent gain or loss would be taken into account by
the partner or shareholder if the entity had sold all its
properties for fair market value immediately before the
disposition. Thus, only net gain or loss attributable to
property held by the entity which is not property attributable
to an active trade or business is taken into account.\4\
---------------------------------------------------------------------------
\4\For this purpose, a business of trading financial instruments or
commodities is not treated as an active trade or business.
---------------------------------------------------------------------------
Income, gain, or loss on working capital is not treated as
derived from a trade or business. Investment income does not
include distributions from a qualified retirement plan or
amounts subject to SECA tax.
REASONS FOR CHANGE
The Committee believes that the 3.8-percent tax on net
investment income adversely affects the efficiency of capital
markets, by discouraging taxpayers from disposing of their
assets and reinvesting the proceeds in a more productive use,
exacerbating the ``lock-in'' effect. Furthermore, the Committee
believes that repealing the net investment income tax will
promote savings and investment for households. Finally, the
Committee believes that repealing the tax on net investment
income will promote long-run economic growth.
DESCRIPTION OF PROVISION
The provision repeals the 3.8-percent tax on net investment
income.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2017.
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 the Reconciliation Legislative Recommendations
Relating to Repeal of the Net Investment Income Tax on March 8,
2017:
The vote on the amendment by Mr. Davis to the amendment in
the nature of a substitute to Subtitle __: Budget
Reconciliation Legislative Recommendations Relating to Repeal
of Net Investment Tax, which would require the taxpayer
benefiting from the investment tax benefit to have a clean drug
test, was not agreed to by a roll call vote of 24 nays to 15
yeas (with a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady........................ ....... X ......... Mr. Neal........... X ....... .........
Mr. Johnson...................... ....... X ......... Mr. Levin.......... X ....... .........
Mr. Nunes........................ ....... X ......... Mr. Lewis.......... X ....... .........
Mr. Tiberi....................... ....... X ......... Mr. Doggett........ X ....... .........
Mr. Reichert..................... ....... X ......... Mr. Thompson....... X ....... .........
Mr. Roskam....................... ....... X ......... Mr. Larson......... X ....... .........
Mr. Buchanan..................... ....... X ......... Mr. Blumenauer..... ....... ....... .........
Mr. Smith (NE)................... ....... X ......... Mr. Kind........... X ....... .........
Ms. Jenkins...................... ....... X ......... Mr. Pascrell....... X ....... .........
Mr. Paulsen...................... ....... X ......... Mr. Crowley........ X ....... .........
Mr. Marchant..................... ....... X ......... Mr. Davis.......... X ....... .........
Ms. Black........................ ....... X ......... Ms. Sanchez........ X ....... .........
Mr. Reed......................... ....... X ......... Mr. Higgins........ X ....... .........
Mr. Kelly........................ ....... X ......... Ms. Sewell......... X ....... .........
Mr. Renacci...................... ....... X ......... Ms. DelBene........ X ....... .........
Mr. Meehan....................... ....... X ......... Ms. Chu............ X ....... .........
Ms. Noem......................... ....... X
Mr. Holding...................... ....... X
Mr. Smith (MO)................... ....... X
Mr. Rice......................... ....... X
Mr. Schweikert................... ....... X
Ms. Walorski..................... ....... X
Mr. Curbelo...................... ....... X
Mr. Bishop....................... ....... X
----------------------------------------------------------------------------------------------------------------
The legislation was ordered favorably transmitted to the
House Committee on the Budget as amended by a roll call vote of
24 yeas and 15 nays (with a quorum being present). The vote was
as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady........................ X ....... ......... Mr. Neal........... ....... X .........
Mr. Johnson...................... X ....... ......... Mr. Levin.......... ....... X .........
Mr. Nunes........................ X ....... ......... Mr. Lewis.......... ....... X .........
Mr. Tiberi....................... X ....... ......... Mr. Doggett........ ....... X .........
Mr. Reichert..................... X ....... ......... Mr. Thompson....... ....... X .........
Mr. Roskam....................... X ....... ......... Mr. Larson......... ....... X .........
Mr. Buchanan..................... X ....... ......... Mr. Blumenauer..... ....... ....... .........
Mr. Smith (NE)................... X ....... ......... Mr. Kind........... ....... X .........
Ms. Jenkins...................... X ....... ......... Mr. Pascrell....... ....... X .........
Mr. Paulsen...................... X ....... ......... Mr. Crowley........ ....... X .........
Mr. Marchant..................... X ....... ......... Mr. Davis.......... ....... X .........
Ms. Black........................ X ....... ......... Ms. Sanchez........ ....... X .........
Mr. Reed......................... X ....... ......... Mr. Higgins........ ....... X .........
Mr. Kelly........................ X ....... ......... Ms. Sewell......... ....... X .........
Mr. Renacci...................... X ....... ......... Ms. DelBene........ ....... X .........
Mr. Meehan....................... X ....... ......... Ms. Chu............ ....... X .........
Ms. Noem......................... X
Mr. Holding...................... X
Mr. Smith (MO)................... X
Mr. Rice......................... X
Mr. Schweikert................... X
Ms. Walorski..................... X
Mr. Curbelo...................... X
Mr. Bishop....................... X
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE PROVISION
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 ``Repeal of Net
Investment Income Tax.''
The budget reconciliation legislative recommendations, as
transmitted, are estimated to have the following effects on
budget receipts for fiscal years 2016-2025:
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in billions of dollars--
---------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-21 2017-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
-1.5...................................... -10.5 -7.5 -16.7 -17.8 -18.7 -19.7 -20.7 -21.7 -22.7 -54.1 -157.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.
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
budget reconciliation legislative recommendations involve no
new or increased budget authority. The Committee states further
that the budget reconciliation legislative recommendations
involve no new or increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by the CBO is
provided.
CONGRESSIONAL BUDGET OFFICE
COST ESTIMATE
----------
March 13, 2017.
American Health Care Act
Budget Reconciliation Recommendations of the House Committees on Ways
and Means and Energy and Commerce, March 9, 2017
SUMMARY
The Concurrent Resolution on the Budget for Fiscal Year
2017 directed the House Committees on Ways and Means and Energy
and Commerce to develop legislation to reduce the deficit. The
Congressional Budget Office and the staff of the Joint
Committee on Taxation (JCT) have produced an estimate of the
budgetary effects of the American Health Care Act, which
combines the pieces of legislation approved by the two
committees pursuant to that resolution. In consultation with
the budget committees, CBO used its March 2016 baseline with
adjustments for subsequently enacted legislation, which
underlies the resolution, as the benchmark to measure the cost
of the legislation.
Effects on the Federal Budget
CBO and JCT estimate that enacting the legislation would
reduce federal deficits by $337 billion over the 2017-2026
period. That total consists of $323 billion in on-budget
savings and $13 billion in off-budget savings. Outlays would be
reduced by $1.2 trillion over the period, and revenues would be
reduced by $0.9 trillion.
The largest savings would come from reductions in outlays
for Medicaid and from the elimination of the Affordable Care
Act's (ACA's) subsidies for nongroup health insurance. The
largest costs would come from repealing many of the changes the
ACA made to the Internal Revenue Code--including an increase in
the Hospital Insurance payroll tax rate for high-income
taxpayers, a surtax on those taxpayers' net investment income,
and annual fees imposed on health insurers--and from the
establishment of a new tax credit for health insurance.
Pay-as-you-go procedures apply because enacting the
legislation would affect direct spending and revenues. CBO and
JCT estimate that enacting the legislation would not increase
net direct spending or on-budget deficits by more than $5
billion in any of the four consecutive 10-year periods
beginning in 2027.
Effects on Health Insurance Coverage
To estimate the budgetary effects, CBO and JCT projected
how the legislation would change the number of people who
obtain federally subsidized health insurance through Medicaid,
the nongroup market, and the employment-based market, as well
as many other factors.
CBO and JCT estimate that, in 2018, 14 million more people
would be uninsured under the legislation than under current
law. Most of that increase would stem from repealing the
penalties associated with the individual mandate. Some of those
people would choose not to have insurance because they chose to
be covered by insurance under current law only to avoid paying
the penalties, and some people would forgo insurance in
response to higher premiums.
Later, following additional changes to subsidies for
insurance purchased in the nongroup market and to the Medicaid
program, the increase in the number of uninsured people
relative to the number under current law would rise to 21
million in 2020 and then to 24 million in 2026. The reductions
in insurance coverage between 2018 and 2026 would stem in large
part from changes in Medicaid enrollment--because some states
would discontinue their expansion of eligibility, some states
that would have expanded eligibility in the future would choose
not to do so, and per-enrollee spending in the program would be
capped. In 2026, an estimated 52 million people would be
uninsured, compared with 28 million who would lack insurance
that year under current law.
Stability of the Health Insurance Market
Decisions about offering and purchasing health insurance
depend on the stability of the health insurance market--that
is, on having insurers participating in most areas of the
country and on the likelihood of premiums' not rising in an
unsustainable spiral. The market for insurance purchased
individually (that is, nongroup coverage) would be unstable,
for example, if the people who wanted to buy coverage at any
offered price would have average health care expenditures so
high that offering the insurance would be unprofitable. In CBO
and JCT's assessment, however, the nongroup market would
probably be stable in most areas under either current law or
the legislation.
Under current law, most subsidized enrollees purchasing
health insurance coverage in the nongroup market are largely
insulated from increases in premiums because their out-of-
pocket payments for premiums are based on a percentage of their
income; the government pays the difference. The subsidies to
purchase coverage combined with the penalties paid by uninsured
people stemming from the individual mandate are anticipated to
cause sufficient demand for insurance by people with low health
care expenditures for the market to be stable.
Under the legislation, in the agencies' view, key factors
bringing about market stability include subsidies to purchase
insurance, which would maintain sufficient demand for insurance
by people with low health care expenditures, and grants to
states from the Patient and State Stability Fund, which would
reduce the costs to insurers of people with high health care
expenditures. Even though the new tax credits would be
structured differently from the current subsidies and would
generally be less generous for those receiving subsidies under
current law, the other changes would, in the agencies' view,
lower average premiums enough to attract a sufficient number of
relatively healthy people to stabilize the market.
Effects on Premiums
The legislation would tend to increase average premiums in
the nongroup market prior to 2020 and lower average premiums
thereafter, relative to projections under current law. In 2018
and 2019, according to CBO and JCT's estimates, average
premiums for single policyholders in the nongroup market would
be 15 percent to 20 percent higher than under current law,
mainly because the individual mandate penalties would be
eliminated, inducing fewer comparatively healthy people to sign
up.
Starting in 2020, the increase in average premiums from
repealing the individual mandate penalties would be more than
offset by the combination of several factors that would
decrease those premiums: grants to states from the Patient and
State Stability Fund (which CBO and JCT expect to largely be
used by states to limit the costs to insurers of enrollees with
very high claims); the elimination of the requirement for
insurers to offer plans covering certain percentages of the
cost of covered benefits; and a younger mix of enrollees. By
2026, average premiums for single policyholders in the nongroup
market under the legislation would be roughly 10 percent lower
than under current law, CBO and JCT estimate.
Although average premiums would increase prior to 2020 and
decrease starting in 2020, CBO and JCT estimate that changes in
premiums relative to those under current law would differ
significantly for people of different ages because of a change
in age-rating rules. Under the legislation, insurers would be
allowed to generally charge five times more for older enrollees
than younger ones rather than three times more as under current
law, substantially reducing premiums for young adults and
substantially raising premiums for older people.
Uncertainty Surrounding the Estimates
The ways in which federal agencies, states, insurers,
employers, individuals, doctors, hospitals, and other affected
parties would respond to the changes made by the legislation
are all difficult to predict, so the estimates in this report
are uncertain. But CBO and JCT have endeavored to develop
estimates that are in the middle of the distribution of
potential outcomes.
Macroeconomic Effects
Because of the magnitude of its budgetary effects, this
legislation is ``major legislation,'' as defined in the rules
of the House of Representatives.\1\ Hence, it triggers the
requirement that the cost estimate, to the greatest extent
practicable, include the budgetary impact of its macroeconomic
effects. However, because of the very short time available to
prepare this cost estimate, quantifying and incorporating those
macroeconomic effects have not been practicable.
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\1\Cl. 8 of Rule XIII of the Rules of the House of Representatives,
H.R. Res. 5, 115th Congress (2017).
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Intergovernmental and Private-Sector Mandates
JCT and CBO have reviewed the provisions of the legislation
and determined that they would impose no intergovernmental
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
JCT and CBO have determined that the legislation would
impose private-sector mandates as defined in UMRA. On the basis
of information from JCT, CBO estimates the aggregate cost of
the mandates would exceed the annual threshold established in
UMRA for private-sector mandates ($156 million in 2017,
adjusted annually for inflation).
MAJOR PROVISIONS OF THE LEGISLATION
Budgetary effects related to health insurance coverage
would stem primarily from the following provisions:
LEliminating penalties associated with the
requirements that most people obtain health insurance coverage
and that large employers offer their employees coverage that
meets specified standards.
LReducing the federal matching rate for adults
made eligible for Medicaid by the ACA to equal the rate for
other enrollees in the state, beginning in 2020.
LCapping the growth in per-enrollee payments for
most Medicaid beneficiaries to no more than the medical care
component of the consumer price index starting in 2020.
LRepealing current-law subsidies for health
insurance coverage obtained through the nongroup market--which
include refundable tax credits for premium assistance and
subsidies to reduce cost-sharing payments--as well as the Basic
Health Program, beginning in 2020.
LCreating a new refundable tax credit for health
insurance coverage purchased through the nongroup market
beginning in 2020.
LAppropriating funding for grants to states
through the Patient and State Stability Fund beginning in 2018.
LRelaxing the current-law requirement that
prevents insurers from charging older people premiums that are
more than three times larger than the premiums charged to
younger people in the nongroup and small-group markets. Unless
a state sets a different limit, the legislation would allow
insurers to charge older people five times more than younger
ones, beginning in 2018.
LRemoving the requirement, beginning in 2020, that
insurers who offer plans in the nongroup and small-group
markets generally must offer plans that cover at least 60
percent of the cost of covered benefits.
LRequiring insurers to apply a 30 percent
surcharge on premiums for people who enroll in insurance in the
nongroup or small-group markets if they have been uninsured for
more than 63 days within the past year.
Other parts of the legislation would repeal or delay many
of the changes the ACA made to the Internal Revenue Code that
were not directly related to the law's insurance coverage
provisions. Those with the largest budgetary effects include:
LRepealing the surtax on certain high-income
taxpayers' net investment income;
LRepealing the increase in the Hospital Insurance
payroll tax rate for certain high-income taxpayers;
LRepealing the annual fee on health insurance
providers; and
LDelaying when the excise tax imposed on some
health insurance plans with high premiums would go into effect.
In addition, the legislation would make several changes to
other health-related programs that would have smaller budgetary
effects.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
CBO and JCT estimate that, on net, enacting the legislation
would decrease federal deficits by $337 billion over the 2017-
2026 period (see Table 1). That change would result from a $1.2
trillion decrease in direct spending, partially offset by an
$883 billion reduction in revenues.
BASIS OF ESTIMATE
For this estimate, CBO and JCT assume that the legislation
will be enacted by May 2017. Costs and savings are measured
relative to CBO's March 2016 baseline projections, with
adjustments for legislation that was enacted after that
baseline was produced.
The largest budgetary effects would stem from provisions in
the recommendations from both committees that would affect
insurance coverage. Those provisions, taken together, would
reduce projected deficits by $935 billion over the 2017-2026
period. Other provisions would increase deficits by $599
billion, mostly by reducing tax revenues. All told, deficits
would be reduced by $337 billion over that period, CBO and JCT
estimate. (See Table 2 for the estimated budgetary effects of
each major provision.)
Budgetary Effects of Health Insurance Coverage Provisions
The $935 billion in estimated deficit reduction over the
2017-2026 period that would stem from the insurance coverage
provisions includes the following amounts (shown in Table 3):
LA reduction of $880 billion in federal outlays
for Medicaid;
LSavings of $673 billion, mostly stemming from the
elimination of the ACA's subsidies for nongroup health
insurance--which include refundable tax credits for premium
assistance and subsidies to reduce cost-sharing payments--in
2020;
LSavings of $70 billion mostly associated with
shifts in the mix of taxable and nontaxable compensation
resulting from net decreases in the number of people estimated
to enroll in employment-based health insurance coverage; and
LSavings of $6 billion from the repeal of a tax
credit for certain small employers that provide health
insurance to their employees.
Those decreases would be partially offset by:
LA cost of $361 billion for the new tax credit for
health insurance established by the legislation in 2020;
LA reduction in revenues of $210 billion from
eliminating the penalties paid by uninsured people and
employers;
LAn increase in spending of $80 billion for the
new Patient and State Stability Fund grant program; and
LA net increase in spending of $43 billion under
the Medicare program stemming from changes in payments to
hospitals that serve a disproportionate share of low-income
patients.
Methodology. The legislation would change the pricing of
nongroup insurance and the eligibility for and the amount of
subsidies to purchase that insurance. It would also lead to
changes in Medicaid eligibility and per capita spending. The
legislation's effects on health insurance coverage would depend
in part on how responsive individuals are to changes in the
prices, after subsidies, they would have to pay for nongroup
insurance; on changes in their eligibility for public coverage;
and on their underlying desire for such insurance. Effects on
coverage would also stem from how responsive firms are to
changes in those post subsidy prices and in the attractiveness
of other aspects of nongroup alternatives to employment-based
insurance.
To capture those complex interactions, CBO uses a
microsimulation model to estimate how rates of coverage and
sources of insurance would change as a result of alterations in
eligibility and subsidies for--and thus the net cost of--
various insurance options. Based on survey data, that model
incorporates a wide range of information about a representative
sample of individuals and families, including their income,
employment, health status, and health insurance coverage. The
model also incorporates information from the research
literature about the responsiveness of individuals and
employers to price changes and the responsiveness of
individuals to changes in eligibility for public coverage. CBO
regularly updates the model so that it incorporates information
from the most recent administrative data on insurance coverage
and premiums. CBO and JCT use that model--in combination with
models of tax revenues, models of Medicaid spending and actions
by states, projections of trends in early retirees' health
insurance coverage, and other available information--to inform
their estimates of the numbers of people with certain types of
coverage and the associated federal budgetary costs.\2\
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\2\For additional information, see Congressional Budget Office,
``Methods for Analyzing Health Insurance Coverage'' (accessed March 13,
2017), www.cbo.gov/topics/health-care/methods-analyzing-health-
insurance-coverage.
Effects of Repealing Mandate Penalties. Eliminating the
penalties associated with two requirements, while keeping the
requirements themselves in place, would affect insurance
coverage in various ways. Those two requirements are that most
people obtain health insurance coverage (also called the
individual mandate) and that large employers offer their
employees health insurance coverage that meets specified
standards (also called the employer mandate). Eliminating their
associated penalties would reduce federal revenues starting in
2017, but CBO and JCT estimate that doing so would also
substantially reduce the number of people with health insurance
coverage and, accordingly, would reduce the costs incurred by
the federal government in subsidizing some health insurance
coverage. The estimated savings stemming from fewer people
enrolling in Medicaid, in health insurance obtained through the
nongroup market, and in employment-based health insurance
coverage would exceed the estimated loss of revenues from
eliminating mandate penalties.
CBO and JCT estimate that repealing the individual mandate
penalties would also result in higher health insurance premiums
in the nongroup market after 2017.\3\ Insurers would still be
required to provide coverage to any applicant, would not be
able to vary premiums to reflect enrollees' health status or to
limit coverage of preexisting medical conditions, and would be
limited in how premiums could vary by age. Those features are
most attractive to applicants with relatively high expected
costs for health care, so CBO and JCT expect that repealing the
individual mandate penalties would tend to reduce insurance
coverage less among older and less healthy people than among
younger and healthier people. Thus, the agencies estimate that
repealing those penalties, taken by itself, would increase
premiums. Nevertheless, CBO and JCT anticipate that a
significant number of relatively healthy people would still
purchase insurance in the nongroup market because of the
availability of government subsidies.
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\3\CBO and JCT expect that insurers would not be able to change
their 2017 premiums because those premiums have already been set.
Major Changes to Medicaid. CBO estimates that several major
provisions affecting Medicaid would decrease direct spending by
$880 billion over the 2017-2026 period. That reduction would
stem primarily from lower enrollment throughout the period,
culminating in 14 million fewer Medicaid enrollees by 2026, a
reduction of about 17 percent relative to the number under
current law. Some of that decline would be among people who are
currently eligible for Medicaid benefits, and some would be
among people who CBO projects would be made eligible as a
result of state actions in the future under current law (that
is, from additional states adopting the optional expansion of
eligibility authorized by the ACA). Some decline in spending
and enrollment would begin immediately, but most of the changes
would begin in 2020, when the legislation would terminate the
enhanced federal matching rate for new enrollees under the
ACA's expansion of Medicaid and would place a per capita-based
cap on the federal government's payments to states for medical
assistance provided through Medicaid. By 2026, Medicaid
spending would be about 25 percent less than what CBO projects
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under current law.
Changes Before 2020. Under current law, the penalties
associated with the individual mandate apply to some Medicaid-
eligible adults and children. (For example, the penalties apply
to single individuals with income above about 90 percent of the
federal poverty guidelines, also known as the federal poverty
level, or FPL). CBO estimates that, without those penalties,
fewer people would enroll in Medicaid, including some who are
not subject to the penalties but might think they are. Some
people might be uncertain about what circumstances trigger the
penalty and others might be uncertain about their annual
income. The estimated lower enrollment would result in less
spending for the program. Those effects on enrollment and
spending would continue throughout the 2017-2026 period.
Termination of Enhanced Federal Matching Funds for New
Enrollees From Expanding Eligibility for Medicaid. Under
current law, states are permitted, but not required, to expand
eligibility for Medicaid to adults under 65 whose income is
equal to or less than 138 percent of the FPL (referred to here
as ``newly eligible''). The federal government pays a larger
share of the medical costs for those people than it pays for
those who were previously eligible. Beginning in 2020, the
legislation would reduce the federal matching rate for newly
eligible adults from 90 percent of medical costs to the rate
for other enrollees in the state. (The federal matching rate
for other enrollees ranges from 50 percent to 75 percent,
depending on the state, with an average of about 57 percent.)
The lower federal matching rate would apply only to those newly
enrolled after December 31, 2019.
The 31 states and the District of Columbia that have
already expanded Medicaid to the newly eligible cover roughly
half of that population nationwide. CBO projects that under
current law, additional states will expand their Medicaid
programs and that, by 2026, roughly 80 percent of newly
eligible people will reside in states that have done so. Under
the legislation, largely because states would pay for a greater
share of enrollees' costs, CBO expects that no additional
states would expand eligibility, thereby reducing both
enrollment in and spending for Medicaid. According to CBO's
estimates, that effect would be modest in the near term, but by
2026, on an average annual basis, 5 million fewer people would
be enrolled in Medicaid than would have been enrolled under
current law (see Figure 1).
CBO also anticipates some states that have already expanded
their Medicaid programs would no longer offer that coverage,
reducing the share of the newly eligible population residing in
a state with expanded eligibility to about 30 percent in 2026.
That estimate reflects different possible outcomes without any
explicit prediction about which states would make which
choices. In considering the possible outcomes, CBO took into
account several factors: the extent of optional coverage
provided to the newly eligible population and other groups
before the ACA's enactment (as a measure of a state's
willingness to provide coverage above statutory minimums),
states' ability to bear costs under the legislation, and
potential methods to mitigate those costs (such as changes to
benefit packages and payment rates). Some states might also
begin to take action prior to 2020 in anticipation of future
changes that would result from the legislation to avoid abrupt
changes to eligibility and other program features. How
individual states would ultimately respond is highly uncertain.
Because the lower federal matching rate would apply only to
those newly enrolled after December 31, 2019 (or who experience
a break in eligibility after that date), CBO estimates that
reductions in spending for the newly eligible would increase
over several years, as ``grandfathered'' enrollees would cycle
off the program and be replaced by new enrollees. On the basis
of historical data (and taking into account the increased
frequency of eligibility redeterminations required by the
legislation), CBO projects that fewer than one-third of those
enrolled as of December 31, 2019, would have maintained
continuous eligibility two years later. Under the legislation,
the higher federal matching rate would apply for fewer than 5
percent of newly eligible enrollees by the end of 2024, CBO
estimates.
Per Capita-Based Cap on Medicaid Payments for Medical
Assistance. Under current law, the federal government and state
governments share in the financing and administration of
Medicaid. In general, states pay health care providers for
services to enrollees, and the federal government reimburses
states for a percentage of their expenditures. All federal
reimbursement for medical services is open-ended, meaning that
if a state spends more because enrollment increases or costs
per enrollee rise, additional federal payments are
automatically generated.
Under the legislation, beginning in 2020, the federal
government would establish a limit on the amount of
reimbursement it provides to states. That limit would be set by
calculating the average per-enrollee cost of medical services
for most enrollees who received full Medicaid benefits in 2016
for each state. The Secretary of Health and Human Services
would then inflate the average per-enrollee costs for each
state by the growth in the consumer price index for medical
care services (CPI-M). The final limit on federal reimbursement
for each state for 2020 and after would be the average cost per
enrollee for five specified groups of enrollees (the elderly,
disabled people, children, newly eligible adults, and all other
adults), reflecting growth in the CPI-M from 2016 multiplied by
the number of enrollees in each category in that year. If a
state spent more than the limit on federal reimbursement, the
federal government would provide no additional funding to match
that spending.
The limit on federal reimbursement would reduce outlays
because (after the changes to the Medicaid expansion population
have been accounted for) Medicaid spending would grow on a per-
enrollee basis at a faster rate than the CPI-M, according to
CBO's projections: at an average annual rate of 4.4 percent for
Medicaid and 3.7 percent for the CPI-M over the 2017-2026
period. With less federal reimbursement for Medicaid, states
would need to decide whether to commit more of their own
resources to finance the program at current-law levels or
whether to reduce spending by cutting payments to health care
providers and health plans, eliminating optional services,
restricting eligibility for enrollment, or (to the extent
feasible) arriving at more efficient methods for delivering
services. CBO anticipates that states would adopt a mix of
those approaches, which would result in additional savings to
the federal government. (Other provisions affecting Medicaid
are discussed below.)
Changes to Subsidies and Market Rules for Nongroup Health
Insurance Before 2020. Under the legislation, existing
subsidies for health insurance coverage purchased in the
nongroup market would largely remain in effect until 2020--but
the premium tax credits would differ by the age of the
individual in 2019. Aside from the changes in enrollment and
premiums as a result of eliminating the individual mandate
penalties (mentioned earlier), the other changes discussed in
this section would have small effects on coverage and federal
subsidies in the nongroup market.
Nongroup Market Subsidies. Subsidies under current law fall
into two categories: subsidies to cover a portion of
participants' health insurance premiums (which take the form of
refundable tax credits) and subsidies to reduce their cost-
sharing amounts (out-of-pocket payments required under
insurance policies). The first category of subsidies, also
called premium tax credits, is generally available to people
with income between 100 percent and 400 percent of the FPL,
with certain exceptions. The second category, also called cost-
sharing subsidies, is available to those who are eligible for
premium tax credits, generally have a household income between
100 percent and 250 percent of the FPL, and enroll in an
eligible plan.
Under current law, those subsidies can be obtained only by
purchasing nongroup coverage through a health insurance
marketplace. Under the legislation, premium tax credits--but
not cost-sharing subsidies--would also be available for most
plans purchased in the nongroup market outside of marketplaces
beginning in 2018. However, the tax credits for those plans
could not be advanced and could only be claimed on a person's
tax return. CBO and JCT estimate that roughly 2 million people
who are expected to enroll in plans purchased in the nongroup
market outside of marketplaces in 2018 and 2019 under current
law would newly receive premium tax credits for that coverage
under the legislation.
The premium tax credits would differ by the age of the
individual for one year in 2019, while cost-sharing subsidies
would remain unchanged prior to 2020. For those with household
income exceeding 150 percent of the FPL, the legislation would
generally reduce the percentage of income that younger people
had to pay toward their premiums and increase that percentage
for older people.\4\ CBO and JCT expect that roughly 1 million
more people would enroll in coverage obtained through the
nongroup market as a result of the change in the structure of
premium tax credits. That increase would be the net result of
higher enrollment among younger people and lower enrollment
among older people.
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\4\For families, the age of the oldest taxpayer would be used to
determine the age-adjusted percentage of income that must be paid
toward the premiums. As under current law, the premium tax credits
would cover the amount by which the reference premium--that is, the
premium for the second-lowest-cost ``silver'' plan that covers the
eligible people in the household in the area in which they reside--
exceeds that percentage of income. A silver plan covers about 70
percent of the costs of covered benefits.
Patient and State Stability Fund Grants. Beginning in 2018
and ending after 2026, the federal government would make a
total of $100 billion in allotments to states that they could
use for a variety of purposes, including reducing premiums for
insurance in the nongroup market. CBO and JCT estimate that
federal outlays for grants from the Patient and State Stability
Fund would total $80 billion over the 2018-2026 period.
By the agencies' estimates, the grants would reduce
premiums for insurance in the nongroup market in many states.
CBO and JCT expect that states would use those grants mostly to
reimburse insurers for some of the costs of enrollees with
claims above a threshold. For states that did not develop plans
to spend the funds, the federal government would make payments
to insurers in the individual market who have enrollees with
relatively high claims. Before 2020, CBO expects, the Secretary
of Health and Human Services would make payments to insurers on
the behalf of most states because most would not have enough
time to set up their own programs before insurers had to set
premiums for 2018. As a result, CBO estimates that most states
would rely on the federal default program for one or more years
until they had more time to establish their own programs.
Continuous Coverage Provisions. Insurers would be required
to impose a penalty on people who enrolled in insurance in the
nongroup or small-group markets if they had been uninsured for
more than 63 days within the past year. When they purchased
insurance in the nongroup or small-group market, they would be
subject to a surcharge equal to 30 percent of their monthly
premium for up to 12 months. The requirement would apply to
people enrolling during a special enrollment period in 2018
and, beginning in 2019, to people enrolling at any time during
the year.
CBO and JCT expect that increasing the future price of
insurance through the surcharge for people who do not have
continuous coverage would increase the number of people with
insurance in 2018 and reduce that number in 2019 and later
years. By the agencies' estimates, roughly 1 million people
would be induced to purchase insurance in 2018 to avoid
possibly having to pay the surcharge in the future. In most
years after 2018, however, roughly 2 million fewer people would
purchase insurance because they would either have to pay the
surcharge or provide documentation about previous health
insurance coverage. The people deterred from purchasing
coverage would tend to be healthier than those who would not be
deterred and would be willing to pay the surcharge.
Age Rating Rules. Beginning in 2018, the legislation would
expand the limits on how much insurers in the nongroup and
small-group markets can vary premiums on the basis of age.
However, CBO and JCT expect that the provision could not be
implemented until 2019 because there would be insufficient time
for the federal government, states, and insurers to incorporate
the changes and then set premiums for 2018. Under current law,
a 64-year-old can generally be charged premiums that cost up to
three times as much as those offered to a 21-year-old. Under
the legislation, that allowable difference would shift to five
times as much unless a state chose otherwise. That change would
tend to reduce premiums for younger people and increase
premiums for older people.
However, CBO and JCT estimate that the structure of the
premium tax credits before 2020 would limit how changes in age
rating rules affected the number of people who would enroll in
health insurance coverage in the nongroup market. People
eligible for subsidies in the nongroup market are now largely
insulated from changes in premiums: A person receiving a
premium tax credit pays a certain percentage of his or her
income toward the reference premium, and the tax credit covers
the difference between the premium and that percentage of
income. Consequently, despite the changes in premiums for
younger and older people, the person's out-of-pocket payments
would not be affected much. Therefore, CBO and JCT estimate
that the increase in the number of people enrolled in coverage
through the nongroup market as a result of changes in age
rating rules would be less than 500,000 in 2019 and would be
the net result of higher enrollment among younger people and
lower enrollment among older people. The small increase would
mostly stem from net changes in enrollment among people who had
income high enough to be ineligible for subsidies and who would
face substantial changes in out-of-pocket payments for
premiums.
Changes to Subsidies and Market Rules for Nongroup Health
Insurance Beginning in 2020. Beginning in 2020, the current
premium tax credits and cost-sharing subsidies would both be
repealed. That same year, the legislation would create new
refundable tax credits for insurance purchased in the nongroup
market. In addition to making the market changes discussed thus
far (eliminating mandate penalties, providing grants to states
to help stabilize the nongroup market, establishing a
requirement for continuous coverage, and changing the age
rating rules), the legislation would relax the current
requirements about the share of benefits that must be covered
by a health insurance plan.
Many rules governing the nongroup market would remain in
effect as under current law. For example, insurers would be
required to accept all applicants during specified open-
enrollment periods, could not vary people's premiums on the
basis of their health, and could not restrict coverage of
enrollees' preexisting health conditions. Insurers would also
still be required to cover specified categories of health care
services, and the amount of costs for covered services that
enrollees have to pay out of pocket would remain limited to a
specified threshold. Prohibitions on annual and lifetime
maximum benefits would still apply. Also, the risk adjustment
program--which transfers funds from plans that attract a
relatively small proportion of high-risk enrollees (people with
serious chronic conditions, for example) to plans that attract
a relatively large proportion of such people--would remain in
place.
Because the new tax credits are designed primarily to be
paid in advance on behalf of enrollees to insurers, procedures
would need to be in place to enable the Internal Revenue
Service and the Department of Health and Human Services to
verify that the credits were being paid to eligible insurers
who were offering qualified insurance as defined under federal
and state law on behalf of eligible enrollees. CBO and JCT's
estimates reflect an assumption that adequate resources would
be made available through future appropriations to those
executive branch agencies to ensure that such systems were put
in place in a timely manner. To the extent that they were not,
enrollment and compliance could be negatively affected.
Changes to Actuarial Value Requirements. Actuarial value is
the percentage of total costs for covered benefits that the
plan pays when covering a standard population. Under current
law, most plans in the nongroup and small-group markets must
have an actuarial value that is in one of four tiers: about 60
percent, 70 percent, 80 percent, or 90 percent. Beginning in
2020, the legislation would repeal those requirements,
potentially allowing plans to have an actuarial value below 60
percent. However, plans would still be required to cover 10
categories of health benefits that are defined as ``essential''
under current law, and the total annual out-of-pocket costs for
an enrollee would remain capped. In CBO and JCT's estimation,
complying with those two requirements would significantly limit
the ability of insurers to design plans with an actuarial value
much below 60 percent.
Nevertheless, CBO and JCT estimate that repealing the
actuarial value requirements would lower the actuarial value of
plans in the nongroup market on average. The requirement that
insurers offer both a plan with an actuarial value of 70
percent and one with an actuarial value of 80 percent in order
to participate in the marketplace would no longer apply under
the legislation. As a result, an insurer could choose to sell
only plans with lower actuarial values. Many insurers would
find that option attractive because they could offer a plan
priced closer to the amount of the premium tax credit so that a
younger person would have low out-of-pocket costs for premiums
and would be more likely to enroll. Insurers might be less
likely to offer plans with high actuarial values out of a fear
of attracting a greater proportion of less healthy enrollees to
those plans, although the availability of the Patient and State
Stability Fund grants in most states would reduce that risk.
The continuation of the risk adjustment program could also help
limit insurers' costs from high-risk enrollees.
Because of plans' lower average actuarial values, CBO and
JCT expect that individuals' cost-sharing payments, including
deductibles, in the nongroup market would tend to be higher
than those anticipated under current law. In addition, cost-
sharing subsidies would be repealed in 2020, significantly
increasing out-of-pocket costs for nongroup insurance for many
lower-income enrollees. The higher costs would make the plans
less attractive than those available under current law to many
potential enrollees, especially people who are eligible for the
largest subsidies under current law.
Changes in the Ways the Nongroup Market Would Function.
Under the legislation, some of the ways that the nongroup
market functions would change for consumers. The current
actuarial value requirements help people compare different
insurance plans, because all plans in a tier cover the same
share of costs, on average. CBO and JCT expect that, under the
legislation, plans would be harder to compare, making shopping
for a plan on the basis of price more difficult.
Another feature of the nongroup market under current law is
that there is one central website through the state or federal
marketplace where people can shop for all the plans in their
area that are eligible for subsidies. Under the legislation,
insurers participating in the nongroup market would no longer
have to offer plans through the marketplaces in order for
people to receive subsidies toward those plans; therefore, CBO
and JCT estimate that fewer would do so. With more plans that
are eligible for subsidies offered directly from insurers or
directly through agents and brokers and not through the
marketplaces' central websites, shopping for and comparing
plans could be harder, depending on insurers' decisions about
how to market their plans.
Changes in Nongroup Market Subsidies. With the repeal in
2020 of the current premium tax credits and the cost-sharing
subsidies, different refundable tax credits for insurance
purchased in the nongroup market would become available.\5\ The
new tax credits would vary on the basis of age by a factor of 2
to 1: Someone age 60 or older would be eligible for a tax
credit of $4,000, while someone younger than age 30 would be
eligible for a tax credit of $2,000. People would generally be
eligible for the full amount of the tax credit if their
adjusted gross income was below $75,000 for a single tax filer
and below $150,000 for joint filers and if they were not
eligible for certain other types of insurance coverage.\6\ The
credits would phase out for people with income above those
thresholds. The tax credits would be refundable if the size of
the credit exceeded a person's tax liability. They could also
be advanced to insurers on a monthly basis throughout the year
on behalf of an enrollee. Finally, tax credits could be used
for most health insurance plans purchased through a marketplace
or directly from an insurer.
---------------------------------------------------------------------------
\5\People would also be able to use the new tax credits toward
unsubsidized of continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA).
\6\The tax credits and the income thresholds would both be indexed
each year by the consumer price index for all urban consumers plus 1
percentage point.
---------------------------------------------------------------------------
Under current law, the size of the premium tax credit
depends on household income and the reference premium in an
enrollee's rating area. The enrollee pays a certain percentage
of his or her income toward the reference premium, and the size
of the subsidy varies by geography and age for a given income
level. In that way, the enrollee is insulated from variations
in premiums by geography and is also largely insulated from
increases in the reference premium. An enrollee would pay the
difference between the reference premium and the premium for
the plan he or she chose, providing some incentive to choose
lower-priced insurance. Beginning in 2020, under the
legislation, the size of a premium tax credit would vary with
age, rather than with income (except for people with income in
the phase-out range) or the amount of the premium. The enrollee
would be responsible for any premium above the credit amount.
That structure would provide greater incentives for enrollees
to choose lower-priced insurance and would mean that people
living in high-cost areas would be responsible for a larger
share of the premium.
Under the legislation, some people would be eligible for
smaller subsidies than those under current law, and others
would be eligible for larger ones. As a result, by CBO and
JCT's estimates, the composition of the population purchasing
health insurance in the nongroup market under the legislation
would differ significantly from that under current law,
particularly by income and age.
For many lower-income people, the new tax credits under the
legislation would tend to be smaller than the premium tax
credits under current law.\7\ In an illustrative example, CBO
and JCT estimate that a 21-year-old with income at 175 percent
of the FPL in 2026 would be eligible for a premium tax credit
of about $3,400 under current law; the tax credit would fall to
about $2,450 under the legislation (see Table 4). In addition,
because cost-sharing subsidies would be eliminated under the
legislation, lower-income people's share of medical services
paid in the form of deductibles and other cost sharing would
increase. As a result, CBO and JCT estimate, fewer lower-income
people would obtain coverage through the nongroup market under
the legislation than under current law.
---------------------------------------------------------------------------
\7\People with income below 100 percent of the FPL who are
ineligible for Medicaid and meet other eligibility criteria would
become newly eligible for a premium tax credit under the legislation.
---------------------------------------------------------------------------
Conversely, the tax credits under the legislation would
tend to be larger than current-law premium tax credits for many
people with higher income--particularly for those with income
above 400 percent of the FPL but below the income cap for a
full credit, which is set by the legislation at $75,000 for a
single tax filer and $150,000 for joint filers in 2020. For
example, CBO and JCT estimate that a 21-year-old with income at
450 percent of the FPL in 2026 would be ineligible for a credit
under current law but newly eligible for a tax credit of about
$2,450 under the legislation. Lower out-of-pocket payments
toward premiums would tend to increase enrollment in the
nongroup market among higher-income people.
Enacting the legislation would also result in significant
changes in the size of subsidies in the nongroup market
according to people's age. For example, CBO and JCT estimate
that a 21-year-old, 40-year-old, and 64-year-old with income at
175 percent of the FPL in 2026 would all pay roughly $1,700
toward their reference premium under current law, even though
the reference premium for a 64-year-old is three times larger
than that for a 21-year-old in most states. Under the
legislation, premiums for older people could be five times
larger than those for younger people in many states, but the
size of the tax credits for older people would only be twice
the size of the credits for younger people. Because of that
difference in how much the tax credits would cover, CBO and JCT
estimate that, under the legislation, a larger share of
enrollees in the nongroup market would be younger people and a
smaller share would be older people.
According to CBO and JCT's estimates, total federal
subsidies for nongroup health insurance would be significantly
smaller under the legislation than under current law for two
reasons. First, by the agencies' projections, fewer people, on
net, would obtain coverage in the nongroup health insurance
market under the legislation. Second, the average subsidy per
subsidized enrollee under the legislation would be
significantly lower than the average subsidy under current law.
In 2020, CBO and JCT estimate, the average subsidy under the
legislation would be about 60 percent of the average subsidy
under current law. In addition, the average subsidy would grow
more slowly under the legislation than under current law. That
difference results from the fact that subsidies under current
law tend to grow with insurance premiums, whereas subsidies
under the legislation would grow more slowly, with the consumer
price index for all urban consumers plus 1 percentage point. By
2026, CBO and JCT estimate that the average subsidy under the
legislation would be about 50 percent of the average subsidy
under current law.
Patient and State Stability Fund Grants. As a condition of
the grants, beginning in 2020, states would be required to
provide matching funds, which would generally increase from 7
percent of the federal funds provided in 2020 to 50 percent of
the federal funds provided in 2026. The agencies expect that
the grants' effects on premiums after 2020 would be limited by
the share of states that took action and decided to pay the
required matching funds in order to receive federal money and
by the extent to which states chose to use the money for
purposes that did not directly help to lower premiums in the
nongroup market. Nevertheless, CBO and JCT estimate that the
grants would exert substantial downward pressure on premiums in
the nongroup market in 2020 and later years and would help
encourage participation in the market by insurers.
Effects of Changes in the Nongroup Market on Employers'
Decisions to Offer Coverage. CBO and JCT estimate that, over
time, fewer employers would offer health insurance because the
legislation would change their incentives to do so. First, the
mandate penalties would be eliminated. Second, the tax credits
under the legislation, for which people would be ineligible if
they had any offer of employment-based insurance, would be
available to people with a broader range of incomes than the
current tax credits are. That change could make nongroup
coverage more attractive to a larger share of employees.
Consequently, in CBO and JCT's estimation, some employers would
choose not to offer coverage and instead increase other forms
of compensation in the belief that nongroup insurance was a
close substitute for employment-based coverage for their
employees.
However, two factors would partially offset employers'
incentives not to offer insurance. First, the average subsidy
for those who are eligible would be smaller under the
legislation than under current law and would grow more slowly
than health care costs over time. Second, CBO and JCT
anticipate, nongroup insurance under the legislation would be
less attractive to many people with employment-based coverage
than under current law because nongroup insurance under the
legislation would cover a smaller share of enrollees' expenses,
on average, and because shopping for and comparing plans would
probably be more difficult. In general, CBO and JCT expect that
businesses that decided not to offer insurance coverage under
the legislation would have, on average, younger and higher-
income workforces than businesses that choose not to offer
insurance under current law.
CBO and JCT expect that employers would adapt slowly to the
legislation. Some employers would probably delay making
decisions because of uncertainty about the viability of and
regulations for the nongroup market and about implementation of
the new law.
Market Stability. CBO and JCT anticipate that, under the
legislation, the combination of subsidies to purchase nongroup
insurance and rules regulating the market would result in a
relatively stable nongroup market. That is, most areas of the
country would have insurers participating in the nongroup
market, and the market would not be subject to an unsustainable
spiral of rising premiums. First and most important, a
substantial number of relatively healthy (mostly young) people
would continue to purchase insurance in the nongroup market
because of the availability of government subsidies. Second,
grants from the Patient and State Stability Fund would help
stabilize premiums and reduce potential losses to insurers from
enrollees with very large claims. Finally, in CBO and JCT's
judgment, the risk adjustment program would help protect
insurers from losses arising from high-risk enrollees. The
agencies expect that all of those factors would encourage
insurers to continue to participate in the nongroup market.
However, significant changes in nongroup subsidies and
market rules would occur each year for the first three years
following enactment, which might cause uncertainty for insurers
in setting premiums. As a result of the elimination of the
individual mandate penalties, CBO and JCT project that nongroup
enrollment in 2018 would be smaller than that in 2017 and that
the average health status of enrollees would worsen. A small
share of that decline in enrollment would be offset by the
onetime effect of the continuous coverage provisions, which
would somewhat increase enrollment in the nongroup market in
2018 as people anticipated potential surcharges in 2019. Grants
from the Patient and State Stability Fund would begin to take
effect in 2018 to help mitigate losses and encourage
participation by insurers.
The mix of enrollees in 2019 would differ from that in
2018, because the change to age-rating rules would allow older
adults to be charged five times as much as younger adults in
many states. In addition, there would be a one-year change to
the premium tax credits, which CBO and JCT expect would
somewhat increase enrollment among younger adults and decrease
enrollment among older adults. Although the combined effect of
those two changes would reduce the average age and improve the
average health of enrollees in the nongroup market, it might be
difficult for insurers to set premiums for 2019 using their
prior experience in the market.
In 2020, CBO estimates, grants to states from the Patient
and State Stability Fund, once fully implemented, would
significantly reduce premiums in the nongroup market and
encourage participation by insurers. The grants would help to
reduce the risk to insurers of offering nongroup insurance. As
a result, CBO expects that those grants would contribute
substantially to the stability of the nongroup market.
That effect would occur despite the fact that more major
changes taking effect in that year would make it difficult for
insurers to predict the mix of enrollees on the basis of their
recent experience. The new age-based tax credits would be
introduced in 2020 and actuarial value requirements would be
eliminated. In response, insurers would have the flexibility to
sell different types of plans than they do under current law.
The nongroup market is expected to be smaller in 2020 than in
2019 but then is expected to grow somewhat over the 2020-2026
period.
Other Budgetary Effects of Health Insurance Coverage
Provisions. Because the insurance coverage provisions of the
legislation would increase the number of uninsured people and
decrease the number of people with Medicaid coverage relative
to the numbers under current law, CBO estimates that Medicare
spending would increase by $43 billion over the 2018-2026
period.
Medicare makes additional ``disproportionate share
hospital'' payments to facilities that serve a higher
percentage of uninsured patients. Those payments have two
components: an increase to the payment rate for each inpatient
case and a lump-sum allocation of a pool of funds based on each
qualifying hospital's share of the days of care provided to
beneficiaries of Supplemental Security Income and Medicaid.
Under the legislation, the decreased enrollment in Medicaid
would slightly reduce the amounts paid to hospitals, CBO
estimates. However, the increase in the number of uninsured
people would substantially boost the amounts distributed on a
lump-sum basis.
Net Effects on Health Insurance Coverage
CBO and JCT expect that under the legislation, the number
of people without health insurance coverage would increase but
that the increase would be limited initially, because insurers
have already set their premiums for the current year and many
people have already made their enrollment decisions for the
year. However, in 2017, the elimination of the individual
mandate penalties would result in about 4 million additional
people becoming uninsured (see Table 5).
In 2018, by CBO and JCT's estimates, about 14 million more
people would be uninsured, relative to the number under current
law. That increase would consist of about 6 million fewer
people with coverage obtained in the nongroup market, roughly 5
million fewer people with coverage under Medicaid, and about 2
million fewer people with employment-based coverage. In 2019,
the number of uninsured would grow to 16 million people because
of further reductions in Medicaid and nongroup coverage. Most
of the reductions in coverage in 2018 and 2019 would stem from
repealing the penalties associated with the individual mandate.
Some of those people would choose not to have insurance because
they choose to be covered by insurance under current law only
to avoid paying the penalties. And some people would forgo
insurance in response to higher premiums. CBO and JCT estimate
that, in total, 41 million people under age 65 would be
uninsured in 2018 and 43 million people under age 65 would be
uninsured in 2019.
In 2020, according to CBO and JCT's estimates, as a result
of the insurance coverage provisions of the legislation, 21
million more nonelderly people in the United States would be
without health insurance than under current law. By 2026, that
number would total 24 million, CBO and JCT estimate.
Specifically:
LRoughly 9 million fewer people would enroll in
Medicaid in 2020; that figure would rise to 14 million in 2026,
as states that expanded eligibility for Medicaid discontinued
doing so, as states projected to expand Medicaid in the future
chose not to do so, and as the cap on per-enrollee spending
took effect.
LRoughly 9 million fewer people, on net, would
obtain coverage through the nongroup market in 2020; that
number would fall to 2 million in 2026. The reduction in
enrollment in the nongroup market would shrink over the 2020-
2026 period because people would gain experience with the new
structure of the tax credits and some employers would respond
to those tax credits by declining to offer insurance to their
employees.
LRoughly 2 million fewer people, on net, would
enroll in employment-based coverage in 2020, and that number
would grow to roughly 7 million in 2026. Part of that net
reduction in employment-based coverage would occur because
fewer employees would take up the offer of such coverage in the
absence of the individual mandate penalties. In addition, CBO
and JCT expect that, over time, fewer employers would offer
health insurance to their workers.
CBO and JCT estimate that 48 million people under age 65,
or roughly 17 percent of the nonelderly population, would be
uninsured in 2020 if the legislation was enacted. That figure
would grow to 52 million, or roughly 19 percent of the
nonelderly population, in 2026. (That figure is currently about
10 percent and is projected to remain at that level in each
year through 2026 under current law.) Although the agencies
expect that the legislation would increase the number of
uninsured broadly, the increase would be disproportionately
larger among older people with lower income; in particular,
people between 50 and 64 years old with income of less than 200
percent of the FPL would make up a larger share of the
uninsured (see Figure 2).
Net Effects on Health Insurance Premiums
The legislation would tend to increase average premiums in
the nongroup market prior to 2020 and lower average premiums
thereafter, relative to the outcomes under current law. (This
discussion is focused on premiums before any applicable tax
credits and before any surcharges for not maintaining
continuous coverage.)
In 2018 and 2019, according to CBO and JCT's estimates,
average premiums for single policyholders in the nongroup
market would be 15 percent to 20 percent higher than under
current law mainly because of the elimination of the individual
mandate penalties. Eliminating those penalties would markedly
reduce enrollment in the nongroup market and increase the share
of enrollees who would be less healthy. CBO and JCT expect that
grants from the Patient and State Stability Fund would largely
be used for reinsurance programs, particularly in 2018 and
2019, when many states would rely on the federal default before
establishing their own programs and, as explained earlier, that
those payments would help lower premiums in the nongroup
market. The agencies estimate that program would have a
relatively small effect on premiums in 2018 because there would
not be much time between enactment of the legislation and
insurers' deadlines for setting premiums for 2018. By 2019,
however, in CBO and JCT's judgment, the Patient and State
Stability Fund would have the effect of somewhat moderating the
increases in average premiums in the nongroup market resulting
from the legislation.
Starting in 2020, the increase in average premiums from
repealing the individual mandate penalties would be more than
offset by the combination of three main factors. First, the mix
of people enrolled in coverage obtained in the nongroup market
is anticipated to be younger, on average, than the mix under
current law. Second, premiums, on average, are estimated to
fall because of the elimination of actuarial value
requirements, which would result in plans that cover a lower
share of health care costs, on average. Third, reinsurance
programs supported by the Patient and State Stability Fund are
estimated to reduce premiums. If those funds were devoted to
other purposes, then premium reductions would be smaller. By
2026, average premiums for single policyholders in the nongroup
market under the legislation would be roughly 10 percent lower
than the estimates under current law.
The changes in premiums would vary for people of different
ages. The change in age-rating rules, effective in 2019, would
directly change the premiums faced by different age groups,
substantially reducing premiums for young adults and raising
premiums for older people. By 2026, CBO and JCT project,
premiums in the nongroup market would be 20 percent to 25
percent lower for a 21-year-old and 8 percent to 10 percent
lower for a 40-year-old--but 20 percent to 25 percent higher
for a 64-year-old.
Revenue Effects of Other Provisions
JCT estimates that the legislation would reduce revenues by
$592 billion over the 2017-2026 period as a result of
provisions that would repeal many of the revenue-related
provisions of the ACA (apart from provisions related to health
insurance coverage discussed above). Those with the most
significant budgetary effects include an increase in the
Hospital Insurance payroll tax rate for high-income taxpayers,
a surtax on those taxpayers' net investment income, and annual
fees imposed on health insurers.\8\
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\8\JCT published 10 documents (JCX-7-17 through JCX-16-17) on March
7, 2017, relating to the legislation. For more information, see
www.jct.gov/publications.html.
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Direct Spending Effects of Other Provisions
The legislation would also make changes to spending for
other federal health care programs. CBO and JCT estimate that
those provisions would increase direct spending by about $7
billion over the 2017-2026 period.
Prevention and Public Health Fund. The legislation would,
beginning in fiscal year 2019, repeal the provision that
established the Prevention and Public Health Fund and rescind
all unobligated balances. The Department of Health and Human
Services awards grants through the fund to public and private
entities to carry out prevention, wellness, and public health
activities. Funding under current law is projected to be $1
billion in 2017 and to rise to $2 billion in 2025 and each year
thereafter. CBO estimates that eliminating that funding would
reduce direct spending by $9 billion over the 2017-2026 period.
Community Health Center Program. The legislation would
increase the funds available to the Community Health Center
Program, which provides grant funds to health centers that
offer primary and preventive care to patients regardless of
their ability to pay. Under current law, the program will
receive about $4 billion in fiscal year 2017. The legislation
would increase funding for the program by $422 million in
fiscal year 2017. CBO estimates that implementing the provision
would increase direct spending by $422 million over the 2017-
2026 period.
Provision Affecting Planned Parenthood. For a one-year
period following enactment, the legislation would prevent
federal funds from being made available to an entity (including
its affiliates, subsidiaries, successors, and clinics) if it
is:
LA nonprofit organization described in section
501(c)(3) of the Internal Revenue Code and exempt from tax
under section 501(a) of the code;
LAn essential community provider that is primarily
engaged in providing family planning and reproductive health
services and related medical care;
LAn entity that provides abortions--except in
instances in which the pregnancy is the result of an act of
rape or incest or the woman's life is in danger; and
LAn entity that had expenditures under the
Medicaid program that exceeded $350 million in fiscal year
2014.
CBO expects that, according to those criteria, only Planned
Parenthood Federation of America and its affiliates and clinics
would be affected. Most federal funds received by such entities
come from payments for services provided to enrollees in
states' Medicaid programs. CBO estimates that the prohibition
would reduce direct spending by $178 million in 2017 and by
$234 million over the 2017-2026 period. Those savings would be
partially offset by increased spending for other Medicaid
services, as discussed below.
To the extent that there would be reductions in access to
care under the legislation, they would affect services that
help women avert pregnancies. The people most likely to
experience reduced access to care would probably reside in
areas without other health care clinics or medical
practitioners who serve low-income populations. CBO projects
that about 15 percent of those people would lose access to
care.
The government would incur some costs for Medicaid
beneficiaries currently served by affected entities because the
costs of about 45 percent of all births are paid for by the
Medicaid program. CBO estimates that the additional births
stemming from the reduced access under the legislation would
add to federal spending for Medicaid. In addition, some of
those children would themselves qualify for Medicaid and
possibly for other federal programs. By CBO's estimates, in the
one-year period in which federal funds for Planned Parenthood
would be prohibited under the legislation, the number of births
in the Medicaid program would increase by several thousand,
increasing direct spending for Medicaid by $21 million in 2017
and by $77 million over the 2017-2026 period. Overall, with
those costs netted against the savings estimated above,
implementing the provision would reduce direct spending by $156
million over the 2017-2026 period, CBO estimates.
Repeal of Medicaid Provisions. Under current law, states
can elect the Community First Choice option, allowing them to
receive a 6 percentage-point increase in their federal matching
rate for some services provided by home and community-based
attendants to certain Medicaid recipients. The legislation
would terminate the increase in the federal matching funds
beginning in calendar year 2020, which would decrease direct
spending by about $12 billion over the next 10 years.
Repeal of Reductions to Allotments for Disproportionate
Share Hospitals. Under current law, Medicaid allotments to
states for payments to hospitals that treat a disproportionate
share of uninsured and Medicaid patients are to be cut
significantly in each year from 2018 to 2025. The cuts are
currently scheduled to be $2 billion in 2018 and to increase
each year until they reach $8 billion in 2024 and 2025. The
legislation would eliminate those cuts for states that have not
expanded Medicaid under the ACA starting in 2018 and for the
remaining states starting in 2020, boosting outlays by $31
billion over the next 10 years.
Safety Net Funding for States That Did Not Expand Medicaid.
The legislation would provide $2 billion in funding in each
year from 2018 to 2021 to states that did not expand Medicaid
eligibility under the ACA. Those states could use the funding,
within limits, to supplement payments to providers that treat
Medicaid enrollees. Such payments to providers would not be
subject to the per capita caps also established by the proposed
legislation. Any states that chose to expand Medicaid coverage
as of July 1 of each year from 2017 through 2020 would lose
access to the funding available under this provision in the
following year and thereafter. CBO estimates that this
provision would increase direct spending by $8 billion over the
2017-2026 period.
Reductions to States' Medicaid Costs. The legislation would
make a number of additional changes to the Medicaid program,
including these:
LRequiring states to treat lottery winnings and
certain other income as income for purposes of determining
eligibility;
LDecreasing the period when Medicaid benefits may
be covered retroactively from up to three months before a
recipient's application to the first of the month in which a
recipient makes an application;
LEliminating federal payments to states for
Medicaid services provided to applicants who did not provide
satisfactory evidence of citizenship or nationality during a
reasonable opportunity period; and
LEliminating states' option to increase the amount
of allowable home equity from $500,000 to $750,000 for
individuals applying for Medicaid coverage of long-term
services and supports.
Together, CBO estimates, those changes would decrease
direct spending by about $7 billion over the 2017-2026 period.
Changes in Spending Subject to Appropriation
CBO has not completed an estimate of the potential impact
of the legislation on discretionary spending, which would be
subject to future appropriation action.
UNCERTAINTY SURROUNDING THE ESTIMATES
CBO and JCT considered the potential responses of many
parties that would be affected by the legislation, including
these:
LFederal agencies--which would need to implement
major changes in the regulation of the health care system and
administration of new subsidy structures and eligibility
verification systems in a short time frame;
LStates--which would need to decide how to use
Patient and State Stability Fund grants, whether to pass new
laws affecting the nongroup market, how to respond to the
reduction in the federal matching rate for certain Medicaid
enrollees, how to respond to constraints from the cap on
Medicaid payments, and how to provide information to the
federal government about insurers and enrollees;
LInsurers--who would need to decide about the
extent of their participation in the insurance market and what
types of plans to sell in the face of different market rules
and federal subsidies;
LEmployers--who would need to decide whether to
offer insurance given the different federal subsidies and
insurance products available to their employees;
LIndividuals--who would make decisions about
health insurance in the context of different premiums,
subsidies, and penalties than those under current law; and
LDoctors and hospitals--who would need to
negotiate contracts with insurers in a new regulatory
environment.
Each of those responses is difficult to predict. Moreover,
the responses would depend upon how the provisions in the
legislation were implemented, such as whether advance payments
of the new tax credits were made reliably. And flaws in the
determination of eligibility, for instance, could keep
subsidies from people who were eligible or provide them to
people who were not.
In addition, CBO and JCT's projections under current law
itself are inexact, which could also affect the estimated
effects. For example, enrollment in the marketplaces under
current law could be lower than is projected, which would tend
to decrease the budgetary savings of the legislation.
Alternatively, the average subsidy per enrollee under current
law could be higher than is projected, which would tend to
increase the budgetary savings of the legislation.
CBO and JCT have endeavored to develop estimates that are
in the middle of the distribution of potential outcomes. One
way to assess the range of uncertainty around the estimated
effects of the legislation is to compare previous projections
with actual results. For example, some aspects of CBO and JCT's
projections of health insurance coverage and related spending
made in July 2012 (after the Supreme Court issued a decision
that essentially made the expansion of the Medicaid program
under the ACA an option for states) can be compared with actual
results for 2016. Projected spending on people made eligible
for Medicaid because of the ACA was about 60 percent of the
actual amount. The number of people predicted in 2012 to
purchase insurance through the marketplaces in 2016 was more
than twice the actual number. The decline in the number of
insured people from 2012 to 2016 was projected to be 23
million, and the decline measured in the National Health
Interview Survey turned out to be 20 million. CBO and JCT have
continued to learn from experience with the ACA and have
endeavored to use that experience to improve their modeling.
That comparison of projections with actual results and the
great uncertainties surrounding the actions of the many parties
that would be affected by the legislation suggest that outcomes
of the legislation could differ substantially from some of the
estimates provided here. Nevertheless, CBO and JCT are
confident about the direction of certain effects of the
legislation. For example, spending on Medicaid would almost
surely be lower than under current law. The cost of the new tax
credit would probably be lower than the cost of the subsidies
for coverage through marketplaces under current law. And the
number of uninsured people under the legislation would almost
surely be greater than under current law.
INCREASE IN LONG-TERM DIRECT
SPENDING AND DEFICITS
CBO estimates that enacting the legislation would not
increase net direct spending or on-budget deficits by more than
$5 billion in any of the four consecutive 10-year periods
beginning in 2027.
MANDATES ON STATE, LOCAL,
AND TRIBAL GOVERNMENTS
JCT and CBO reviewed the provisions of the legislation and
determined that they would impose no intergovernmental mandates
as defined in the Unfunded Mandates Reform Act. For large
entitlement programs like Medicaid, UMRA defines an increase in
the stringency of conditions or a cap on federal funding as an
intergovernmental mandate if the affected governments lack
authority to offset those costs while continuing to provide
required services. As discussed earlier in this estimate, the
legislation would eliminate the enhanced federal matching rate
for some future enrollees, establish new per capita caps in the
Medicaid program, and make other changes that would affect
Medicaid spending--some of which would provide additional
assistance to states.
On net, CBO estimates that states would see an overall
decrease in federal assistance, as reflected in estimates of
federal savings in the Medicaid program. In response to the
caps and other changes, CBO anticipates that states could use
existing flexibility allowed in the Medicaid program and
additional authorities provided by the legislation to cut
payments to health care providers and health plans, eliminate
optional services, restrict eligibility for enrollment, or (to
the extent feasible) change the way services are delivered to
save costs. Because flexibility in the program would allow
states to make such changes and still provide statutorily
required services, the per capita caps and other changes in
Medicaid would not impose intergovernmental mandates as defined
in UMRA.
MANDATES ON THE PRIVATE SECTOR
JCT and CBO have determined that the legislation would
impose private-sector mandates as defined in UMRA. On the basis
of information from JCT, CBO estimates that the aggregate
direct cost of the mandates imposed by the legislation would
exceed the annual threshold established in UMRA for private-
sector mandates ($156 million in 2017, adjusted annually for
inflation).
The tax provisions of the legislation contain two mandates.
Specifically, the legislation would recapture excess advance
payments of premium tax credits (so that the full amount of
excess advance payments is treated as an additional tax
liability for the individual) and repeal the small business
(health insurance) tax credit.
The nontax provisions of the legislation would impose a
private-sector mandate as defined in UMRA on insurers that
offer health insurance coverage in the individual or small-
group market. The legislation would require those insurers to
charge a penalty equal to 30 percent of the monthly premium for
a period of 12 months to individuals who enroll in insurance in
a given year after having allowed their health insurance to
lapse for more than 63 days during the previous year. CBO
estimates that the costs of complying with the mandate would be
largely offset by the penalties insurers would collect.
ESTIMATE PREPARED BY:
Federal Spending
Kate Fritzsche, Sarah Masi, Daniel Hoople, Robert Stewart, Lisa
Ramirez-Branum, Andrea Noda, Allison Percy, Sean Lyons,
Alexandra Minicozzi, Eamon Molloy, Ben Hopkins, Susan Yeh
Beyer, Jared Maeda, Christopher Zogby, Romain Parsad, Ezra
Porter, Lori Housman, Kevin McNellis, Jamease Kowalczyk, Noah
Meyerson, T.J. McGrath, Rebecca Verreau, Alissa Ardito, and the
staff of the Joint Committee on Taxation
Federal Revenues
Staff of the Joint Committee on Taxation
Impact on State, Local, and Tribal Governments
Leo Lex, Zachary Byrum, and the staff of the Joint Committee on
Taxation
Impact on the Private Sector
Amy Petz and the staff of the Joint Committee on Taxation
ESTIMATE REVIEWED AND EDITED BY:
Mark Hadley, Theresa Gullo, Jeffrey Kling, Robert Sunshine, David
Weaver, John Skeen, Kate Kelly, Jorge Salazar, and Darren Young
ESTIMATE APPROVED BY:
Holly Harvey, Deputy Assistant Director for Budget Analysis; Jessica
Banthin, Deputy Assistant Director for Health, Retirement, and
Long-Term Analysts; Chad Chirico, Chief, Low-Income Health
Programs and Prescription Drugs Cost Estimates Unit
TABLE 1.--SUMMARY OF THE DIRECT SPENDING AND REVENUE EFFECTS OF THE AHCA, THE BUDGET RECONCILIATION RECOMMENDATIONS OF THE HOUSE COMMITTEES ON WAYS AND
MEANS AND ENERGY AND COMMERCE, MARCH 9, 2017
[Billions of dollars, by fiscal year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING\a\
Coverage Provisions:
Estimated Budget Authority.... -6.6 -12.5 -22.9 -97.6 -139.1 -157.4 -173.8 -186.9 -199.4 -210.5 -278.6 -1,206.7
Estimated Outlays............. -6.6 -27.5 -25.6 -92.5 -138.6 -158.5 -175.2 -188.5 -201.3 -212.0 -290.7 -1,226.2
Non Coverage Provisions:
Estimated Budget Authority.... 0.3 -0.5 -0.7 0.6 1.7 -0.2 1.0 1.1 0.7 0.0 1.3 3.8
Estimated Outlays............. -0.1 0.3 -0.1 0.8 1.8 0.5 0.8 1.5 1.3 0.3 2.7 7.1
Total Changes in Direct
Spending:
Estimated Budget Authority.... -6.3 -13.0 -23.6 -97.1 -137.4 -157.6 -172.8 -185.8 -198.7 -210.5 -277.4 -1,202.8
Estimated Outlays............. -6.7 -27.2 -25.7 -91.7 -136.9 -158.0 -174.3 -187.0 -200.0 -211.7 -288.1 -1,219.1
CHANGES IN REVENUES\b\
Coverage Provisions............. -3.8 -13.7 -16.8 -25.5 -33.6 -36.4 -38.9 -40.4 -41.0 -40.7 -93.5 -290.9
Non Coverage Provisions......... -2.1 -37.5 -41.8 -57.6 -65.1 -70.2 -76.0 -83.1 -79.7 -78.7 -204.2 -591.9
-----------------------------------------------------------------------------------------------------------------------
Total Changes in Revenues. -5.9 -51.2 -58.6 -83.1 -98.7 -106.6 -114.9 -123.5 -120.6 -119.4 -297.6 -882.8
INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING OR REVENUES
Net Increase or Decrease (-) in -0.8 24.0 33.0 -8.6 -38.2 -51.3 -59.4 -63.5 -79.4 -92.4 9.4 -336.5
the Deficit....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Notes: The costs of this legislation fall within budget function 550 (health), 570 (Medicare), 600 (Income Security), and 650 (Social Security).
AHCA = American Health Care Act; numbers may not add up to totals because of rounding.
\a\For outlays, a positive number indicates an increase (adding to the deficit) and a negative number indicates a decrease (reducing the deficit).
\b\For revenues, a negative number indicates a decrease (adding to the deficit).
TABLE 2.--ESTIMATE OF THE DIRECT SPENDING AND REVENUE EFFECTS OF THE AHCA, THE BUDGET RECONCILIATION RECOMMENDATIONS OF THE HOUSE COMMITTEES ON WAYS AND MEANS AND ENERGY AND COMMERCE, MARCH
9, 2017
[Billions of dollars, by fiscal year]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING\a\
Coverage Provisions:
Estimated Budget Authority............................................ -6.6 -12.5 -22.9 -97.6 -139.1 -157.4 -173.8 -186.9 -199.4 -210.5 -278.6 -1,206.7
Estimated Outlays..................................................... -6.6 -27.5 -25.6 -92.5 -138.6 -158.5 -175.2 -188.5 -201.3 -212.0 -290.7 -1,226.2
On-Budget........................................................... -6.6 -27.5 -25.6 -92.5 -138.6 -158.2 -174.7 -187.9 -200.7 -211.4 -290.7 -1,223.6
Off-Budget.......................................................... 0 (*) (*) (*) -0.1 -0.2 -0.4 -0.6 -0.6 -0.6 (*) -2.5
Prevention and Public Health Fund:
Estimated Budget Authority............................................ 0 -0.9 -0.9 -1.0 -1.0 -1.5 -1.0 -1.7 -2.0 -2.0 -3.8 -12.0
Estimated Outlays..................................................... 0 -0.1 -0.4 -0.7 -0.9 -1.0 -1.1 -1.3 -1.4 -1.7 -2.2 -8.8
Community Health Center Program:
Estimated Budget Authority............................................ 0.4 0.0 0 0 0 0 0 0 0 0 0.4 0.4
Estimated Outlays..................................................... 0.1 0.3 0.1 0 0 0 0 0 0 0 0.4 0.4
Provision Affecting Planned Parenthood:
Estimated Budget Authority............................................ -0.2 (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.2 -0.2
Estimated Outlays..................................................... -0.2 (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.2 -0.2
Repeal of Medicaid Provisions:\b\
Estimated Budget Authority............................................ 0 0 0 -0.8 -1.3 -1.6 -1.9 -2.0 -2.1 -2.2 -2.1 -11.7
Estimated Outlays..................................................... 0 0 0 -0.8 -1.3 -1.6 -1.9 -2.0 -2.1 -2.2 -2.1 -11.7
Repeal of Medicaid Expansion:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Repeal of Reductions to Allotments for DSH:
Estimated Budget Authority............................................ 0 0.6 1.0 1.9 2.8 3.7 4.7 5.7 5.7 5.1 6.3 31.2
Estimated Outlays..................................................... 0 0.6 1.0 1.9 2.8 3.7 4.7 5.7 5.7 5.1 6.3 31.2
Reductions to States' Medicaid Costs:\b\
Estimated Budget Authority............................................ 0 -0.3 -0.6 -0.8 -0.8 -0.8 -0.9 -0.9 -0.9 -1.0 -2.5 -7.1
Estimated Outlays..................................................... 0 -0.3 -0.6 -0.8 -0.8 -0.8 -0.9 -0.9 -0.9 -1.0 -2.5 -7.1
Safety Net Funding for Non Expansion States:
Estimated Budget Authority............................................ 0 2.0 2.0 2.0 2.0 0.0 0.0 0.0 0.0 0.0 8.0 8.0
Estimated Outlays..................................................... 0 1.8 2.0 2.0 2.0 0.2 0.0 0.0 0.0 0.0 7.8 8.0
Providing Incentives for Increased Frequency of Eligibility
Redeterminations:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Per Capita Allotment for Medical Assistance:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Repeal of Cost-Sharing Subsidy:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Patient and State Stability Fund:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Continuous Health Insurance Coverage Incentive:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Increasing Levels of Coverage Options:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Change in Permissible Age Variation:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Recapture Excess Advance Payments of Premium Tax Credits:
Estimated Budget Authority............................................ 0 -2.0 -2.2 -0.7 0 0 0 0 0 0 -4.9 -4.9
Estimated Outlays..................................................... 0 -2.0 -2.2 -0.7 0 0 0 0 0 0 -4.9 -4.9
Additional Modifications to Premium Tax Credit:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Premium Tax Credit:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Small Business Tax Credit:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Individual Mandate:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Employer Mandate:
Estimated Budget Authority............................................
[Included in estimate of coverage provisions]
[Included in estimate of coverage provisions]
Estimated Outlays.....................................................
Total Changes in Direct Spending:
Estimated Budget Authority.......................................... -6.3 -13.0 -23.6 -97.1 -137.4 -157.6 -172.8 -185.8 -198.7 -210.5 -277.4 -1,202.8
Estimated Outlays................................................... -6.7 -27.2 -25.7 -91.7 -136.9 -158.0 -174.3 -187.0 -200.0 -211.7 -288.1 -1,219.1
On-Budget......................................................... -6.7 -27.2 -25.7 -91.7 -136.8 -157.7 -173.9 -186.4 -199.4 -211.1 -288.0 -1,216.6
Off-Budget........................................................ 0 (*) (*) (*) -0.1 -0.2 -0.4 -0.6 -0.6 -0.6 (*) -2.5
CHANGES IN REVENUES\c\
Coverage Provisions:
Estimated Revenues.................................................... -3.8 -13.7 -16.8 -25.5 -33.6 -36.4 -38.9 -40.4 -41.0 -40.7 -93.5 -290.9
On-Budget........................................................... -4.5 -17.0 -19.9 -27.6 -35.5 -38.4 -41.7 -44.7 -46.7 -48.0 -104.5 -324.2
Off-Budget.......................................................... 0.7 3.3 3.1 2.0 1.9 2.0 2.8 4.3 5.8 7.3 11.1 33.3
Recapture Excess Advance Payments of Premium Tax Credits................ 0 0.6 0.7 0.5 0 0 0 0 0 0 1.8 1.8
Additional Modifications to Premium Tax Credit........................
[Included in estimate of coverage provisions]
Premium Tax Credit....................................................
[Included in estimate of coverage provisions]
Small Business Tax Credit.............................................
[Included in estimate of coverage provisions]
Individual Mandate....................................................
[Included in estimate of coverage provisions]
Employer Mandate......................................................
[Included in estimate of coverage provisions]
Repeal of the Tax on Employee Health Insurance Premiums and Health Plan 0 0 0 -3.4 -6.9 -8.7 -10.7 -13.6 -5.5 0 -10.3 -48.7
Benefits\d\............................................................
Repeal of Tax on Over-the-Counter Medications........................... 0 -0.4 -0.5 -0.6 -0.6 -0.6 -0.6 -0.7 -0.7 -0.7 -2.1 -5.5
Repeal of Increase of Tax on Health Savings............................. 0 (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.1
Repeal of Limitations on Contributions to Flexible Spending Accounts.... 0 -0.3 -1.2 -1.6 -1.7 -1.8 -2.2 -2.6 -3.3 -4.1 -4.7 -18.6
Repeal of Tax on Prescription Medications............................... 0 -3.1 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -2.7 -11.2 -24.8
Repeal of Medical Device Excise Tax..................................... 0 -1.4 -1.9 -2.0 -2.1 -2.2 -2.3 -2.4 -2.6 -2.7 -7.4 -19.6
Repeal of Health Insurance Tax.......................................... 0 -12.8 -13.5 -14.3 -15.1 -15.9 -16.8 -17.8 -18.7 -19.7 -55.7 -144.7
Repeal of Elimination of Deduction for Expenses Allocable to Medicare 0 -0.1 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.6 -1.7
Part D Subsidy.........................................................
Repeal of Increase in Income Threshold for Determining Medical Care -0.2 -2.0 -3.2 -3.4 -3.6 -3.9 -4.2 -4.5 -4.8 -5.1 -12.4 -34.9
Deduction..............................................................
Repeal of Medicare Tax Increase......................................... -0.4 -6.5 -10.1 -11.4 -12.3 -13.2 -14.1 -15.2 -16.5 -17.6 -40.8 -117.3
Refundable Tax Credit for Health Insurance..............................
[Included in estimate of coverage provisions]
Maximum Contribution Limit to Health Savings............................ 0 -1.0 -1.6 -1.7 -1.9 -2.1 -2.3 -2.5 -2.7 -2.9 -6.2 -18.6
Allow Both Spouses to Make Catch-up Contributions to the Same Health 0 (*) (*) (*) (*) (*) (*) (*) -0.1 -0.1 -0.1 -0.4
Savings Account........................................................
Special Rule for Certain Medical Expenses Incurred Before Establishment 0 (*) (*) (*) (*) (*) (*) (*) (*) (*) -0.1 -0.2
of Health Savings......................................................
Repeal of Tanning Tax................................................... 0 (*) -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.6
Repeal of Net Investment Tax............................................ -1.5 -10.5 -7.5 -16.7 -17.8 -18.7 -19.7 -20.7 -21.7 -22.7 -54.1 -157.6
Remuneration............................................................ 0 (*) (*) (*) -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.4
Total Changes in Revenues............................................. -5.9 -51.2 -58.6 -83.1 -98.7 -106.6 -114.9 -123.5 -120.6 -119.4 -297.6 -882.8
On-Budget........................................................... -6.6 -53.8 -60.8 -83.3 -98.0 -105.5 -114.0 -123.2 -123.3 -124.7 -302.7 -893.5
Off-Budget.......................................................... 0.7 2.6 2.2 0.2 -0.7 -1.2 -1.0 -0.3 2.7 5.3 5.0 10.7
INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING OR REVENUES
Net Increase or Decrease (-) in the Deficit............................. -0.8 24.0 33.0 -8.6 -38.2 -51.3 -59.4 -63.5 -79.4 -92.4 9.4 -336.5
On-Budget............................................................. (*) 26.6 35.1 -8.4 -38.8 -52.3 -59.9 -63.2 -76.0 -86.4 14.5 -323.3
Off-Budget............................................................ -0.7 -2.6 -2.2 -0.2 0.6 0.9 0.5 -0.3 -3.3 -5.9 -5.1 -13.2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Notes: The costs of this legislation fall within budget function 550 (health), 570 (Medicare), 600 (Income Security), and 650 (Social Security).
Numbers may not add up to totals because of rounding; DSH = Disproportionate Share Hospital; AHCA = American Health Care Act;
* = an increase or decrease between zero and $50 million.
\a\For outlays, a positive number indicates an increase (adding to the deficit) and a negative number indicates a decrease (reducing the deficit).
\b\Estimate interacts with the provision related to the Per Capita Allotment for Medical Assistance.
\c\For revenues, a positive number indicates an increase (reducing the deficit) and a negative number indicates a decrease (adding to the deficit).
\d\This estimate does not include effects of interactions with other subsidies; those effects are included in estimates of other relevant provisions.
TABLE 3.--NET BUDGETARY EFFECTS OF THE INSURANCE COVERAGE PROVISIONS OF THE AHCA
[Billions of dollars, by fiscal year]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 2017-
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medicaid Outlays............................ -3 -18 -26 -68 -94 -111 -124 -135 -146 -155 -880
Subsidies for Coverage Through Marketplaces -5 -11 -16 -62 -87 -91 -95 -99 -102 -106 -673
and Related Spending and Revenues\a,b\.....
Small-Employer Tax Credits\b,c\............. (*) (*) (*) (*) -1 -1 -1 -1 -1 -1 -6
Tax Credits for Nongroup Insurance\b,d\..... 0 0 0 30 44 47 52 58 63 68 361
Penalty Payments by Employers\c\............ 2 16 20 15 16 18 19 20 22 23 171
Penalty Payments by Uninsured People........ 3 3 3 3 4 4 4 4 4 5 38
Patient and State Stability Fund Grants..... 0 0 12 15 10 9 9 8 8 8 80
Medicare\e\................................. 0 1 3 4 6 6 6 6 6 6 43
Other Effects on Revenues and Outlays\d,f\.. -1 -5 -5 -4 -4 -4 -6 -10 -14 -18 -70
-----------------------------------------------------------------------------------------------------------
Total Effect on the Deficit............... -3 -14 -9 -67 -105 -122 -136 -148 -160 -171 -935
Memorandum:
Decreases in Mandatory Spending............. -7 -27 -26 -93 -139 -158 -175 -188 -201 -212 -1,226
Decreases in Revenues....................... -4 -14 -17 -26 -34 -36 -39 -40 -41 -41 -291
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Except in the memorandum lines, positive numbers indicate an increase in the deficit, and negative numbers indicate a decrease in the deficit.
Numbers may not add up to totals because of rounding; AHCA = American Health Care Act; * = between -$500 million and zero.
\a\Related spending and revenues include spending for the Basic Health Program and net spending and revenues for risk adjustment.
\b\Includes effects on outlays and on revenues.
\c\Effects on the deficit include the associated effects of changes in taxable compensation on revenues.
\d\Includes costs for a new tax credit for continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
\e\Effects arise mostly from changes in Disproportionate Share Hospital payments.
\f\Consists mainly of the effects of changes in taxable compensation on revenues. CBO also estimates that outlays for Social Security benefits would
decrease by about $3 billion over the 2017-2026 period.
TABLE 4.--ILLUSTRATIVE EXAMPLE OF SUBSIDIES FOR NONGROUP HEALTH INSURANCE UNDER CURRENT LAW AND THE AHCA, 2026
[Dollars]
----------------------------------------------------------------------------------------------------------------
Actuarial
value of plan
Premium tax Net premium after cost-
Premium\a\ credit\b\ paid sharing
subsidies
(percent)\c\
----------------------------------------------------------------------------------------------------------------
SINGLE INDIVIDUAL WITH ANNUAL INCOME OF $26,500 (175 PERCENT OF FPL)\d\
Current Law:
21 years old.................................. 5,100 3,400 1,700
40 years old.................................. 6,500 4,800 1,700 87
64 years old.................................. 15,300 13,600 1,700
---------------------------------------------------------------
AHCA:
21 years old.................................. 3,900 2,450 1,450
40 years old.................................. 6,050 3,650 2,400 65
64 years old.................................. 19,500 4,900 14,600
----------------------------------------------------------------------------------------------------------------
SINGLE INDIVIDUAL WITH ANNUAL INCOME OF $68,200 (450 PERCENT OF FPL)\d\
Current Law:
21 years old.................................. 5,100 0 5,100
40 years old.................................. 6,500 0 6,500 70
64 years old.................................. 15,300 0 15,300
---------------------------------------------------------------
AHCA:
21 years old.................................. 3,900 2,450 1,450
40 years old.................................. 6,050 3,650 2,400 65
64 years old.................................. 19,500 4,900 14,600
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
All dollar figures have been rounded to the nearest $50; AHCA = American Health Care Act; FPL = federal poverty
level.
\a\For this illustration, CBO projected the average national premiums for a 21-year-old in the nongroup health
insurance market in 2026 both under current law and under the AHCA. On the basis of those amounts, CBO
calculated premiums for a 40-year-old and a 64-year-old, assuming that the person lives in a state that uses
the federal default age-rating methodology, which limits variation of premiums to a ratio of 3 to 1 for adults
under current law and 5 to 1 for adults under the AHCA. CBO projects that, under current law, most states will
use the default 3-to-1 age-rating curve; under the AHCA, CBO projects, most would use an age-rating curve with
a maximum ratio of 5 to 1.
\b\Under current law, premium tax credits are calculated as the difference between the reference premium and a
specified percentage of income for a person with income at a given percentage of the FPL. The reference
premium is the premium for the second-lowest-cost silver plan available in the marketplace in the area in
which the person resides. A silver plan covers about 70 percent of the costs of covered benefits. CBO's
projection of the maximum percentage of income for calculating premium tax credits in 2026 for someone with
income at 175 percent of the FPL takes into account the probability, estimated in CBO's March 2016 baseline,
that additional indexing may apply. Under the AHCA, the premium tax credits offered for nongroup coverage
would be indexed to the consumer price index for all urban consumers plus 1 percentage point. In 2026, CBO
projects, those tax credits would be about 22 percent higher than the amounts specified in 2020.
\c\The actuarial value of a plan is the percentage of costs for covered services that the plan pays. Cost-
sharing subsidies are payments made by the federal government to insurers that reduce the cost-sharing amounts
(out-of-pocket payments required under insurance policies) for covered people whose income is generally
between 100 percent and 250 percent of the FPL. The cost-sharing subsidy amounts in this example would range
from $1,100 for a 21-year-old with income at 175 percent of the FPL to $3,350 for a 64-year-old at the same
income level. Under current law, cost-sharing subsidies have the effect of increasing the actuarial value of
the plan from 70 percent for a typical silver plan to 94 percent for people whose income is between 100
percent and 149 percent of the FPL; 87 percent for people between 150 percent and 199 percent of the FPL; and
73 percent for people between 200 percent and 249 percent of the FPL. People whose income is 250 percent of
the FPL or more would receive a standard 70 percent actuarial value when purchasing a silver plan. CBO
projects that, under the AHCA, the elimination of required actuarial values and the structure of new tax
credits would, by 2026, result in a reduction to about 65 percent in the average actuarial value of plans
purchased in the nongroup market.
\d\Income levels reflect modified adjusted gross income, which equals adjusted gross income plus untaxed Social
Security benefits, foreign earned income that is excluded from adjusted gross income, tax-exempt interest, and
income of dependent filers. CBO projects that in 2026, a modified adjusted gross income of $26,500 would equal
175 percent of the FPL and an income of $68,200 would equal 450 percent of the FPL.
TABLE 5.--EFFECTS OF THE AHCA ON HEALTH INSURANCE COVERAGE FOR PEOPLE UNDER AGE 65
[Millions of people, by calendar year]
----------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
----------------------------------------------------------------------------------------------------------------
Total Population Under Age 65....... 273 274 275 276 276 277 278 279 279 280
Uninsured Under Current Law......... 26 26 27 27 27 27 27 28 28 28
Change in Coverage Under the AHCA:
Medicaid\a\....................... -1 -5 -6 -9 -12 -13 -13 -14 -14 -14
Nongroup coverage, including -2 -6 -7 -9 -8 -8 -6 -5 -4 -2
marketplaces\b\..................
Employment-based coverage......... -1 -2 -2 -2 -2 -2 -3 -5 -5 -7
Other coverage\c\................. (*) (*) (*) -1 -1 -1 -1 -1 -1 -1
Uninsured......................... 4 14 16 21 23 23 23 24 24 24
Uninsured Under the AHCA............ 31 41 43 48 50 50 51 51 51 52
Percentage of the Population Under
Age 65 With Insurance Under the
AHCA:
Including all U.S. residents...... 89 85 84 83 82 82 82 82 82 81
Excluding unauthorized immigrants. 91 87 87 85 84 84 84 84 84 84
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.
Estimates are based on CBO's March 2016 baseline, adjusted for subsequent legislation. They reflect average
enrollment over the course of a year among noninstitutionalized civilian residents of the 50 states and the
District of Columbia who are under the age of 65, and they include spouses and dependents covered under family
policies.
AHCA = American Health Care Act; * = a reduction that falls between zero and 500,000 people.
\a\Includes noninstitutionalized enrollees with full Medicaid benefits.
\b\Under current law, many people can purchase subsidized health insurance coverage through the marketplaces
(sometimes called exchanges) operated by the federal government, by state governments, or as partnerships
between federal and state governments. People also can purchase unsubsidized coverage in the nongroup market
outside of those marketplaces. Under the AHCA, people could receive subsidies for coverage purchased either
inside or outside of the marketplaces.
\c\Includes coverage under the Basic Health Program, which allows states to establish a coverage program
primarily for people whose income is between 138 percent and 200 percent of the federal poverty level. To
subsidize that coverage, the federal government provides states with funding that is equal to 95 percent of
the subsidies for which those people would otherwise have been eligible by purchasing health insurance through
a marketplace. Payments for that program would be rescinded by the AHCA in 2020.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
description portions of this report.
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
budget reconciliation legislative recommendations contain no
measure that authorizes funding, so no statement of general
performance goals and objectives for which any measure
authorizing 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 budget reconciliation
legislative recommendations do not contain any private sector
mandates. The Committee has determined that the budget
reconciliation legislative recommendations do not impose any
Federal intergovernmental mandates 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 provisions of the budget reconciliation
legislative recommendations and states that the provisions of
the legislative recommendations do 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 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 budget reconciliation legislative recommendations contain
no provisions that amend the Code 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 budget reconciliation legislative
recommendations and states that the provisions of the
legislative recommendations 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 clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that none
of the budget reconciliation legislative recommendations
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 section 6104 of title 31,
United States Code.
H. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (115th Congress),
the following statement is made concerning directed rule
makings: The Committee advises that the budget reconciliation
legislative recommendations require no directed rule makings
within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BUDGET RECONCILIATION
LEGISLATIVE RECOMMENDATIONS, AS TRANSMITTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes to existing law made by
the recommendations, as transmitted, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, 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. 31. Tax withheld on wages.
* * * * * * *
Sec. 36C. Health insurance coverage.
* * * * * * *
SEC. 35. HEALTH INSURANCE COSTS OF ELIGIBLE INDIVIDUALS.
(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by subtitle A an
amount equal to 72.5 percent of the amount paid by the taxpayer
for coverage of the taxpayer and qualifying family members
under qualified health insurance for eligible coverage months
beginning in the taxable year.
(b) Eligible Coverage Month.--For purposes of this section--
(1) In general.--The term ``eligible coverage month''
means any month if--
(A) as of the first day of such month, the
taxpayer--
(i) is an eligible individual,
(ii) is covered by qualified health
insurance, the premium for which is
paid by the taxpayer,
(iii) does not have other specified
coverage, and
(iv) is not imprisoned under Federal,
State, or local authority, and
(B) such month begins more than 90 days after
the date of the enactment of the Trade Act of
2002, and before January 1, 2020.
(2) Joint returns.--In the case of a joint return,
the requirements of paragraph (1)(A) shall be treated
as met with respect to any month if at least 1 spouse
satisfies such requirements.
(c) Eligible Individual.--For purposes of this section--
(1) In general.--The term ``eligible individual''
means--
(A) an eligible TAA recipient,
(B) an eligible alternative TAA recipient,
and
(C) an eligible PBGC pension recipient.
(2) Eligible TAA recipient.--
(A) In general.--Except as provided in
subparagraph (B), the term ``eligible TAA
recipient'' means, with respect to any month,
any individual who is receiving for any day of
such month a trade readjustment allowance under
chapter 2 of title II of the Trade Act of 1974
or who would be eligible to receive such
allowance if section 231 of such Act were
applied without regard to subsection (a)(3)(B)
of such section. An individual shall continue
to be treated as an eligible TAA recipient
during the first month that such individual
would otherwise cease to be an eligible TAA
recipient by reason of the preceding sentence.
(B) Special rule.--In the case of any
eligible coverage month beginning after the
date of the enactment of this paragraph, the
term ``eligible TAA recipient'' means, with
respect to any month, any individual who--
(i) is receiving for any day of such
month a trade readjustment allowance
under chapter 2 of title II of the
Trade Act of 1974,
(ii) would be eligible to receive
such allowance except that such
individual is in a break in training
provided under a training program
approved under section 236 of such Act
that exceeds the period specified in
section 233(e) of such Act, but is
within the period for receiving such
allowances provided under section
233(a) of such Act, or
(iii) is receiving unemployment
compensation (as defined in section
85(b)) for any day of such month and
who would be eligible to receive such
allowance for such month if section 231
of such Act were applied without regard
to subsections (a)(3)(B) and (a)(5)
thereof.
An individual shall continue to be treated as
an eligible TAA recipient during the first
month that such individual would otherwise
cease to be an eligible TAA recipient by reason
of the preceding sentence.
(3) Eligible alternative TAA recipient.--The term
``eligible alternative TAA recipient'' means, with
respect to any month, any individual who--
(A) is a worker described in section
246(a)(3)(B) of the Trade Act of 1974 who is
participating in the program established under
section 246(a)(1) of such Act, and
(B) is receiving a benefit for such month
under section 246(a)(2) of such Act.
An individual shall continue to be treated as an
eligible alternative TAA recipient during the first
month that such individual would otherwise cease to be
an eligible alternative TAA recipient by reason of the
preceding sentence.
(4) Eligible PBGC pension recipient.--The term
``eligible PBGC pension recipient'' means, with respect
to any month, any individual who--
(A) has attained age 55 as of the first day
of such month, and
(B) is receiving a benefit for such month any
portion of which is paid by the Pension Benefit
Guaranty Corporation under title IV of the
Employee Retirement Income Security Act of
1974.
(d) Qualifying Family Member.--For purposes of this section--
(1) In general.--The term ``qualifying family
member'' means--
(A) the taxpayer's spouse, and
(B) any dependent of the taxpayer with
respect to whom the taxpayer is entitled to a
deduction under section 151(c).
Such term does not include any individual who has other
specified coverage.
(2) Special dependency test in case of divorced
parents, etc..--If section 152(e) applies to any child
with respect to any calendar year, in the case of any
taxable year beginning in such calendar year, such
child shall be treated as described in paragraph (1)(B)
with respect to the custodial parent (as defined in
section 152(e)(4)(A)) and not with respect to the
noncustodial parent.
(e) Qualified Health Insurance.--For purposes of this
section--
(1) In general.--The term ``qualified health
insurance'' means any of the following:
(A) Coverage under a COBRA continuation
provision (as defined in section 9832(d)(1)).
(B) State-based continuation coverage
provided by the State under a State law that
requires such coverage.
(C) Coverage offered through a qualified
State high risk pool (as defined in section
2744(c)(2) of the Public Health Service Act).
(D) Coverage under a health insurance program
offered for State employees.
(E) Coverage under a State-based health
insurance program that is comparable to the
health insurance program offered for State
employees.
(F) Coverage through an arrangement entered
into by a State and--
(i) a group health plan (including
such a plan which is a multiemployer
plan as defined in section 3(37) of the
Employee Retirement Income Security Act
of 1974),
(ii) an issuer of health insurance
coverage,
(iii) an administrator, or
(iv) an employer.
(G) Coverage offered through a State
arrangement with a private sector health care
coverage purchasing pool.
(H) Coverage under a State-operated health
plan that does not receive any Federal
financial participation.
(I) Coverage under a group health plan that
is available through the employment of the
eligible individual's spouse.
(J) In the case of any eligible individual
and such individual's qualifying family
members, coverage under individual health
insurance (other than coverage enrolled in
through an Exchange established under the
Patient Protection and Affordable Care Act).
For purposes of this subparagraph, the term
``individual health insurance'' means any
insurance which constitutes medical care
offered to individuals other than in connection
with a group health plan and does not include
Federal- or State-based health insurance
coverage.
(K) Coverage under an employee benefit plan
funded by a voluntary employees' beneficiary
association (as defined in section 501(c)(9))
established pursuant to an order of a
bankruptcy court, or by agreement with an
authorized representative, as provided in
section 1114 of title 11, United States Code.
(2) Requirements for State-based coverage.--
(A) In general.--The term ``qualified health
insurance'' does not include any coverage
described in subparagraphs (B) through (H) of
paragraph (1) unless the State involved has
elected to have such coverage treated as
qualified health insurance under this section
and such coverage meets the following
requirements:
(i) Guaranteed issue.--Each
qualifying individual is guaranteed
enrollment if the individual pays the
premium for enrollment or provides a
qualified health insurance costs credit
eligibility certificate described in
section 7527 and pays the remainder of
such premium.
(ii) No imposition of preexisting
condition exclusion.--No pre-existing
condition limitations are imposed with
respect to any qualifying individual.
(iii) Nondiscriminatory premium.--The
total premium (as determined without
regard to any subsidies) with respect
to a qualifying individual may not be
greater than the total premium (as so
determined) for a similarly situated
individual who is not a qualifying
individual.
(iv) Same benefits.--Benefits under
the coverage are the same as (or
substantially similar to) the benefits
provided to similarly situated
individuals who are not qualifying
individuals.
(B) Qualifying individual.--For purposes of
this paragraph, the term ``qualifying
individual'' means--
(i) an eligible individual for whom,
as of the date on which the individual
seeks to enroll in the coverage
described in subparagraphs (B) through
(H) of paragraph (1), the aggregate of
the periods of creditable coverage (as
defined in section 9801(c)) is 3 months
or longer and who, with respect to any
month, meets the requirements of
clauses (iii) and (iv) of subsection
(b)(1)(A); and
(ii) the qualifying family members of
such eligible individual.
(3) Exception.--The term ``qualified health
insurance'' shall not include--
(A) a flexible spending or similar
arrangement, and
(B) any insurance if substantially all of its
coverage is of excepted benefits described in
section 9832(c).
(f) Other Specified Coverage.--For purposes of this section,
an individual has other specified coverage for any month if, as
of the first day of such month--
(1) Subsidized coverage.--
(A) In general.--Such individual is covered
under any insurance which constitutes medical
care (except insurance substantially all of the
coverage of which is of excepted benefits
described in section 9832(c)) under any health
plan maintained by any employer (or former
employer) of the taxpayer or the taxpayer's
spouse and at least 50 percent of the cost of
such coverage (determined under section 4980B)
is paid or incurred by the employer.
(B) Eligible alternative TAA recipients.--In
the case of an eligible alternative TAA
recipient, such individual is either--
(i) eligible for coverage under any
qualified health insurance (other than
insurance described in subparagraph
(A), (B), or (F) of subsection (e)(1))
under which at least 50 percent of the
cost of coverage (determined under
section 4980B(f)(4)) is paid or
incurred by an employer (or former
employer) of the taxpayer or the
taxpayer's spouse, or
(ii) covered under any such qualified
health insurance under which any
portion of the cost of coverage (as so
determined) is paid or incurred by an
employer (or former employer) of the
taxpayer or the taxpayer's spouse.
(C) Treatment of cafeteria plans.--For
purposes of subparagraphs (A) and (B), the cost
of coverage shall be treated as paid or
incurred by an employer to the extent the
coverage is in lieu of a right to receive cash
or other qualified benefits under a cafeteria
plan (as defined in section 125(d)).
(2) Coverage under medicare, medicaid, or SCHIP.--
Such individual--
(A) is entitled to benefits under part A of
title XVIII of the Social Security Act or is
enrolled under part B of such title, or
(B) is enrolled in the program under title
XIX or XXI of such Act (other than under
section 1928 of such Act).
(3) Certain other coverage.--Such individual--
(A) is enrolled in a health benefits plan
under chapter 89 of title 5, United States
Code, or
(B) is entitled to receive benefits under
chapter 55 of title 10, United States Code.
(g) Special Rules.--
(1) Coordination with advance payments of credit.--
With respect to any taxable year, the amount which
would (but for this subsection) be allowed as a credit
to the taxpayer under subsection (a) shall be reduced
(but not below zero) by the aggregate amount paid on
behalf of such taxpayer under section 7527 for months
beginning in such taxable year.
(2) Coordination with other deductions.--Amounts
taken into account under subsection (a) shall not be
taken into account in determining any deduction allowed
under section 162(l) or 213.
(3) Medical and health savings accounts.--Amounts
distributed from an Archer MSA (as defined in section
220(d)) or from a health savings account (as defined in
section 223(d)) shall not be taken into account under
subsection (a).
(4) Denial of credit to dependents.--No credit shall
be allowed under this section to any individual with
respect to whom a deduction under section 151 is
allowable to another taxpayer for a taxable year
beginning in the calendar year in which such
individual's taxable year begins.
(5) Both spouses eligible individuals.--The spouse of
the taxpayer shall not be treated as a qualifying
family member for purposes of subsection (a), if--
(A) the taxpayer is married at the close of
the taxable year,
(B) the taxpayer and the taxpayer's spouse
are both eligible individuals during the
taxable year, and
(C) the taxpayer files a separate return for
the taxable year.
(6) Marital status; certain married individuals
living apart.--Rules similar to the rules of paragraphs
(3) and (4) of section 21(e) shall apply for purposes
of this section.
(7) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any
contract for qualified health insurance under which
amounts are payable for coverage of an individual other
than the taxpayer and qualifying family members.
(8) Treatment of payments.--For purposes of this
section--
(A) Payments by Secretary.--Payments made by
the Secretary on behalf of any individual under
section 7527 (relating to advance payment of
credit for health insurance costs of eligible
individuals) shall be treated as having been
made by the taxpayer on the first day of the
month for which such payment was made.
(B) Payments by taxpayer.--Payments made by
the taxpayer for eligible coverage months shall
be treated as having been made by the taxpayer
on the first day of the month for which such
payment was made.
(9) COBRA premium assistance.--In the case of an
assistance eligible individual who receives premium
reduction for COBRA continuation coverage under section
3001(a) of title III of division B of the American
Recovery and Reinvestment Act of 2009 for any month
during the taxable year, such individual shall not be
treated as an eligible individual, a certified
individual, or a qualifying family member for purposes
of this section or section 7527 with respect to such
month.
(10) Continued qualification of family members after
certain events.--
(A) Medicare eligibility.--In the case of any
month which would be an eligible coverage month
with respect to an eligible individual but for
subsection (f)(2)(A), such month shall be
treated as an eligible coverage month with
respect to such eligible individual solely for
purposes of determining the amount of the
credit under this section with respect to any
qualifying family members of such individual
(and any advance payment of such credit under
section 7527). This subparagraph shall only
apply with respect to the first 24 months after
such eligible individual is first entitled to
the benefits described in subsection (f)(2)(A).
(B) Divorce.--In the case of the finalization
of a divorce between an eligible individual and
such individual's spouse, such spouse shall be
treated as an eligible individual for purposes
of this section and section 7527 for a period
of 24 months beginning with the date of such
finalization, except that the only qualifying
family members who may be taken into account
with respect to such spouse are those
individuals who were qualifying family members
immediately before such finalization.
(C) Death.--In the case of the death of an
eligible individual--
(i) any spouse of such individual
(determined at the time of such death)
shall be treated as an eligible
individual for purposes of this section
and section 7527 for a period of 24
months beginning with the date of such
death, except that the only qualifying
family members who may be taken into
account with respect to such spouse are
those individuals who were qualifying
family members immediately before such
death, and
(ii) any individual who was a
qualifying family member of the
decedent immediately before such death
(or, in the case of an individual to
whom paragraph (4) applies, the
taxpayer to whom the deduction under
section 151 is allowable) shall be
treated as an eligible individual for
purposes of this section and section
7527 for a period of 24 months
beginning with the date of such death,
except that in determining the amount
of such credit only such qualifying
family member may be taken into
account.
(11) Election.--
(A) In general.--This section shall not apply
to any taxpayer for any eligible coverage month
unless such taxpayer elects the application of
this section for such month.
(B) Timing and applicability of election.--
Except as the Secretary may provide--
(i) an election to have this section
apply for any eligible coverage month
in a taxable year shall be made not
later than the due date (including
extensions) for the return of tax for
the taxable year; and
(ii) any election for this section to
apply for an eligible coverage month
shall apply for all subsequent eligible
coverage months in the taxable year
and, once made, shall be irrevocable
with respect to such months.
(12) Coordination with premium tax credit.--
(A) In general.--An eligible coverage month
to which the election under paragraph (11)
applies shall not be treated as a coverage
month (as defined in section 36B(c)(2)) for
purposes of section 36B with respect to the
taxpayer.
(B) Coordination with advance payments of
premium tax credit.--In the case of a taxpayer
who makes the election under paragraph (11)
with respect to any eligible coverage month in
a taxable year or on behalf of whom any advance
payment is made under section 7527 with respect
to any month in such taxable year--
(i) the tax imposed by this chapter
for the taxable year shall be increased
by the excess, if any, of--
(I) the sum of any advance
payments made on behalf of the
taxpayer under section 1412 of
the Patient Protection and
Affordable Care Act and section
7527 for months during such
taxable year, over
(II) the sum of the credits
allowed under this section
(determined without regard to
paragraph (1)) and section 36B
(determined without regard to
subsection (f)(1) thereof) for
such taxable year; and
(ii) section 36B(f)(2) shall not
apply with respect to such taxpayer for
such taxable year, except that if such
taxpayer received any advance payments
under section 7527 for any month in
such taxable year and is later allowed
a credit under section 36B for such
taxable year, then section 36B(f)(2)(B)
shall be applied by substituting the
amount determined under clause (i) for
the amount determined under section
36B(f)(2)(A).
(13) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section, section 6050T,
and section 7527.
(14) Coordination with health insurance coverage
credit.--
(A) In general.--An eligible coverage month
to which the election under paragraph (11)
applies shall not be treated as an eligible
coverage month (as defined in section 36C(d))
for purposes of section 36C with respect to the
taxpayer or any of the taxpayer's qualifying
family members (as defined in section 36C(e)).
(B) Coordination with advance payments of
health insurance coverage credit.--In the case
of a taxpayer who makes the election under
paragraph (11) with respect to any eligible
coverage month in a taxable year or on behalf
of whom any advance payment is made under
section 7527 with respect to any month in such
taxable year--
(i) the tax imposed by this chapter
for the taxable year shall be increased
by the excess, if any, of--
(I) the sum of any advance
payments made on behalf of the
taxpayer under sections 7527
and 7529 for months during such
taxable year, over
(II) the sum of the credits
allowed under this section
(determined without regard to
paragraph (1)) and section 36C
(determined without regard to
subsection (i)(5)(A) thereof)
for such taxable year, and
(ii) section 36C(i)(5)(B) shall not
apply with respect to such taxpayer for
such taxable year.
* * * * * * *
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], 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.]
(A) Applicable percentage.--
(i) In general.--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 percentage to the final
percentage specified in such table for
such income tier with respect to a
taxpayer of the age involved:
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
In the case of Over Age 59
household income ------------------------------------------------------------------------------------------------------------------------------------------------
(expressed as a
percent of the Up to Age 29 Age 30-39 Age 40-49 Age 50-59
poverty line) Initial % Final % Initial % Final % Initial % Final % Initial Final Initial
within the following % % %
income tier:
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------
Up to 133% 2................ 2................ 2................ 2................ 2................ 2................ 2................ 2................ 2............... 2
133%-150% 3................ 4................ 3................ 4................ 3................ 4................ 3................ 4................ 3............... 4
150%-200% 4................ 4.3.............. 4................ 5.3.............. 4................ 6.3.............. 4................ 7.3.............. 4............... 8.3
200%-250% 4.3.............. 4.3.............. 5.3.............. 5.9.............. 6.3.............. 8.05............. 7.3.............. 9................ 8.3............. 10
250%-300% 4.3.............. 4.3.............. 5.9.............. 5.9.............. 8.05............. 8.35............. 9................ 10.5............. 10.............. 11.5
300%-400% 4.3.............. 4.3.............. 5.9.............. 5.9.............. 8.35............. 8.35............. 10.5............. 10.5............. 11.5............ 11.5
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(ii) Age determinations.--
(I) In general.--For purposes
of clause (i), the age of the
taxpayer taken into account
under clause (i) with respect
to any taxable year is the age
attained by such taxpayer
before the close of such
taxable year.
(II) Joint returns.--In the
case of a joint return, the age
of the older spouse shall be
taken into account under clause
(i).
(iii) Indexing.--In the case of any
taxable year beginning in calendar year
2019, the initial and final percentages
contained in clause (i) shall be
adjusted to reflect--
(I) the excess (if any) of
the rate of premium growth for
the period beginning with
calendar year 2013 and ending
with calendar year 2018, over
the rate of income growth for
such period, and
(II) in addition to any
adjustment under subclause (I),
the excess (if any) of the rate
of premium growth for calendar
year 2018, over the rate of
growth in the consumer price
index for calendar year 2018.
(iv) Failsafe.--Clause (iii)(II)
shall apply 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 calendar year 2018 exceeds an
amount equal to 0.504 percent of the
gross domestic product for such
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] the
Exchange through which such taxpayer is
permitted to obtain coverage, 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 (determined
without regard to subparagraphs (A), (C)(ii),
and (C)(iv) of paragraph (1) thereof and
without regard to whether the plan is offered
on an Exchange), except that such term [shall
not include a qualified health plan which is a
catastrophic plan described in section 1302(e)
of such Act.] shall not include any health plan
that--
(i) is a grandfathered health plan or
a grandmothered health plan, or
(ii) includes coverage for abortions
(other than any abortion necessary to
save the life of the mother or any
abortion with respect to a pregnancy
that is the result of an act of rape or
incest).
(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.
(C) Grandmothered health plan.--
(i) In general.--The term
``grandmothered health plan'' means
health insurance coverage which is
offered in the individual health
insurance market as of October 1, 2013,
and is permitted to be offered in such
market after January 1, 2014, as a
result of CCIIO guidance.
(ii) CCIIO guidance defined.--The
term ``CCIIO guidance'' means the
letter issued by the Centers for
Medicare & Medicaid Services on
November 14, 2013, to the State
Insurance Commissioners outlining a
transitional policy for non-
grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified
(including by a communication entitled
``Insurance Standards Bulletin Series--
INFORMATION--Extension of Transitional
Policy through Calendar Year 2017''
issued on February 29, 2016, by the
Director of the Center for Consumer
Information & Insurance Oversight of
such Centers).
(iii) Individual health insurance
market.--The term ``individual health
insurance market'' means the market for
health insurance coverage (as defined
in section 9832(b)) offered to
individuals other than in connection
with a group health plan (within the
meaning of section 5000(b)(1)).
(D) Certain rules related to abortion.--
(i) Option to purchase separate
coverage or plan.--Nothing in
subparagraph (A) shall be construed as
prohibiting any individual from
purchasing separate coverage for
abortions described in such
subparagraph, or a health plan that
includes such abortions, so long as no
credit is allowed under this section
with respect to the premiums for such
coverage or plan.
(ii) Option to offer coverage or
plan.--Nothing in subparagraph (A)
shall restrict any health insurance
issuer offering a health plan from
offering separate coverage for
abortions described in such
subparagraph, or a plan that includes
such abortions, so long as premiums for
such separate coverage or plan are not
paid for with any amount attributable
to the credit allowed under this
section (or the amount of any advance
payment of the credit under section
1412 of the Patient Protection and
Affordable Care Act).
(iii) Other treatments.--The
treatment of any infection, injury,
disease, or disorder that has been
caused by or exacerbated by the
performance of an abortion shall not be
treated as an abortion for purposes of
subparagraph (A).
(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.
(iii) Nonapplicability of
limitation.--This subparagraph shall
not apply to taxable years beginning
after December 31, 2017, and before
January 1, 2020.
(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.
(h) Termination.--No credit shall be allowed under this
section with respect to any coverage month which begins after
December 31, 2019.
SEC. 36C. HEALTH INSURANCE COVERAGE.
(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this subtitle
for the taxable year the sum of the monthly credit amounts with
respect to such taxpayer for calendar months during such
taxable year.
(b) Monthly Credit Amounts.--
(1) In general.--The monthly credit amount with
respect to any taxpayer for any calendar month is the
lesser of--
(A) the sum of the monthly limitation amounts
determined under subsection (c) with respect to
the taxpayer and the taxpayer's qualifying
family members for such month, or
(B) the amount paid for eligible health
insurance for the taxpayer and the taxpayer's
qualifying family members for such month.
(2) Eligible coverage month requirement.--No amount
shall be taken into account under subparagraph (A) or
(B) of paragraph (1) with respect to any individual for
any month unless such month is an eligible coverage
month with respect to such individual.
(c) Monthly Limitation Amounts.--
(1) In general.--The monthly limitation amount with
respect to any individual for any eligible coverage
month during any taxable year is \1/12\ of--
(A) $2,000 in the case of an individual who
has not attained age 30 as of the beginning of
such taxable year,
(B) $2,500 in the case of an individual who
has attained age 30 but who has not attained
age 40 as of such time,
(C) $3,000 in the case of an individual who
has attained age 40 but who has not attained
age 50 as of such time,
(D) $3,500 in the case of an individual who
has attained age 50 but who has not attained
age 60 as of such time, and
(E) $4,000 in the case of an individual who
has attained age 60 as of such time.
(2) Limitation based on modified adjusted gross
income.--
(A) In general.--The amount otherwise
determined under subsection (b)(1)(A) (without
regard to this subparagraph but after any other
adjustment of such amount under this section)
for the taxable year shall be reduced (but not
below zero) by 10 percent of the excess (if
any) of--
(i) the taxpayer's modified adjusted
gross income for such taxable year,
over
(ii) $75,000 (twice such amount in
the case of a joint return).
(B) Modified adjusted gross income.--For
purposes of this paragraph, 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) Other limitations.--
(A) Aggregate dollar limitation.--The sum of
the monthly limitation amounts taken into
account under this section with respect to any
taxpayer for any taxable year shall not exceed
$14,000.
(B) Maximum number of individuals taken into
account.--With respect to any taxpayer for any
month, monthly limitation amounts shall be
taken into account under this section only with
respect to the 5 oldest individuals with
respect to whom monthly limitation amounts
could (without regard to this subparagraph)
otherwise be so taken into account.
(d) Eligible Coverage Month.--For purposes of this section,
the term ``eligible coverage month'' means, with respect to any
individual, any month if, as of the first day of such month,
the individual--
(1) is covered by eligible health insurance,
(2) is not eligible for other specified coverage,
(3) is either--
(A) a citizen or national of the United
States, or
(B) a qualified alien (within the meaning of
section 431 of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1641)), and
(4) is not incarcerated, other than incarceration
pending the disposition of charges.
(e) Qualifying Family Member.--For purposes of this section,
the term ``qualifying family member'' means--
(1) in the case of a joint return, the taxpayer's
spouse,
(2) any dependent of the taxpayer, and
(3) with respect to any eligible coverage month, any
child (as defined in section 152(f)(1)) of the taxpayer
who as of the end of the taxable year has not attained
age 27 if such child is covered for such month under
eligible health insurance which also covers the
taxpayer (in the case of a joint return, either
spouse).
(f) Eligible Health Insurance.--For purposes of this
section--
(1) In general The term ``eligible health insurance''
means any health insurance coverage (as defined in
section 9832(b)) if--
(A) such coverage is either--
(i) offered in the individual health
insurance market within a State, or
(ii) is unsubsidized COBRA
continuation coverage,
(B) such coverage is not a grandfathered
health plan (as defined in section 1251 of the
Patient Protection and Affordable Care Act) or
a grandmothered health plan,
(C) substantially all of such coverage is not
of excepted benefits described in section
9832(c),
(D) such coverage does not include coverage
for abortions (other than any abortion
necessary to save the life of the mother or any
abortion with respect to a pregnancy that is
the result of an act of rape or incest),
(E) such coverage does not consist of short-
term limited duration insurance (as defined by
the Secretary), and
(F) the State in which such insurance is
offered certifies that such coverage meets the
requirements of this paragraph.
(2) Rules related to state certification.--
(A) Certification made available to public.--
A certification shall not be taken into account
under paragraph (1)(E) unless such
certification is made available to the public
and meets such other requirements as the
Secretary may provide.
(B) Special rule for unsubsidized cobra
continuation coverage.--In the case of
unsubsidized COBRA continuation coverage--
(i) paragraph (1)(E) shall be applied
by substituting ``the plan
administrator (as defined in section
414(g)) of the health plan'' for ``the
State in which such insurance is
offered'', and
(ii) the requirements of subparagraph
(A) shall be treated as satisfied if
the certification meets such
requirements as the Secretary may
provide.
(3) Grandmothered health plan.--
(A) In general.--The term ``grandmothered
health plan'' means health insurance coverage
which is offered in the individual health
insurance market as of January 1, 2013, and is
permitted to be offered in such market after
January 1, 2014, as a result of CCIIO guidance.
(B) CCIIO guidance defined.--The term ``CCIIO
guidance'' means the letter issued by the
Centers for Medicare & Medicaid Services on
November 14, 2013, to the State Insurance
Commissioners outlining a transitional policy
for non-grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified (including
by a communication entitled ``Insurance
Standards Bulletin Series--INFORMATION--
Extension of Transitional Policy through
Calendar Year 2017'' issued on February 29,
2016, by the Director of the Center for
Consumer Information & Insurance Oversight of
such Centers).
(4) Individual health insurance market.--The term
``individual health insurance market'' means the market
for health insurance coverage (as defined in section
9832(b)) offered to individuals other than in
connection with a group health plan (within the meaning
of section 5000(b)(1)).
(g) Other Specified Coverage.--For purposes of this section--
(1) In general.--The term ``other specified
coverage'' means any of the following:
(A) Coverage under a group health plan
(within the meaning of section 5000(b)(1))
other than--
(i) coverage under a plan
substantially all of the coverage of
which is of excepted benefits described
in section 9832(c), and
(ii) COBRA continuation coverage.
(B) Coverage under the Medicare program under
part A of title XVIII of the Social Security
Act.
(C) Coverage under the Medicaid program under
title XIX of the Social Security Act.
(D) Coverage under the CHIP program under
title XXI of the Social Security Act.
(E) Medical coverage under chapter 55 of
title 10, United States Code, including
coverage under the TRICARE program.
(F) Coverage under a health care program
under chapter 17 or 18 of title 38, United
States Code, as determined by the Secretary of
Veterans Affairs, in coordination with the
Secretary of Health and Human Services and the
Secretary of the Treasury.
(G) Coverage under a health plan under
section 2504(e) of title 22, United States Code
(relating to Peace Corps volunteers).
(H) Coverage under the Nonappropriated Fund
Health Benefits Program of the Department of
Defense, established under section 349 of the
National Defense Authorization Act for Fiscal
Year 1995 (Public Law 103-337; 10 U.S.C. 1587
note).
(2) Special rule with respect to veterans health
programs.--In the case of other specified coverage
described in paragraph (1)(F), an individual shall not
be treated as eligible for such coverage unless such
individual is enrolled in such coverage.
(h) Unsubsidized COBRA Continuation Coverage.--For purposes
of this section--
(1) In general.--The term ``unsubsidized COBRA
continuation coverage'' means COBRA continuation
coverage no portion of the premiums for which are
subsidized by the employer.
(2) COBRA continuation coverage.--The term ``COBRA
continuation coverage'' means continuation coverage
provided pursuant to part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974
(other than under section 609), title XXII of the
Public Health Service Act, section 4980B of the
Internal Revenue Code of 1986 (other than subsection
(f)(1) of such section insofar as it relates to
pediatric vaccines), or section 8905a of title 5,
United States Code, or under a State program that
provides comparable continuation coverage. Such term
shall not include coverage under a health flexible
spending arrangement.
(i) Special Rules.--
(1) Married couples must file joint return.--If the
taxpayer is married (within the meaning of section
7703) at the close of the taxable year, no credit shall
be allowed under this section to such taxpayer unless
such taxpayer and the taxpayer's spouse file a joint
return for such taxable year.
(2) Denial of credit to dependents.--
(A) In general.--No credit shall be allowed
under this section to any individual who is a
dependent with respect to another taxpayer for
a taxable year beginning in the calendar year
in which such individual's taxable year begins.
(B) Coordination with rule for older
children.--In the case of any individual who is
a qualifying family member described in
subsection (e)(3) with respect to another
taxpayer for any month, in determining the
amount of any credit allowable to such
individual under this section for any taxable
year of such individual which includes such
month, the monthly limitation amount with
respect to such individual for such month shall
be zero and no amount paid for eligible health
insurance with respect to such individual for
such month shall be taken into account.
(3) Coordination with medical expense deduction.--
Amounts described in subsection (b)(1)(B) with respect
to any month shall not be taken into account in
determining the deduction allowed under section 213
except to the extent that such amounts exceed the
amount described in subsection (b)(1)(A) with respect
to such month.
(4) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any
contract for eligible health insurance under which
amounts are payable for coverage of an individual other
than the taxpayer and the taxpayer's qualifying family
members.
(5) Coordination with advance payments of credit.--
With respect to any taxable year--
(A) the amount which would (but for this
subsection) be allowed as a credit to the
taxpayer under subsection (a) shall be reduced
(but not below zero) by the aggregate amount
paid on behalf of such taxpayer under section
7529 for months beginning in such taxable year,
and
(B) the tax imposed by section 1 for such
taxable year shall be increased by the excess
(if any) of--
(i) the aggregate amount paid on
behalf of such taxpayer under section
7529 for months beginning in such
taxable year, over
(ii) the amount which would (but for
this subsection) be allowed as a credit
to the taxpayer under subsection (a).
(6) Special rules for qualified small employer health
reimbursement arrangements.--
(A) In general.--If the taxpayer or any
qualifying family member of the taxpayer is
provided a qualified small employer health
reimbursement arrangement for any eligible
coverage month, the sum determined under
subsection (b)(1)(A) with respect to the
taxpayer for such month shall be reduced (but
not below zero) by \1/12\ of the permitted
benefit (as defined in section 9831(d)(3)(C))
under such arrangement.
(B) 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).
(C) 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 (A) shall be applied by
substituting ``the number of months during the
year for which such arrangement was provided''
for ``12''.
(7) Certain rules related to abortion.--
(A) Option to purchase separate coverage or
plan.--Nothing in subsection (f)(1)(D) shall be
construed as prohibiting any individual from
purchasing separate coverage for abortions
described in such subparagraph, or a health
plan that includes such abortions, so long as
no credit is allowed under this section with
respect to the premiums for such coverage or
plan.
(B) Option to offer coverage or plan.--
Nothing in subsection (f)(1)(D) shall restrict
any health insurance issuer offering a health
plan from offering separate coverage for
abortions described in such clause, or a plan
that includes such abortions, so long as
premiums for such separate coverage or plan are
not paid for with any amount attributable to
the credit allowed under this section.
(C) Other treatments.--The treatment of any
infection, injury, disease, or disorder that
has been caused by or exacerbated by the
performance of an abortion shall not be treated
as an abortion for purposes of subsection
(f)(1)(D).
(8) Inflation adjustment.--
(A) In general.--In the case of any taxable
year beginning in a calendar year after 2020,
each dollar amount in subsection (c)(1), the
$75,000 amount in subsection (c)(2)(A)(ii), and
the dollar amount in subsection (c)(3)(A),
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--
(I) by substituting
``calendar year 2019'' for
``calendar year 1992'' in
subparagraph (B) thereof, and
(II) by substituting for the
CPI referred to section
1(f)(3)(A) the amount that such
CPI would have been if the
annual percentage increase in
CPI with respect to each year
after 2019 had been one
percentage point greater.
(B) Terms related to cpi.--
(i) Annual percentage increase.--For
purposes of subparagraph (A)(ii)(II),
the term ``annual percentage increase''
means the percentage (if any) by which
CPI for any year exceeds CPI for the
prior year.
(ii) Other terms.--Terms used in this
paragraph which are also used in
section 1(f)(3) shall have the same
meanings as when used in such section.
(C) Rounding.--Any increase determined under
subparagraph (A) shall be rounded to the
nearest multiple of $50.
(9) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section, section 6050X,
and section 7529.
* * * * * * *
Subpart D--Business Related Credits
* * * * * * *
SEC. 45R. EMPLOYEE HEALTH INSURANCE EXPENSES OF SMALL EMPLOYERS.
(a) General Rule.--For purposes of section 38, in the case of
an eligible small employer, the small employer health insurance
credit determined under this section for any taxable year in
the credit period is the amount determined under subsection
(b).
(b) Health Insurance Credit Amount.--Subject to subsection
(c), the amount determined under this subsection with respect
to any eligible small employer is equal to 50 percent (35
percent in the case of a tax-exempt eligible small employer) of
the lesser of--
(1) the aggregate amount of nonelective contributions
the employer made on behalf of its employees during the
taxable year under the arrangement described in
subsection (d)(4) for premiums for qualified health
plans offered by the employer to its employees through
an Exchange, or
(2) the aggregate amount of nonelective contributions
which the employer would have made during the taxable
year under the arrangement if each employee taken into
account under paragraph (1) had enrolled in a qualified
health plan which had a premium equal to the average
premium (as determined by the Secretary of Health and
Human Services) for the small group market in the
rating area in which the employee enrolls for coverage.
(c) Phaseout of Credit Amount Based on Number of Employees
and Average Wages.--The amount of the credit determined under
subsection (b) without regard to this subsection shall be
reduced (but not below zero) by the sum of the following
amounts:
(1) Such amount multiplied by a fraction the
numerator of which is the total number of full-time
equivalent employees of the employer in excess of 10
and the denominator of which is 15.
(2) Such amount multiplied by a fraction the
numerator of which is the average annual wages of the
employer in excess of the dollar amount in effect under
subsection (d)(3)(B) and the denominator of which is
such dollar amount.
(d) Eligible Small Employer.--For purposes of this section--
(1) In general.--The term ``eligible small employer''
means, with respect to any taxable year, an employer--
(A) which has no more than 25 full-time
equivalent employees for the taxable year,
(B) the average annual wages of which do not
exceed an amount equal to twice the dollar
amount in effect under paragraph (3)(B) for the
taxable year, and
(C) which has in effect an arrangement
described in paragraph (4).
(2) Full-time equivalent employees.--
(A) In general.--The term ``full-time
equivalent employees'' means a number of
employees equal to the number determined by
dividing--
(i) the total number of hours of
service for which wages were paid by
the employer to employees during the
taxable year, by
(ii) 2,080.
Such number shall be rounded to the next lowest
whole number if not otherwise a whole number.
(B) Excess hours not counted.--If an employee
works in excess of 2,080 hours of service
during any taxable year, such excess shall not
be taken into account under subparagraph (A).
(C) Hours of service.--The Secretary, in
consultation with the Secretary of Labor, shall
prescribe such regulations, rules, and guidance
as may be necessary to determine the hours of
service of an employee, including rules for the
application of this paragraph to employees who
are not compensated on an hourly basis.
(3) Average annual wages.--
(A) In general.--The average annual wages of
an eligible small employer for any taxable year
is the amount determined by dividing--
(i) the aggregate amount of wages
which were paid by the employer to
employees during the taxable year, by
(ii) the number of full-time
equivalent employees of the employee
determined under paragraph (2) for the
taxable year.
Such amount shall be rounded to the next lowest
multiple of $1,000 if not otherwise such a
multiple.
(B) Dollar amount.--For purposes of paragraph
(1)(B) and subsection (c)(2)--
(i) 2010, 2011, 2012, and 2013.--The
dollar amount in effect under this
paragraph for taxable years beginning
in 2010, 2011, 2012, or 2013 is
$25,000.
(ii) Subsequent years.--In the case
of a taxable year beginning in a
calendar year after 2013, the dollar
amount in effect under this paragraph
shall be equal to $25,000, multiplied
by the cost-of-living adjustment under
section 1(f)(3) for the calendar year,
determined by substituting ``calendar
year 2012'' for ``calendar year 1992''
in subparagraph (B) thereof.
(4) Contribution arrangement.--An arrangement is
described in this paragraph if it requires an eligible
small employer to make a nonelective contribution on
behalf of each employee who enrolls in a qualified
health plan offered to employees by the employer
through an exchange in an amount equal to a uniform
percentage (not less than 50 percent) of the premium
cost of the qualified health plan.
(5) Seasonal worker hours and wages not counted.--For
purposes of this subsection--
(A) In general.--The number of hours of
service worked by, and wages paid to, a
seasonal worker of an employer shall not be
taken into account in determining the full-time
equivalent employees and average annual wages
of the employer unless the worker works for the
employer on more than 120 days during the
taxable year.
(B) Definition of seasonal worker.--The term
``seasonal worker'' means a worker who performs
labor or services on a seasonal basis as
defined by the Secretary of Labor, including
workers covered by section 500.20(s)(1) of
title 29, Code of Federal Regulations and
retail workers employed exclusively during
holiday seasons.
(e) Other Rules and Definitions.--For purposes of this
section--
(1) Employee.--
(A) Certain employees excluded.--The term
``employee'' shall not include--
(i) an employee within the meaning of
section 401(c)(1),
(ii) any 2-percent shareholder (as
defined in section 1372(b)) of an
eligible small business which is an S
corporation,
(iii) any 5-percent owner (as defined
in section 416(i)(1)(B)(i)) of an
eligible small business, or
(iv) any individual who bears any of
the relationships described in
subparagraphs (A) through (G) of
section 152(d)(2) to, or is a dependent
described in section 152(d)(2)(H) of,
an individual described in clause (i),
(ii), or (iii).
(B) Leased employees.--The term ``employee''
shall include a leased employee within the
meaning of section 414(n).
(2) Credit period.--The term ``credit period'' means,
with respect to any eligible small employer, the 2-
consecutive-taxable year period beginning with the 1st
taxable year in which the employer (or any predecessor)
offers 1 or more qualified health plans to its
employees through an Exchange.
(3) Nonelective contribution.--The term ``nonelective
contribution'' means an employer contribution other
than an employer contribution pursuant to a salary
reduction arrangement.
(4) Wages.--The term ``wages'' has the meaning given
such term by section 3121(a) (determined without regard
to any dollar limitation contained in such section).
(5) Aggregation and other rules made applicable.--
(A) 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 for purposes of this section.
(B) Other rules.--Rules similar to the rules
of subsections (c), (d), and (e) of section 52
shall apply.
(f) Credit Made Available to Tax-Exempt Eligible Small
Employers.--
(1) In general.--In the case of a tax-exempt eligible
small employer, there shall be treated as a credit
allowable under subpart C (and not allowable under this
subpart) the lesser of--
(A) the amount of the credit determined under
this section with respect to such employer, or
(B) the amount of the payroll taxes of the
employer during the calendar year in which the
taxable year begins.
(2) Tax-exempt eligible small employer.--For purposes
of this section, the term ``tax-exempt eligible small
employer'' means an eligible small employer which is
any organization described in section 501(c) which is
exempt from taxation under section 501(a).
(3) Payroll taxes.--For purposes of this subsection--
(A) In general.--The term ``payroll taxes''
means--
(i) amounts required to be withheld
from the employees of the tax-exempt
eligible small employer under section
3401(a),
(ii) amounts required to be withheld
from such employees under section
3101(b), and
(iii) amounts of the taxes imposed on
the tax-exempt eligible small employer
under section 3111(b).
(B) Special rule.--A rule similar to the rule
of section 24(d)(2)(C) shall apply for purposes
of subparagraph (A).
(g) Application of Section for Calendar Years 2010, 2011,
2012, and 2013.--In the case of any taxable year beginning in
2010, 2011, 2012, or 2013, the following modifications to this
section shall apply in determining the amount of the credit
under subsection (a):
(1) No credit period required.--The credit shall be
determined without regard to whether the taxable year
is in a credit period and for purposes of applying this
section to taxable years beginning after 2013, no
credit period shall be treated as beginning with a
taxable year beginning before 2014.
(2) Amount of credit.--The amount of the credit
determined under subsection (b) shall be determined--
(A) by substituting ``35 percent (25 percent
in the case of a tax-exempt eligible small
employer)'' for ``50 percent (35 percent in the
case of a tax-exempt eligible small
employer)'',
(B) by reference to an eligible small
employer's nonelective contributions for
premiums paid for health insurance coverage
(within the meaning of section 9832(b)(1)) of
an employee, and
(C) by substituting for the average premium
determined under subsection (b)(2) the amount
the Secretary of Health and Human Services
determines is the average premium for the small
group market in the State in which the employer
is offering health insurance coverage (or for
such area within the State as is specified by
the Secretary).
(3) Contribution arrangement.--An arrangement shall
not fail to meet the requirements of subsection (d)(4)
solely because it provides for the offering of
insurance outside of an Exchange.
(h) Insurance Definitions.--[Any term]
(1) In general._Any term used in this section which
is also used in the Public Health Service Act or
subtitle A of title I of the Patient Protection and
Affordable Care Act shall have the meaning given such
term by such Act or subtitle.
(2) Exclusion of health plans including coverage for
abortion.--
(A) In general.--The term ``qualified health
plan'' does not include any health plan that
includes coverage for abortions (other than any
abortion necessary to save the life of the
mother or any abortion with respect to a
pregnancy that is the result of an act of rape
or incest).
(B) Certain rules related to abortion.--
(i) Option to purchase separate
coverage or plan.--Nothing in
subparagraph (A) shall be construed as
prohibiting any employer from
purchasing for its employees separate
coverage for abortions described in
such subparagraph, or a health plan
that includes such abortions, so long
as no credit is allowed under this
section with respect to the employer
contributions for such coverage or
plan.
(ii) Option to offer coverage or
plan.--Nothing in subparagraph (A)
shall restrict any health insurance
issuer offering a health plan from
offering separate coverage for
abortions described in such
subparagraph, or a plan that includes
such abortions, so long as such
separate coverage or plan is not paid
for with any employer contribution
eligible for the credit allowed under
this section.
(iii) Other treatments.--The
treatment of any infection, injury,
disease, or disorder that has been
caused by or exacerbated by the
performance of an abortion shall not be
treated as an abortion for purposes of
subparagraph (A).
(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the provisions of
this section, including regulations to prevent the avoidance of
the 2-year limit on the credit period through the use of
successor entities and the avoidance of the limitations under
subsection (c) through the use of multiple entities.
(j) Shall Not Apply.--This section shall not apply with
respect to amounts paid or incurred in taxable years beginning
after December 31, 2019.
* * * * * * *
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)] (f) 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)).
* * * * * * *
SEC. 125. CAFETERIA PLANS.
(a) General Rule.--Except as provided in subsection (b), no
amount shall be included in the gross income of a participant
in a cafeteria plan solely because, under the plan, the
participant may choose among the benefits of the plan.
(b) Exception for Highly Compensated Participants and Key
Employees.--
(1) Highly compensated participants.--In the case of
a highly compensated participant, subsection (a) shall
not apply to any benefit attributable to a plan year
for which the plan discriminates in favor of--
(A) highly compensated individuals as to
eligibility to participate, or
(B) highly compensated participants as to
contributions and benefits.
(2) Key employees.--In the case of a key employee
(within the meaning of section 416(i)(1)), subsection
(a) shall not apply to any benefit attributable to a
plan for which the qualified benefits provided to key
employees exceed 25 percent of the aggregate of such
benefits provided for all employees under the plan. For
purposes of the preceding sentence, qualified benefits
shall be determined without regard to the second
sentence of subsection (f).
(3) Year of inclusion.--For purposes of determining
the taxable year of inclusion, any benefit described in
paragraph (1) or (2) shall be treated as received or
accrued in the taxable year of the participant or key
employee in which the plan year ends.
(c) Discrimination as to Benefits or Contributions.--For
purposes of subparagraph (B) of subsection (b)(1), a cafeteria
plan does not discriminate where qualified benefits and total
benefits (or employer contributions allocable to qualified
benefits and employer contributions for total benefits) do not
discriminate in favor of highly compensated participants.
(d) Cafeteria Plan Defined.--For purposes of this section--
(1) In general.--The term ``cafeteria plan'' means a
written plan under which--
(A) all participants are employees, and
(B) the participants may choose among 2 or
more benefits consisting of cash and qualified
benefits.
(2) Deferred compensation plans excluded.--
(A) In general.--The term ``cafeteria plan''
does not include any plan which provides for
deferred compensation.
(B) Exception for cash and deferred
arrangements.--Subparagraph (A) shall not apply
to a profit-sharing or stock bonus plan or
rural cooperative plan (within the meaning of
section 401(k)(7)) which includes a qualified
cash or deferred arrangement (as defined in
section 401(k)(2)) to the extent of amounts
which a covered employee may elect to have the
employer pay as contributions to a trust under
such plan on behalf of the employee.
(C) Exception for certain plans maintained by
educational institutions.--Subparagraph (A)
shall not apply to a plan maintained by an
educational organization described in section
170(b)(1)(A)(ii) to the extent of amounts which
a covered employee may elect to have the
employer pay as contributions for post-
retirement group life insurance if--
(i) all contributions for such
insurance must be made before
retirement, and
(ii) such life insurance does not
have a cash surrender value at any
time.
For purposes of section 79, any life insurance
described in the preceding sentence shall be
treated as group-term life insurance.
(D) Exception for health savings accounts.--
Subparagraph (A) shall not apply to a plan to
the extent of amounts which a covered employee
may elect to have the employer pay as
contributions to a health savings account
established on behalf of the employee.
(e) Highly Compensated Participant and Individual Defined.--
For purposes of this section--
(1) Highly compensated participant.--The term
``highly compensated participant'' means a participant
who is--
(A) an officer,
(B) a shareholder owning more than 5 percent
of the voting power or value of all classes of
stock of the employer,
(C) highly compensated, or
(D) a spouse or dependent (within the meaning
of section 152, determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B)
thereof) of an individual described in
subparagraph (A), (B), or (C).
(2) Highly compensated individual.--The term ``highly
compensated individual'' means an individual who is
described in subparagraphs (A), (B), (C), or (D) of
paragraph (1).
(f) Qualified Benefits Defined.--For purposes of this
section--
(1) In general.--The term ``qualified benefit'' means
any benefit which, with the application of subsection
(a), is not includible in the gross income of the
employee by reason of an express provision of this
chapter (other than section 106(b), 117, 127, or 132).
Such term includes any group term life insurance which
is includible in gross income only because it exceeds
the dollar limitation of section 79 and such term
includes any other benefit permitted under regulations.
(2) Long-term care insurance not qualified.--The term
``qualified benefit'' shall not include any product
which is advertised, marketed, or offered as long-term
care insurance.
(3) Certain exchange-participating qualified health
plans not qualified.--
(A) In general.--The term ``qualified
benefit'' shall not include any qualified
health plan (as defined in section 1301(a) of
the Patient Protection and Affordable Care Act)
offered through an Exchange established under
section 1311 of such Act.
(B) Exception for exchange-eligible
employers.--Subparagraph (A) shall not apply
with respect to any employee if such employee's
employer is a qualified employer (as defined in
section 1312(f)(2) of the Patient Protection
and Affordable Care Act) offering the employee
the opportunity to enroll through such an
Exchange in a qualified health plan in a group
market.
(g) Special Rules.--
(1) Collectively bargained plan not considered
discriminatory.--For purposes of this section, a plan
shall not be treated as discriminatory if the plan is
maintained under an agreement which the Secretary finds
to be a collective bargaining agreement between
employee representatives and one or more employers.
(2) Health benefits.--For purposes of subparagraph
(B) of subsection (b)(1), a cafeteria plan which
provides health benefits shall not be treated as
discriminatory if--
(A) contributions under the plan on behalf of
each participant include an amount which--
(i) equals 100 percent of the cost of
the health benefit coverage under the
plan of the majority of the highly
compensated participants similarly
situated, or
(ii) equals or exceeds 75 percent of
the cost of the health benefit coverage
of the participant (similarly situated)
having the highest cost health benefit
coverage under the plan, and
(B) contributions or benefits under the plan
in excess of those described in subparagraph
(A) bear a uniform relationship to
compensation.
(3) Certain participation eligibility rules not
treated as discriminatory.--For purposes of
subparagraph (A) of subsection (b)(1), a classification
shall not be treated as discriminatory if the plan--
(A) benefits a group of employees described
in section 410(b)(2)(A)(i), and
(B) meets the requirements of clauses (i) and
(ii):
(i) No employee is required to
complete more than 3 years of
employment with the employer or
employers maintaining the plan as a
condition of participation in the plan,
and the employment requirement for each
employee is the same.
(ii) Any employee who has satisfied
the employment requirement of clause
(i) and who is otherwise entitled to
participate in the plan commences
participation no later than the first
day of the first plan year beginning
after the date the employment
requirement was satisfied unless the
employee was separated from service
before the first day of that plan year.
(4) Certain controlled groups, etc..--All employees
who are treated as employed by a single employer under
subsection (b), (c), or (m) of section 414 shall be
treated as employed by a single employer for purposes
of this section.
(h) Special Rule for Unused Benefits in Health Flexible
Spending Arrangements of Individuals Called to Active Duty.--
(1) In general.--For purposes of this title, a plan
or other arrangement shall not fail to be treated as a
cafeteria plan or health flexible spending arrangement
(and shall not fail to be treated as an accident or
health plan) merely because such arrangement provides
for qualified reservist distributions.
(2) Qualified reservist distribution.--For purposes
of this subsection, the term ``qualified reservist
distribution'' means any distribution to an individual
of all or a portion of the balance in the employee's
account under such arrangement if--
(A) such individual was (by reason of being a
member of a reserve component (as defined in
section 101 of title 37, United States Code))
ordered or called to active duty for a period
in excess of 179 days or for an indefinite
period, and
(B) such distribution is made during the
period beginning on the date of such order or
call and ending on the last date that
reimbursements could otherwise be made under
such arrangement for the plan year which
includes the date of such order or call.
[(i) Limitation on Health Flexible Spending Arrangements.--
[(1) In general.--For purposes of this section, if a
benefit is provided under a cafeteria plan through
employer contributions to a health flexible spending
arrangement, such benefit shall not be treated as a
qualified benefit unless the cafeteria plan provides
that an employee may not elect for any taxable year to
have salary reduction contributions in excess of $2,500
made to such arrangement.
[(2) Adjustment for inflation.--In the case of any
taxable year beginning after December 31, 2013, the
dollar amount in paragraph (1) shall be increased by an
amount equal to--
[(A) such amount, multiplied by
[(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in
which such taxable year begins by substituting
``calendar year 2012'' for ``calendar year
1992'' in subparagraph (B) thereof.
If any increase determined under this paragraph is not
a multiple of $50, such increase shall be rounded to
the next lowest multiple of $50.]
(j) Simple Cafeteria Plans for Small Businesses.--
(1) In general.--An eligible employer maintaining a
simple cafeteria plan with respect to which the
requirements of this subsection are met for any year
shall be treated as meeting any applicable
nondiscrimination requirement during such year.
(2) Simple cafeteria plan.--For purposes of this
subsection, the term ``simple cafeteria plan'' means a
cafeteria plan--
(A) which is established and maintained by an
eligible employer, and
(B) with respect to which the contribution
requirements of paragraph (3), and the
eligibility and participation requirements of
paragraph (4), are met.
(3) Contribution requirements.--
(A) In general.--The requirements of this
paragraph are met if, under the plan the
employer is required, without regard to whether
a qualified employee makes any salary reduction
contribution, to make a contribution to provide
qualified benefits under the plan on behalf of
each qualified employee in an amount equal to--
(i) a uniform percentage (not less
than 2 percent) of the employee's
compensation for the plan year, or
(ii) an amount which is not less than
the lesser of--
(I) 6 percent of the
employee's compensation for the
plan year, or
(II) twice the amount of the
salary reduction contributions
of each qualified employee.
(B) Matching contributions on behalf of
highly compensated and key employees.--The
requirements of subparagraph (A)(ii) shall not
be treated as met if, under the plan, the rate
of contributions with respect to any salary
reduction contribution of a highly compensated
or key employee at any rate of contribution is
greater than that with respect to an employee
who is not a highly compensated or key
employee.
(C) Additional contributions.--Subject to
subparagraph (B), nothing in this paragraph
shall be treated as prohibiting an employer
from making contributions to provide qualified
benefits under the plan in addition to
contributions required under subparagraph (A).
(D) Definitions.--For purposes of this
paragraph--
(i) Salary reduction contribution.--
The term ``salary reduction
contribution'' means, with respect to a
cafeteria plan, any amount which is
contributed to the plan at the election
of the employee and which is not
includible in gross income by reason of
this section.
(ii) Qualified employee.--The term
``qualified employee'' means, with
respect to a cafeteria plan, any
employee who is not a highly
compensated or key employee and who is
eligible to participate in the plan.
(iii) Highly compensated employee.--
The term ``highly compensated
employee'' has the meaning given such
term by section 414(q).
(iv) Key employee.--The term ``key
employee'' has the meaning given such
term by section 416(i).
(4) Minimum eligibility and participation
requirements.--
(A) In general.--The requirements of this
paragraph shall be treated as met with respect
to any year if, under the plan--
(i) all employees who had at least
1,000 hours of service for the
preceding plan year are eligible to
participate, and
(ii) each employee eligible to
participate in the plan may, subject to
terms and conditions applicable to all
participants, elect any benefit
available under the plan.
(B) Certain employees may be excluded.--For
purposes of subparagraph (A)(i), an employer
may elect to exclude under the plan employees--
(i) who have not attained the age of
21 before the close of a plan year,
(ii) who have less than 1 year of
service with the employer as of any day
during the plan year,
(iii) who are covered under an
agreement which the Secretary of Labor
finds to be a collective bargaining
agreement if there is evidence that the
benefits covered under the cafeteria
plan were the subject of good faith
bargaining between employee
representatives and the employer, or
(iv) who are described in section
410(b)(3)(C) (relating to nonresident
aliens working outside the United
States).
A plan may provide a shorter period of service
or younger age for purposes of clause (i) or
(ii).
(5) Eligible employer.--For purposes of this
subsection--
(A) In general.--The term ``eligible
employer'' means, with respect to any year, any
employer if such employer employed an average
of 100 or fewer employees on business days
during either of the 2 preceding years. For
purposes of this subparagraph, a year may only
be taken into account if the employer was in
existence throughout the year.
(B) Employers not in existence during
preceding year.--If an employer was not in
existence throughout the preceding year, the
determination under subparagraph (A) shall be
based on the average number of employees that
it is reasonably expected such employer will
employ on business days in the current year.
(C) Growing employers retain treatment as
small employer.--
(i) In general.--If--
(I) an employer was an
eligible employer for any year
(a ``qualified year''), and
(II) such employer
establishes a simple cafeteria
plan for its employees for such
year,
then, notwithstanding the fact the
employer fails to meet the requirements
of subparagraph (A) for any subsequent
year, such employer shall be treated as
an eligible employer for such
subsequent year with respect to
employees (whether or not employees
during a qualified year) of any trade
or business which was covered by the
plan during any qualified year.
(ii) Exception.--This subparagraph
shall cease to apply if the employer
employs an average of 200 or more
employees on business days during any
year preceding any such subsequent
year.
(D) Special rules.--
(i) Predecessors.--Any reference in
this paragraph to an employer shall
include a reference to any predecessor
of such employer.
(ii) Aggregation rules.--All persons
treated as a single employer under
subsection (a) or (b) of section 52, or
subsection (n) or (o) of section 414,
shall be treated as one person.
(6) Applicable nondiscrimination requirement.--For
purposes of this subsection, the term ``applicable
nondiscrimination requirement'' means any requirement
under subsection (b) of this section, section 79(d),
section 105(h), or paragraph (2), (3), (4), or (8) of
section 129(d).
(7) Compensation.--The term ``compensation'' has the
meaning given such term by section 414(s).
(k) Cross Reference.--For reporting and recordkeeping
requirements, see section 6039D.
(l) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the provisions of
this section.
* * * * * * *
SEC. 139A. FEDERAL SUBSIDIES FOR PRESCRIPTION DRUG PLANS.
Gross income shall not include any special subsidy payment
received under section 1860D-22 of the Social Security Act.
This section shall not be taken into account for purposes of
determining whether any deduction is allowable with respect to
any cost taken into account in determining such payment.
* * * * * * *
PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
* * * * * * *
SEC. 162. TRADE OR BUSINESS EXPENSES.
(a) In General.--There shall be allowed as a deduction all
the ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business, including--
(1) a reasonable allowance for salaries or other
compensation for personal services actually rendered;
(2) traveling expenses (including amounts expended
for meals and lodging other than amounts which are
lavish or extravagant under the circumstances) while
away from home in the pursuit of a trade or business;
and
(3) rentals or other payments required to be made as
a condition to the continued use or possession, for
purposes of the trade or business, of property to which
the taxpayer has not taken or is not taking title or in
which he has no equity.
For purposes of the preceding sentence, the place of residence
of a Member of Congress (including any Delegate and Resident
Commissioner) within the State, congressional district, or
possession which he represents in Congress shall be considered
his home, but amounts expended by such Members within each
taxable year for living expenses shall not be deductible for
income tax purposes in excess of $3,000. For purposes of
paragraph (2), the taxpayer shall not be treated as being
temporarily away from home during any period of employment if
such period exceeds 1 year. The preceding sentence shall not
apply to any Federal employee during any period for which such
employee is certified by the Attorney General (or the designee
thereof) as traveling on behalf of the United States in
temporary duty status to investigate or prosecute, or provide
support services for the investigation or prosecution of, a
Federal crime.
(b) Charitable Contributions and Gifts Excepted.--No
deduction shall be allowed under subsection (a) for any
contribution or gift which would be allowable as a deduction
under section 170 were it not for the percentage limitations,
the dollar limitations, or the requirements as to the time of
payment, set forth in such section.
(c) Illegal Bribes, Kickbacks, and Other Payments.--
(1) Illegal payments to government officials or
employees.--No deduction shall be allowed under
subsection (a) for any payment made, directly or
indirectly, to an official or employee of any
government, or of any agency or instrumentality of any
government, if the payment constitutes an illegal bribe
or kickback or, if the payment is to an official or
employee of a foreign government, the payment is
unlawful under the Foreign Corrupt Practices Act of
1977. The burden of proof in respect of the issue, for
the purposes of this paragraph, as to whether a payment
constitutes an illegal bribe or kickback (or is
unlawful under the Foreign Corrupt Practices Act of
1977) shall be upon the Secretary to the same extent as
he bears the burden of proof under section 7454
(concerning the burden of proof when the issue relates
to fraud).
(2) Other illegal payments.--No deduction shall be
allowed under subsection (a) for any payment (other
than a payment described in paragraph (1)) made,
directly or indirectly, to any person, if the payment
constitutes an illegal bribe, illegal kickback, or
other illegal payment under any law of the United
States, or under any law of a State (but only if such
State law is generally enforced), which subjects the
payor to a criminal penalty or the loss of license or
privilege to engage in a trade or business. For
purposes of this paragraph, a kickback includes a
payment in consideration of the referral of a client,
patient, or customer. The burden of proof in respect of
the issue, for purposes of this paragraph, as to
whether a payment constitutes an illegal bribe, illegal
kickback, or other illegal payment shall be upon the
Secretary to the same extent as he bears the burden of
proof under section 7454 (concerning the burden of
proof when the issue relates to fraud).
(3) Kickbacks, rebates, and bribes under medicare and
medicaid.--No deduction shall be allowed under
subsection (a) for any kickback, rebate, or bribe made
by any provider of services, supplier, physician, or
other person who furnishes items or services for which
payment is or may be made under the Social Security
Act, or in whole or in part out of Federal funds under
a State plan approved under such Act, if such kickback,
rebate, or bribe is made in connection with the
furnishing of such items or services or the making or
receipt of such payments. For purposes of this
paragraph, a kickback includes a payment in
consideration of the referral of a client, patient, or
customer.
(d) Capital Contributions to Federal National Mortgage
Association.--For purposes of this subtitle, whenever the
amount of capital contributions evidenced by a share of stock
issued pursuant to section 303(c) of the Federal National
Mortgage Association Charter Act (12 U.S.C., sec. 1718) exceeds
the fair market value of the stock as of the issue date of such
stock, the initial holder of the stock shall treat the excess
as ordinary and necessary expenses paid or incurred during the
taxable year in carrying on a trade or business.
(e) Denial of Deduction for Certain Lobbying and Political
Expenditures.--
(1) In general.--No deduction shall be allowed under
subsection (a) for any amount paid or incurred in
connection with--
(A) influencing legislation,
(B) participation in, or intervention in, any
political campaign on behalf of (or in
opposition to) any candidate for public office,
(C) any attempt to influence the general
public, or segments thereof, with respect to
elections, legislative matters, or referendums,
or
(D) any direct communication with a covered
executive branch official in an attempt to
influence the official actions or positions of
such official.
(2) Exception for local legislation.--In the case of
any legislation of any local council or similar
governing body--
(A) paragraph (1)(A) shall not apply, and
(B) the deduction allowed by subsection (a)
shall include all ordinary and necessary
expenses (including, but not limited to,
traveling expenses described in subsection
(a)(2) and the cost of preparing testimony)
paid or incurred during the taxable year in
carrying on any trade or business--
(i) in direct connection with
appearances before, submission of
statements to, or sending
communications to the committees, or
individual members, of such council or
body with respect to legislation or
proposed legislation of direct interest
to the taxpayer, or
(ii) in direct connection with
communication of information between
the taxpayer and an organization of
which the taxpayer is a member with
respect to any such legislation or
proposed legislation which is of direct
interest to the taxpayer and to such
organization,
and that portion of the dues so paid or
incurred with respect to any organization of
which the taxpayer is a member which is
attributable to the expenses of the activities
described in clauses (i) and (ii) carried on by
such organization.
(3) Application to dues of tax-exempt
organizations.--No deduction shall be allowed under
subsection (a) for the portion of dues or other similar
amounts paid by the taxpayer to an organization which
is exempt from tax under this subtitle which the
organization notifies the taxpayer under section
6033(e)(1)(A)(ii) is allocable to expenditures to which
paragraph (1) applies.
(4) Influencing legislation.--For purposes of this
subsection--
(A) In general.--The term ``influencing
legislation'' means any attempt to influence
any legislation through communication with any
member or employee of a legislative body, or
with any government official or employee who
may participate in the formulation of
legislation.
(B) Legislation.--The term ``legislation''
has the meaning given such term by section
4911(e)(2).
(5) Other special rules.--
(A) Exception for certain taxpayers.--In the
case of any taxpayer engaged in the trade or
business of conducting activities described in
paragraph (1), paragraph (1) shall not apply to
expenditures of the taxpayer in conducting such
activities directly on behalf of another person
(but shall apply to payments by such other
person to the taxpayer for conducting such
activities).
(B) De minimis exception.--
(i) In general.--Paragraph (1) shall
not apply to any in-house expenditures
for any taxable year if such
expenditures do not exceed $2,000. In
determining whether a taxpayer exceeds
the $2,000 limit under this clause,
there shall not be taken into account
overhead costs otherwise allocable to
activities described in paragraphs
(1)(A) and (D).
(ii) In-house expenditures.--For
purposes of clause (i), the term ``in-
house expenditures'' means expenditures
described in paragraphs (1)(A) and (D)
other than--
(I) payments by the taxpayer
to a person engaged in the
trade or business of conducting
activities described in
paragraph (1) for the conduct
of such activities on behalf of
the taxpayer, or
(II) dues or other similar
amounts paid or incurred by the
taxpayer which are allocable to
activities described in
paragraph (1).
(C) Expenses incurred in connection with
lobbying and political activities.--Any amount
paid or incurred for research for, or
preparation, planning, or coordination of, any
activity described in paragraph (1) shall be
treated as paid or incurred in connection with
such activity.
(6) Covered executive branch official.--For purposes
of this subsection, the term ``covered executive branch
official'' means--
(A) the President,
(B) the Vice President,
(C) any officer or employee of the White
House Office of the Executive Office of the
President, and the 2 most senior level officers
of each of the other agencies in such Executive
Office, and
(D)(i) any individual serving in a position
in level I of the Executive Schedule under
section 5312 of title 5, United States Code,
(ii) any other individual designated by the
President as having Cabinet level status, and
(iii) any immediate deputy of an individual
described in clause (i) or (ii).
(7) Special rule for Indian tribal governments.--For
purposes of this subsection, an Indian tribal
government shall be treated in the same manner as a
local council or similar governing body.
(8) Cross reference.--For reporting requirements and
alternative taxes related to this subsection, see
section 6033(e).
(f) Fines and Penalties.--No deduction shall be allowed under
subsection (a) for any fine or similar penalty paid to a
government for the violation of any law.
(g) Treble Damage Payments Under the Antitrust Laws.--If in a
criminal proceeding a taxpayer is convicted of a violation of
the antitrust laws, or his plea of guilty or nolo contendere to
an indictment or information charging such a violation is
entered or accepted in such a proceeding, no deduction shall be
allowed under subsection (a) for two-thirds of any amount paid
or incurred--
(1) on any judgment for damages entered against the
taxpayer under section 4 of the Act entitled ``An Act
to supplement existing laws against unlawful restraints
and monopolies, and for other purposes'', approved
October 15, 1914 (commonly known as the Clayton Act),
on account of such violation or any related violation
of the antitrust laws which occurred prior to the date
of the final judgment of such conviction, or
(2) in settlement of any action brought under such
section 4 on account of such violation or related
violation.
(h) State Legislators' Travel Expenses Away from Home.--
(1) In general.--For purposes of subsection (a), in
the case of any individual who is a State legislator at
any time during the taxable year and who makes an
election under this subsection for the taxable year--
(A) the place of residence of such individual
within the legislative district which he
represented shall be considered his home,
(B) he shall be deemed to have expended for
living expenses (in connection with his trade
or business as a legislator) an amount equal to
the sum of the amounts determined by
multiplying each legislative day of such
individual during the taxable year by the
greater of--
(i) the amount generally allowable
with respect to such day to employees
of the State of which he is a
legislator for per diem while away from
home, to the extent such amount does
not exceed 110 percent of the amount
described in clause (ii) with respect
to such day, or
(ii) the amount generally allowable
with respect to such day to employees
of the executive branch of the Federal
Government for per diem while away from
home but serving in the United States,
and
(C) he shall be deemed to be away from home
in the pursuit of a trade or business on each
legislative day.
(2) Legislative days.--For purposes of paragraph (1),
a legislative day during any taxable year for any
individual shall be any day during such year on which--
(A) the legislature was in session (including
any day in which the legislature was not in
session for a period of 4 consecutive days or
less), or
(B) the legislature was not in session but
the physical presence of the individual was
formally recorded at a meeting of a committee
of such legislature.
(3) Election.--An election under this subsection for
any taxable year shall be made at such time and in such
manner as the Secretary shall by regulations prescribe.
(4) Section not to apply to legislators who reside
near capitol.--This subsection shall not apply to any
legislator whose place of residence within the
legislative district which he represents is 50 or fewer
miles from the capitol building of the State.
(j) Certain Foreign Advertising Expenses.--
(1) In general.--No deduction shall be allowed under
subsection (a) for any expenses of an advertisement
carried by a foreign broadcast undertaking and directed
primarily to a market in the United States. This
paragraph shall apply only to foreign broadcast
undertakings located in a country which denies a
similar deduction for the cost of advertising directed
primarily to a market in the foreign country when
placed with a United States broadcast undertaking.
(2) Broadcast undertaking.--For purposes of paragraph
(1), the term ``broadcast undertaking'' includes (but
is not limited to) radio and television stations.
(k) Stock Reacquisition Expenses.--
(1) In general.--Except as provided in paragraph (2),
no deduction otherwise allowable shall be allowed under
this chapter for any amount paid or incurred by a
corporation in connection with the reacquisition of its
stock or of the stock of any related person (as defined
in section 465(b)(3)(C)).
(2) Exceptions.--Paragraph (1) shall not apply to--
(A) Certain specific deductions.--Any--
(i) deduction allowable under section
163 (relating to interest),
(ii) deduction for amounts which are
properly allocable to indebtedness and
amortized over the term of such
indebtedness, or
(iii) deduction for dividends paid
(within the meaning of section 561).
(B) Stock of certain regulated investment
companies.--Any amount paid or incurred in
connection with the redemption of any stock in
a regulated investment company which issues
only stock which is redeemable upon the demand
of the shareholder.
(l) Special Rules for Health Insurance Costs of Self-Employed
Individuals.--
(1) Allowance of deduction.--In the case of a
taxpayer who is an employee within the meaning of
section 401(c)(1), there shall be allowed as a
deduction under this section an amount equal to the
amount paid during the taxable year for insurance which
constitutes medical care for--
(A) the taxpayer,
(B) the taxpayer's spouse,
(C) the taxpayer's dependents, and
(D) any child (as defined in section
152(f)(1)) of the taxpayer who as of the end of
the taxable year has not attained age 27.
(2) Limitations.--
(A) Dollar amount.--No deduction shall be
allowed under paragraph (1) to the extent that
the amount of such deduction exceeds the
taxpayer's earned income (within the meaning of
section 401(c)) derived by the taxpayer from
the trade or business with respect to which the
plan providing the medical care coverage is
established.
(B) Other coverage.--Paragraph (1) shall not
apply to any taxpayer for any calendar month
for which the taxpayer is eligible to
participate in any subsidized health plan
maintained by any employer of the taxpayer or
of the spouse of, or any dependent, or
individual described in subparagraph (D) of
paragraph (1) with respect to, the taxpayer.
The preceding sentence shall be applied
separately with respect to--
(i) plans which include coverage for
qualified long-term care services (as
defined in section 7702B(c)) or are
qualified long-term care insurance
contracts (as defined in section
7702B(b)), and
(ii) plans which do not include such
coverage and are not such contracts.
(C) Long-term care premiums.--In the case of
a qualified long-term care insurance contract
(as defined in section 7702B(b)), only eligible
long-term care premiums (as defined in section
213(d)(10)) shall be taken into account under
paragraph (1).
(3) Coordination with medical deduction.--Any amount
paid by a taxpayer for insurance to which paragraph (1)
applies shall not be taken into account in computing
the amount allowable to the taxpayer as a deduction
under section 213(a).
(4) Deduction not allowed for self-employment tax
purposes.--The deduction allowable by reason of this
subsection shall not be taken into account in
determining an individual's net earnings from self-
employment (within the meaning of section 1402(a)) for
purposes of chapter 2 for taxable years beginning
before January 1, 2010, or after December 31, 2010.
(5) Treatment of certain S corporation
shareholders.--This subsection shall apply in the case
of any individual treated as a partner under section
1372(a), except that--
(A) for purposes of this subsection, such
individual's wages (as defined in section 3121)
from the S corporation shall be treated as such
individual's earned income (within the meaning
of section 401(c)(1)), and
(B) there shall be such adjustments in the
application of this subsection as the Secretary
may by regulations prescribe.
(6) Coordination with health insurance coverage
credit.--The deduction otherwise allowable to a
taxpayer under paragraph (1) for any taxable year shall
be reduced (but not below zero) by the sum of--
(A) the amount of the credit allowable to
such taxpayer under section 36C (determined
without regard to subsection (i)(5)(A) thereof)
for such taxable year, plus
(B) the aggregate payments made with respect
to the taxpayer under section 7530 for months
during such taxable year.
(m) Certain Excessive Employee Remuneration.--
(1) In general.--In the case of any publicly held
corporation, no deduction shall be allowed under this
chapter for applicable employee remuneration with
respect to any covered employee to the extent that the
amount of such remuneration for the taxable year with
respect to such employee exceeds $1,000,000.
(2) Publicly held corporation.--For purposes of this
subsection, the term ``publicly held corporation''
means any corporation issuing any class of common
equity securities required to be registered under
section 12 of the Securities Exchange Act of 1934.
(3) Covered employee.--For purposes of this
subsection, the term ``covered employee'' means any
employee of the taxpayer if--
(A) as of the close of the taxable year, such
employee is the chief executive officer of the
taxpayer or is an individual acting in such a
capacity, or
(B) the total compensation of such employee
for the taxable year is required to be reported
to shareholders under the Securities Exchange
Act of 1934 by reason of such employee being
among the 4 highest compensated officers for
the taxable year (other than the chief
executive officer).
(4) Applicable employee remuneration.--For purposes
of this subsection--
(A) In general.--Except as otherwise provided
in this paragraph, the term ``applicable
employee remuneration'' means, with respect to
any covered employee for any taxable year, the
aggregate amount allowable as a deduction under
this chapter for such taxable year (determined
without regard to this subsection) for
remuneration for services performed by such
employee (whether or not during the taxable
year).
(B) Exception for remuneration payable on
commission basis.--The term ``applicable
employee remuneration'' shall not include any
remuneration payable on a commission basis
solely on account of income generated directly
by the individual performance of the individual
to whom such remuneration is payable.
(C) Other performance-based compensation.--
The term ``applicable employee remuneration''
shall not include any remuneration payable
solely on account of the attainment of one or
more performance goals, but only if--
(i) the performance goals are
determined by a compensation committee
of the board of directors of the
taxpayer which is comprised solely of 2
or more outside directors,
(ii) the material terms under which
the remuneration is to be paid,
including the performance goals, are
disclosed to shareholders and approved
by a majority of the vote in a separate
shareholder vote before the payment of
such remuneration, and
(iii) before any payment of such
remuneration, the compensation
committee referred to in clause (i)
certifies that the performance goals
and any other material terms were in
fact satisfied.
(D) Exception for existing binding
contracts.--The term ``applicable employee
remuneration'' shall not include any
remuneration payable under a written binding
contract which was in effect on February 17,
1993, and which was not modified thereafter in
any material respect before such remuneration
is paid.
(E) Remuneration.--For purposes of this
paragraph, the term ``remuneration'' includes
any remuneration (including benefits) in any
medium other than cash, but shall not include--
(i) any payment referred to in so
much of section 3121(a)(5) as precedes
subparagraph (E) thereof, and
(ii) any benefit provided to or on
behalf of an employee if at the time
such benefit is provided it is
reasonable to believe that the employee
will be able to exclude such benefit
from gross income under this chapter.
For purposes of clause (i), section 3121(a)(5)
shall be applied without regard to section
3121(v)(1).
(F) Coordination with disallowed golden
parachute payments.--The dollar limitation
contained in paragraph (1) shall be reduced
(but not below zero) by the amount (if any)
which would have been included in the
applicable employee remuneration of the covered
employee for the taxable year but for being
disallowed under section 280G.
(G) Coordination with excise tax on specified
stock compensation.--The dollar limitation
contained in paragraph (1) with respect to any
covered employee shall be reduced (but not
below zero) by the amount of any payment (with
respect to such employee) of the tax imposed by
section 4985 directly or indirectly by the
expatriated corporation (as defined in such
section) or by any member of the expanded
affiliated group (as defined in such section)
which includes such corporation.
(5) Special rule for application to employers
participating in the Troubled Assets Relief Program.--
(A) In general.--In the case of an applicable
employer, no deduction shall be allowed under
this chapter--
(i) in the case of executive
remuneration for any applicable taxable
year which is attributable to services
performed by a covered executive during
such applicable taxable year, to the
extent that the amount of such
remuneration exceeds $500,000, or
(ii) in the case of deferred
deduction executive remuneration for
any taxable year for services performed
during any applicable taxable year by a
covered executive, to the extent that
the amount of such remuneration exceeds
$500,000 reduced (but not below zero)
by the sum of--
(I) the executive
remuneration for such
applicable taxable year, plus
(II) the portion of the
deferred deduction executive
remuneration for such services
which was taken into account
under this clause in a
preceding taxable year.
(B) Applicable employer.--For purposes of
this paragraph--
(i) In general.--Except as provided
in clause (ii), the term ``applicable
employer'' means any employer from whom
1 or more troubled assets are acquired
under a program established by the
Secretary under section 101(a) of the
Emergency Economic Stabilization Act of
2008 if the aggregate amount of the
assets so acquired for all taxable
years exceeds $300,000,000.
(ii) Disregard of certain assets sold
through direct purchase.--If the only
sales of troubled assets by an employer
under the program described in clause
(i) are through 1 or more direct
purchases (within the meaning of
section 113(c) of the Emergency
Economic Stabilization Act of 2008),
such assets shall not be taken into
account under clause (i) in determining
whether the employer is an applicable
employer for purposes of this
paragraph.
(iii) Aggregation rules.--Two or more
persons who are treated as a single
employer under subsection (b) or (c) of
section 414 shall be treated as a
single employer, except that in
applying section 1563(a) for purposes
of either such subsection, paragraphs
(2) and (3) thereof shall be
disregarded.
(C) Applicable taxable year.--For purposes of
this paragraph, the term ``applicable taxable
year'' means, with respect to any employer--
(i) the first taxable year of the
employer--
(I) which includes any
portion of the period during
which the authorities under
section 101(a) of the Emergency
Economic Stabilization Act of
2008 are in effect (determined
under section 120 thereof), and
(II) in which the aggregate
amount of troubled assets
acquired from the employer
during the taxable year
pursuant to such authorities
(other than assets to which
subparagraph (B)(ii) applies),
when added to the aggregate
amount so acquired for all
preceding taxable years,
exceeds $300,000,000, and
(ii) any subsequent taxable year
which includes any portion of such
period.
(D) Covered executive.--For purposes of this
paragraph--
(i) In general.--The term ``covered
executive'' means, with respect to any
applicable taxable year, any employee--
(I) who, at any time during
the portion of the taxable year
during which the authorities
under section 101(a) of the
Emergency Economic
Stabilization Act of 2008 are
in effect (determined under
section 120 thereof), is the
chief executive officer of the
applicable employer or the
chief financial officer of the
applicable employer, or an
individual acting in either
such capacity, or
(II) who is described in
clause (ii).
(ii) Highest compensated employees.--
An employee is described in this clause
if the employee is 1 of the 3 highest
compensated officers of the applicable
employer for the taxable year (other
than an individual described in clause
(i)(I)), determined--
(I) on the basis of the
shareholder disclosure rules
for compensation under the
Securities Exchange Act of 1934
(without regard to whether
those rules apply to the
employer), and
(II) by only taking into
account employees employed
during the portion of the
taxable year described in
clause (i)(I).
(iii) Employee remains covered
executive.--If an employee is a covered
executive with respect to an applicable
employer for any applicable taxable
year, such employee shall be treated as
a covered executive with respect to
such employer for all subsequent
applicable taxable years and for all
subsequent taxable years in which
deferred deduction executive
remuneration with respect to services
performed in all such applicable
taxable years would (but for this
paragraph) be deductible.
(E) Executive remuneration.--For purposes of
this paragraph, the term ``executive
remuneration'' means the applicable employee
remuneration of the covered executive, as
determined under paragraph (4) without regard
to subparagraphs (B), (C), and (D) thereof.
Such term shall not include any deferred
deduction executive remuneration with respect
to services performed in a prior applicable
taxable year.
(F) Deferred deduction executive
remuneration.--For purposes of this paragraph,
the term ``deferred deduction executive
remuneration'' means remuneration which would
be executive remuneration for services
performed in an applicable taxable year but for
the fact that the deduction under this chapter
(determined without regard to this paragraph)
for such remuneration is allowable in a
subsequent taxable year.
(G) Coordination.--Rules similar to the rules
of subparagraphs (F) and (G) of paragraph (4)
shall apply for purposes of this paragraph.
(H) Regulatory authority.--The Secretary may
prescribe such guidance, rules, or regulations
as are necessary to carry out the purposes of
this paragraph and the Emergency Economic
Stabilization Act of 2008, including the extent
to which this paragraph applies in the case of
any acquisition, merger, or reorganization of
an applicable employer.
(6) Special rule for application to certain health
insurance providers.--
(A) In general.--No deduction shall be
allowed under this chapter--
(i) in the case of applicable
individual remuneration which is for
any disqualified taxable year beginning
after December 31, 2012, and which is
attributable to services performed by
an applicable individual during such
taxable year, to the extent that the
amount of such remuneration exceeds
$500,000, or
(ii) in the case of deferred
deduction remuneration for any taxable
year beginning after December 31, 2012,
which is attributable to services
performed by an applicable individual
during any disqualified taxable year
beginning after December 31, 2009, to
the extent that the amount of such
remuneration exceeds $500,000 reduced
(but not below zero) by the sum of--
(I) the applicable individual
remuneration for such
disqualified taxable year, plus
(II) the portion of the
deferred deduction remuneration
for such services which was
taken into account under this
clause in a preceding taxable
year (or which would have been
taken into account under this
clause in a preceding taxable
year if this clause were
applied by substituting
`December 31, 2009' for
`December 31, 2012' in the
matter preceding subclause
(I)).
(B) Disqualified taxable year.--For purposes
of this paragraph, the term ``disqualified
taxable year'' means, with respect to any
employer, any taxable year for which such
employer is a covered health insurance
provider.
(C) Covered health insurance provider.--For
purposes of this paragraph--
(i) In general.--The term ``covered
health insurance provider'' means--
(I) with respect to taxable
years beginning after December
31, 2009, and before January 1,
2013, any employer which is a
health insurance issuer (as
defined in section 9832(b)(2))
and which receives premiums
from providing health insurance
coverage (as defined in section
9832(b)(1)), and
(II) with respect to taxable
years beginning after December
31, 2012, any employer which is
a health insurance issuer (as
defined in section 9832(b)(2))
and with respect to which not
less than 25 percent of the
gross premiums received from
providing health insurance
coverage (as defined in section
9832(b)(1)) is from minimum
essential coverage (as defined
in section 5000A(f)).
(ii) Aggregation rules.--Two or more
persons who are treated as a single
employer under subsection (b), (c),
(m), or (o) of section 414 shall be
treated as a single employer, except
that in applying section 1563(a) for
purposes of any such subsection,
paragraphs (2) and (3) thereof shall be
disregarded.
(D) Applicable individual remuneration.--For
purposes of this paragraph, the term
``applicable individual remuneration'' means,
with respect to any applicable individual for
any disqualified taxable year, the aggregate
amount allowable as a deduction under this
chapter for such taxable year (determined
without regard to this subsection) for
remuneration (as defined in paragraph (4)
without regard to subparagraphs (B), (C), and
(D) thereof) for services performed by such
individual (whether or not during the taxable
year). Such term shall not include any deferred
deduction remuneration with respect to services
performed during the disqualified taxable year.
(E) Deferred deduction remuneration.--For
purposes of this paragraph, the term ``deferred
deduction remuneration'' means remuneration
which would be applicable individual
remuneration for services performed in a
disqualified taxable year but for the fact that
the deduction under this chapter (determined
without regard to this paragraph) for such
remuneration is allowable in a subsequent
taxable year.
(F) Applicable individual.--For purposes of
this paragraph, the term ``applicable
individual'' means, with respect to any covered
health insurance provider for any disqualified
taxable year, any individual--
(i) who is an officer, director, or
employee in such taxable year, or
(ii) who provides services for or on
behalf of such covered health insurance
provider during such taxable year.
(G) Coordination.--Rules similar to the rules
of subparagraphs (F) and (G) of paragraph (4)
shall apply for purposes of this paragraph.
(H) Regulatory authority.--The Secretary may
prescribe such guidance, rules, or regulations
as are necessary to carry out the purposes of
this paragraph.
(I) Termination.--This paragraph shall not
apply to taxable years beginning after December
31, 2017.
(n) Special Rule for Certain Group Health Plans.--
(1) In general.--No deduction shall be allowed under
this chapter to an employer for any amount paid or
incurred in connection with a group health plan if the
plan does not reimburse for inpatient hospital care
services provided in the State of New York--
(A) except as provided in subparagraphs (B)
and (C), at the same rate as licensed
commercial insurers are required to reimburse
hospitals for such services when such
reimbursement is not through such a plan,
(B) in the case of any reimbursement through
a health maintenance organization, at the same
rate as health maintenance organizations are
required to reimburse hospitals for such
services for individuals not covered by such a
plan (determined without regard to any
government-supported individuals exempt from
such rate), or
(C) in the case of any reimbursement through
any corporation organized under Article 43 of
the New York State Insurance Law, at the same
rate as any such corporation is required to
reimburse hospitals for such services for
individuals not covered by such a plan.
(2) State law exception.--Paragraph (1) shall not
apply to any group health plan which is not required
under the laws of the State of New York (determined
without regard to this subsection or other provisions
of Federal law) to reimburse at the rates provided in
paragraph (1).
(3) Group health plan.--For purposes of this
subsection, the term ``group health plan'' means a plan
of, or contributed to by, an employer or employee
organization (including a self-insured plan) to provide
health care (directly or otherwise) to any employee,
any former employee, the employer, or any other
individual associated or formerly associated with the
employer in a business relationship, or any member of
their family.
(o) Treatment of Certain Expenses of Rural Mail Carriers.--
(1) General rule.--In the case of any employee of the
United States Postal Service who performs services
involving the collection and delivery of mail on a
rural route and who receives qualified reimbursements
for the expenses incurred by such employee for the use
of a vehicle in performing such services--
(A) the amount allowable as a deduction under
this chapter for the use of a vehicle in
performing such services shall be equal to the
amount of such qualified reimbursements; and
(B) such qualified reimbursements shall be
treated as paid under a reimbursement or other
expense allowance arrangement for purposes of
section 62(a)(2)(A) (and section 62(c) shall
not apply to such qualified reimbursements).
(2) Special rule where expenses exceed
reimbursements.--Notwithstanding paragraph (1)(A), if
the expenses incurred by an employee for the use of a
vehicle in performing services described in paragraph
(1) exceed the qualified reimbursements for such
expenses, such excess shall be taken into account in
computing the miscellaneous itemized deductions of the
employee under section 67.
(3) Definition of qualified reimbursements.--For
purposes of this subsection, the term ``qualified
reimbursements'' means the amounts paid by the United
States Postal Service to employees as an equipment
maintenance allowance under the 1991 collective
bargaining agreement between the United States Postal
Service and the National Rural Letter Carriers'
Association. Amounts paid as an equipment maintenance
allowance by such Postal Service under later collective
bargaining agreements that supersede the 1991 agreement
shall be considered qualified reimbursements if such
amounts do not exceed the amounts that would have been
paid under the 1991 agreement, adjusted for changes in
the Consumer Price Index (as defined in section
1(f)(5)) since 1991.
(p) Treatment of Expenses of Members of Reserve Component of
Armed Forces of the United States.--For purposes of subsection
(a)(2), in the case of an individual who performs services as a
member of a reserve component of the Armed Forces of the United
States at any time during the taxable year, such individual
shall be deemed to be away from home in the pursuit of a trade
or business for any period during which such individual is away
from home in connection with such service.
(q) Cross Reference.--
(1) For special rule relating to expenses in
connection with subdividing real property for sale, see
section 1237.
(2) For special rule relating to the treatment of
payments by a transferee of a franchise, trademark, or
trade name, see section 1253.
(3) For special rules relating to--
(A) funded welfare benefit plans, see section
419, and
(B) deferred compensation and other deferred
benefits, see section 404.
* * * * * * *
PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS
* * * * * * *
SEC. 213. MEDICAL, DENTAL, ETC., EXPENSES.
(a) Allowance of Deduction.--There shall be allowed as a
deduction the expenses paid during the taxable year, not
compensated for by insurance or otherwise, for medical care of
the taxpayer, his spouse, or a dependent (as defined in section
152, determined without regard to subsections (b)(1), (b)(2),
and (d)(1)(B) thereof), to the extent that such expenses exceed
[10 percent] 7.5 percent of adjusted gross income.
(b) Limitation With Respect to Medicine and Drugs.--An amount
paid during the taxable year for medicine or a drug shall be
taken into account under subsection (a) only if such medicine
or drug is a prescribed drug or is insulin.
(c) Special Rule for Decedents.--
(1) Treatment of expenses paid after death.--For
purposes of subsection (a), expenses for the medical
care of the taxpayer which are paid out of his estate
during the 1-year period beginning with the day after
the date of his death shall be treated as paid by the
taxpayer at the time incurred.
(2) Limitation.--Paragraph (1) shall not apply if the
amount paid is allowable under section 2053 as a
deduction in computing the taxable estate of the
decedent, but this paragraph shall not apply if (within
the time and in the manner and form prescribed by the
Secretary) there is filed--
(A) a statement that such amount has not been
allowed as a deduction under section 2053, and
(B) a waiver of the right to have such amount
allowed at any time as a deduction under
section 2053.
(d) Definitions.--For purposes of this section--
(1) The term ``medical care'' means amounts paid--
(A) for the diagnosis, cure, mitigation,
treatment, or prevention of disease, or for the
purpose of affecting any structure or function
of the body,
(B) for transportation primarily for and
essential to medical care referred to in
subparagraph (A),
(C) for qualified long-term care services (as
defined in section 7702B(c)), or
(D) for insurance (including amounts paid as
premiums under part B of title XVIII of the
Social Security Act, relating to supplementary
medical insurance for the aged) covering
medical care referred to in subparagraphs (A)
and (B) or for any qualified long- term care
insurance contract (as defined in section
7702B(b)).
In the case of a qualified long-term care insurance
contract (as defined in section 7702B(b)), only
eligible long-term care premiums (as defined in
paragraph (10)) shall be taken into account under
subparagraph (D).
(2) Amounts paid for certain lodging away from home
treated as paid for medical care
Amounts paid for lodging (not lavish or extravagant
under the circumstances) while away from home primarily
for and essential to medical care referred to in
paragraph (1)(A) shall be treated as amounts paid for
medical care if--
(A) the medical care referred to in paragraph
(1)(A) is provided by a physician in a licensed
hospital (or in a medical care facility which
is related to, or the equivalent of, a licensed
hospital), and
(B) there is no significant element of
personal pleasure, recreation, or vacation in
the travel away from home.
The amount taken into account under the preceding
sentence shall not exceed $50 for each night for each
individual.
(3) Prescribed drug
The term ``prescribed drug'' means a drug or
biological which requires a prescription of a physician
for its use by an individual.
(4) Physician
The term ``physician'' has the meaning given to such
term by section 1861(r) of the Social Security Act (42
U.S.C. 1395x(r)).
(5) Special rule in the case of child of divorced
parents, etc.
Any child to whom section 152(e) applies shall be
treated as a dependent of both parents for purposes of
this section.
(6) In the case of an insurance contract under which
amounts are payable for other than medical care
referred to in subparagraphs (A), (B), and (C) of
paragraph (1)--
(A) no amount shall be treated as paid for
insurance to which paragraph (1)(D) applies
unless the charge for such insurance is either
separately stated in the contract, or furnished
to the policyholder by the insurance company in
a separate statement,
(B) the amount taken into account as the
amount paid for such insurance shall not exceed
such charge, and
(C) no amount shall be treated as paid for
such insurance if the amount specified in the
contract (or furnished to the policyholder by
the insurance company in a separate statement)
as the charge for such insurance is
unreasonably large in relation to the total
charges under the contract.
(7) Subject to the limitations of paragraph (6),
premiums paid during the taxable year by a taxpayer
before he attains the age of 65 for insurance covering
medical care (within the meaning of subparagraphs (A),
(B), and (C) of paragraph (1)) for the taxpayer, his
spouse, or a dependent after the taxpayer attains the
age of 65 shall be treated as expenses paid during the
taxable year for insurance which constitutes medical
care if premiums for such insurance are payable (on a
level payment basis) under the contract for a period of
10 years or more or until the year in which the
taxpayer attains the age of 65 (but in no case for a
period of less than 5 years).
(8) The determination of whether an individual is
married at any time during the taxable year shall be
made in accordance with the provisions of section
6013(d) (relating to determination of status as husband
and wife).
(9) Cosmetic surgery.--
(A) In general.--The term ``medical care''
does not include cosmetic surgery or other
similar procedures, unless the surgery or
procedure is necessary to ameliorate a
deformity arising from, or directly related to,
a congenital abnormality, a personal injury
resulting from an accident or trauma, or
disfiguring disease.
(B) Cosmetic surgery defined.--For purposes
of this paragraph, the term ``cosmetic
surgery'' means any procedure which is directed
at improving the patient's appearance and does
not meaningfully promote the proper function of
the body or prevent or treat illness or
disease.
(10) Eligible long-term care premiums.--
(A) In general.--For purposes of this
section, the term ``eligible long-term care
Premiums'' means the amount paid during a
taxable year for any qualified long-term care
insurance contract (as defined in section
7702B(b)) covering an individual, to the extent
such amount does not exceed the limitation
determined under the following table:
------------------------------------------------------------------------
In the case of an individual with
an attained age before the close of The limitation is:
the taxable year of:
------------------------------------------------------------------------
40 or less $200
More than 40 but not more than 50 375
More than 50 but not more than 60 750
More than 60 but not more than 70 2,000
More than 70 2,500
------------------------------------------------------------------------
(B) Indexing.--
(i) In general.--In the case of any
taxable year beginning in a calendar
year after 1997, each dollar amount
contained in subparagraph (A) shall be
increased by the medical care cost
adjustment of such amount for such
calendar year. If any increase
determined under the preceding sentence
is not a multiple of $10, such increase
shall be rounded to the nearest
multiple of $10.
(ii) Medical care cost adjustment.--
For purposes of clause (i), the medical
care cost adjustment for any calendar
year is the percentage (if any) by
which--
(I) the medical care
component of the Consumer Price
Index (as defined in section
1(f)(5)) for August of the
preceding calendar year,
exceeds
(II) such component for
August of 1996.
The Secretary shall, in consultation
with the Secretary of Health and Human
Services, prescribe an adjustment which
the Secretary determines is more
appropriate for purposes of this
paragraph than the adjustment described
in the preceding sentence, and the
adjustment so prescribed shall apply in
lieu of the adjustment described in the
preceding sentence.
(11) Certain payments to relatives treated as not
paid for medical care --An amount paid for a qualified
long-term care service (as defined in section 7702B(c))
provided to an individual shall be treated as not paid
for medical care if such service is provided--
(A) by the spouse of the individual or by a
relative (directly or through a partnership,
corporation, or other entity) unless the
service is provided by a licensed professional
with respect to such service, or
(B) by a corporation or partnership which is
related (within the meaning of section 267(b)
or 707(b)) to the individual.
For purposes of this paragraph, the term ``relative''
means an individual bearing a relationship to the
individual which is described in any of subparagraphs
(A) through (G) of section 152(d)(2). This paragraph
shall not apply for purposes of section 105(b) with
respect to reimbursements through insurance.
(e) Exclusion of Amounts Allowed for Care of Certain
Dependents.--Any expense allowed as a credit under section 21
shall not be treated as an expense paid for medical care.
(f) Special Rule for 2013, 2014, 2015, [and 2016] 2016, and
2017.--In the case of any taxable year beginning after December
31, 2012, and ending before January 1, [2017] 2018, subsection
(a) shall be applied with respect to a taxpayer by substituting
``7.5 percent'' for ``10 percent'' if such taxpayer or such
taxpayer's spouse has attained age 65 before the close of such
taxable year.
* * * * * * *
SEC. 220. ARCHER MSAS.
(a) Deduction Allowed.--In the case of an individual who is
an eligible individual for any month during the taxable year,
there shall be allowed as a deduction for the taxable year an
amount equal to the aggregate amount paid in cash during such
taxable year by such individual to an Archer MSA of such
individual.
(b) Limitations.--
(1) In general.--The amount allowable as a deduction
under subsection (a) to an individual for the taxable
year shall not exceed the sum of the monthly
limitations for months during such taxable year that
the individual is an eligible individual.
(2) Monthly limitation.--The monthly limitation for
any month is the amount equal to 1/12 of--
(A) in the case of an individual who has
self-only coverage under the high deductible
health plan as of the first day of such month,
65 percent of the annual deductible under such
coverage, and
(B) in the case of an individual who has
family coverage under the high deductible
health plan as of the first day of such month,
75 percent of the annual deductible under such
coverage.
(3) Special rule for married individuals.--In the
case of individuals who are married to each other, if
either spouse has family coverage--
(A) both spouses shall be treated as having
only such family coverage (and if such spouses
each have family coverage under different
plans, as having the family coverage with the
lowest annual deductible), and
(B) the limitation under paragraph (1) (after
the application of subparagraph (A) of this
paragraph) shall be divided equally between
them unless they agree on a different division.
(4) Deduction not to exceed compensation.--
(A) Employees.--The deduction allowed under
subsection (a) for contributions as an eligible
individual described in subclause (I) of
subsection (c)(1)(A)(iii) shall not exceed such
individual's wages, salaries, tips, and other
employee compensation which are attributable to
such individual's employment by the employer
referred to in such subclause.
(B) Self-employed individuals.--The deduction
allowed under subsection (a) for contributions
as an eligible individual described in
subclause (II) of subsection (c)(1)(A)(iii)
shall not exceed such individual's earned
income (as defined in section 401(c)(1))
derived by the taxpayer from the trade or
business with respect to which the high
deductible health plan is established.
(C) Community property laws not to apply.--
The limitations under this paragraph shall be
determined without regard to community property
laws.
(5) Coordination with exclusion for employer
contributions.--No deduction shall be allowed under
this section for any amount paid for any taxable year
to an Archer MSA of an individual if--
(A) any amount is contributed to any Archer
MSA of such individual for such year which is
excludable from gross income under section
106(b), or
(B) if such individual's spouse is covered
under the high deductible health plan covering
such individual, any amount is contributed for
such year to any Archer MSA of such spouse
which is so excludable.
(6) Denial of deduction to dependents.--No deduction
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.
(7) Medicare eligible individuals.--The limitation
under this subsection for any month with respect to an
individual shall be zero for the first month such
individual is entitled to benefits under title XVIII of
the Social Security Act and for each month thereafter.
(c) Definitions.--For purposes of this section--
(1) Eligible individual.--
(A) In general.--The term ``eligible
individual'' means, with respect to any month,
any individual if--
(i) such individual is covered under
a high deductible health plan as of the
1st day of such month,
(ii) such individual is not, while
covered under a high deductible health
plan, covered under any health plan--
(I) which is not a high
deductible health plan, and
(II) which provides coverage
for any benefit which is
covered under the high
deductible health plan, and
(iii)
(I) the high deductible
health plan covering such
individual is established and
maintained by the employer of
such individual or of the
spouse of such individual and
such employer is a small
employer, or
(II) such individual is an
employee (within the meaning of
section 401(c)(1)) or the
spouse of such an employee and
the high deductible health plan
covering such individual is not
established or maintained by
any employer of such individual
or spouse.
(B) Certain coverage disregarded.--
Subparagraph (A)(ii) shall be applied without
regard to--
(i) coverage for any benefit provided
by permitted insurance, and
(ii) coverage (whether through
insurance or otherwise) for accidents,
disability, dental care, vision care,
or long-term care.
(C) Continued eligibility of employee and
spouse establishing Archer MSAs.--If, while an
employer is a small employer--
(i) any amount is contributed to an
Archer MSA of an individual who is an
employee of such employer or the spouse
of such an employee, and
(ii) such amount is excludable from
gross income under section 106(b) or
allowable as a deduction under this
section,
such individual shall not cease to meet the
requirement of subparagraph (A)(iii)(I) by
reason of such employer ceasing to be a small
employer so long as such employee continues to
be an employee of such employer.
(D) Limitations on eligibility.--For
limitations on number of taxpayers who are
eligible to have Archer MSAs, see subsection
(i).
(2) High deductible health plan.--
(A) In general.--The term ``high deductible
health plan'' means a health plan--
(i) in the case of self-only
coverage, which has an annual
deductible which is not less than
$1,500 and not more than $2,250,
(ii) in the case of family coverage,
which has an annual deductible which is
not less than $3,000 and not more than
$4,500, and
(iii) the annual out-of-pocket
expenses required to be paid under the
plan (other than for premiums) for
covered benefits does not exceed--
(I) $3,000 for self-only
coverage, and
(II) $5,500 for family
coverage.
(B) Special rules.--
(i) Exclusion of certain plans.--Such
term does not include a health plan if
substantially all of its coverage is
coverage described in paragraph (1)(B).
(ii) Safe harbor for absence of
preventive care deductible.--A plan
shall not fail to be treated as a high
deductible health plan by reason of
failing to have a deductible for
preventive care if the absence of a
deductible for such care is required by
State law.
(3) Permitted insurance.--The term ``permitted
insurance'' means--
(A) insurance if substantially all of the
coverage provided under such insurance relates
to--
(i) liabilities incurred under
workers' compensation laws,
(ii) tort liabilities,
(iii) liabilities relating to
ownership or use of property, or
(iv) such other similar liabilities
as the Secretary may specify by
regulations,
(B) insurance for a specified disease or
illness, and
(C) insurance paying a fixed amount per day
(or other period) of hospitalization.
(4) Small employer.--
(A) In general.--The term ``small employer''
means, with respect to any calendar year, any
employer if such employer employed an average
of 50 or fewer employees on business days
during either of the 2 preceding calendar
years. For purposes of the preceding sentence,
a preceding calendar year may be taken into
account only if the employer was in existence
throughout such year.
(B) Employers not in existence in preceding
year.--In the case of an employer which was not
in existence throughout the 1st preceding
calendar year, the determination under
subparagraph (A) 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) Certain growing employers retain
treatment as small employer.--The term ``small
employer'' includes, with respect to any
calendar year, any employer if--
(i) such employer met the requirement
of subparagraph (A) (determined without
regard to subparagraph (B)) for any
preceding calendar year after 1996,
(ii) any amount was contributed to
the Archer MSA of any employee of such
employer with respect to coverage of
such employee under a high deductible
health plan of such employer during
such preceding calendar year and such
amount was excludable from gross income
under section 106(b) or allowable as a
deduction under this section, and
(iii) such employer employed an
average of 200 or fewer employees on
business days during each preceding
calendar year after 1996.
(D) Special rules.--
(i) Controlled groups.--For purposes
of this paragraph, all persons treated
as a single employer under subsection
(b), (c), (m), or (o) of section 414
shall be treated as 1 employer.
(ii) Predecessors.--Any reference in
this paragraph to an employer shall
include a reference to any predecessor
of such employer.
(5) Family coverage.--The term ``family coverage''
means any coverage other than self-only coverage.
(d) Archer Msa.--For purposes of this section--
(1) Archer MSA.--The term ``Archer MSA'' means a
trust created or organized in the United States as a
medical savings account exclusively for the purpose of
paying the qualified medical expenses of the account
holder, but only if the written governing instrument
creating the trust meets the following requirements:
(A) Except in the case of a rollover
contribution described in subsection (f)(5), no
contribution will be accepted--
(i) unless it is in cash, or
(ii) to the extent such contribution,
when added to previous contributions to
the trust for the calendar year,
exceeds 75 percent of the highest
annual limit deductible permitted under
subsection (c)(2)(A)(ii) for such
calendar year.
(B) The trustee is a bank (as defined in
section 408(n)), an insurance company (as
defined in section 816), or another person who
demonstrates to the satisfaction of the
Secretary that the manner in which such person
will administer the trust will be consistent
with the requirements of this section.
(C) No part of the trust assets will be
invested in life insurance contracts.
(D) The assets of the trust will not be
commingled with other property except in a
common trust fund or common investment fund.
(E) The interest of an individual in the
balance in his account is nonforfeitable.
(2) Qualified medical expenses.--
(A) In general.--The term ``qualified medical
expenses'' means, with respect to an account
holder, amounts paid by such holder for medical
care (as defined in section 213(d)) for such
individual, the spouse of such individual, and
any dependent (as defined in section 152,
determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) thereof) of such
individual, but only to the extent such amounts
are not compensated for by insurance or
otherwise. [Such term shall include an amount
paid for medicine or a drug 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.]
(B) Health insurance may not be purchased
from account.--
(i) In general.--Subparagraph (A)
shall not apply to any payment for
insurance.
(ii) Exceptions.--Clause (i) shall
not apply to any expense for coverage
under--
(I) a health plan during any
period of continuation coverage
required under any Federal law,
(II) a qualified long-term
care insurance contract (as
defined in section 7702B(b)),
or
(III) a health plan during a
period in which the individual
is receiving unemployment
compensation under any Federal
or State law.
(C) Medical expenses of individuals who are
not eligible individuals.--Subparagraph (A)
shall apply to an amount paid by an account
holder for medical care of an individual who is
not described in clauses (i) and (ii) of
subsection (c)(1)(A)for the month in which the
expense for such care is incurred only if no
amount is contributed (other than a rollover
contribution) to any Archer MSA of such account
holder for the taxable year which includes such
month. This subparagraph shall not apply to any
expense for coverage described in subclause (I)
or (III) of subparagraph (B)(ii).
(3) Account holder.--The term ``account holder''
means the individual on whose behalf the Archer MSA was
established.
(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this
section:
(A) Section 219(d)(2) (relating to no
deduction for rollovers).
(B) Section 219(f)(3) (relating to time when
contributions deemed made).
(C) Except as provided in section 106(b),
section 219(f)(5) (relating to employer
payments).
(D) Section 408(g) (relating to community
property laws).
(E) Section 408(h) (relating to custodial
accounts).
(e) Tax Treatment of Accounts.--
(1) In general.--An Archer MSA is exempt from
taxation under this subtitle unless such account has
ceased to be an Archer MSA. Notwithstanding the
preceding sentence, any such account is subject to the
taxes imposed by section 511 (relating to imposition of
tax on unrelated business income of charitable, etc.
organizations).
(2) Account terminations.--Rules similar to the rules
of paragraphs (2) and (4) of section 408(e) shall apply
to Archer MSAs, and any amount treated as distributed
under such rules shall be treated as not used to pay
qualified medical expenses.
(f) Tax Treatment of Distributions.--
(1) Amounts used for qualified medical expenses.--Any
amount paid or distributed out of an Archer MSA which
is used exclusively to pay qualified medical expenses
of any account holder shall not be includible in gross
income.
(2) Inclusion of amounts not used for qualified
medical expenses.--Any amount paid or distributed out
of an Archer MSA which is not used exclusively to pay
the qualified medical expenses of the account holder
shall be included in the gross income of such holder.
(3) Excess contributions returned before due date of
return.--
(A) In general.--If any excess contribution
is contributed for a taxable year to any Archer
MSA of an individual, paragraph (2) shall not
apply to distributions from the Archer MSAs of
such individual (to the extent such
distributions do not exceed the aggregate
excess contributions to all such accounts of
such individual for such year) if--
(i) such distribution is received by
the individual on or before the last
day prescribed by law (including
extensions of time) for filing such
individual's return for such taxable
year, and
(ii) such distribution is accompanied
by the amount of net income
attributable to such excess
contribution.
Any net income described in clause (ii) shall
be included in the gross income of the
individual for the taxable year in which it is
received.
(B) Excess contribution.--For purposes of
subparagraph (A), the term ``excess
contribution'' means any contribution (other
than a rollover contribution) which is neither
excludable from gross income under section
106(b) nor deductible under this section.
(4) Additional tax on distributions not used for
qualified medical expenses.--
(A) In general.--The tax imposed by this
chapter on the account holder for any taxable
year in which there is a payment or
distribution from an Archer MSA of such holder
which is includible in gross income under
paragraph (2) shall be increased by [20
percent] 15 percent of the amount which is so
includible.
(B) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment
or distribution is made after the account
holder becomes disabled within the meaning of
section 72(m)(7) or dies.
(C) Exception for distributions after
medicare eligibility.--Subparagraph (A) shall
not apply to any payment or distribution after
the date on which the account holder attains
the age specified in section 1811 of the Social
Security Act.
(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets
the requirements of subparagraphs (A) and (B).
(A) In general.--Paragraph (2) shall not
apply to any amount paid or distributed from an
Archer MSA to the account holder to the extent
the amount received is paid into an Archer MSA
or a health savings account (as defined in
section 223(d)) for the benefit of such holder
not later than the 60th day after the day on
which the holder receives the payment or
distribution.
(B) Limitation.--This paragraph shall not
apply to any amount described in subparagraph
(A) received by an individual from an Archer
MSA if, at any time during the 1-year period
ending on the day of such receipt, such
individual received any other amount described
in subparagraph (A) from an Archer MSA which
was not includible in the individual's gross
income because of the application of this
paragraph.
(6) Coordination with medical expense deduction.--For
purposes of determining the amount of the deduction
under section 213, any payment or distribution out of
an Archer MSA for qualified medical expenses shall not
be treated as an expense paid for medical care.
(7) Transfer of account incident to divorce.--The
transfer of an individual's interest in an Archer MSA
to an individual's spouse or former spouse under a
divorce or separation instrument described in
subparagraph (A) of section 71(b)(2) shall not be
considered a taxable transfer made by such individual
notwithstanding any other provision of this subtitle,
and such interest shall, after such transfer, be
treated as an Archer MSA with respect to which such
spouse is the account holder.
(8) Treatment after death of account holder.--
(A) Treatment if designated beneficiary is
spouse.--If the account holder's surviving
spouse acquires such holder's interest in an
Archer MSA by reason of being the designated
beneficiary of such account at the death of the
account holder, such Archer MSA shall be
treated as if the spouse were the account
holder.
(B) Other cases.--
(i) In general.--If, by reason of the
death of the account holder, any person
acquires the account holder's interest
in an Archer MSA in a case to which
subparagraph (A) does not apply--
(I) such account shall cease
to be an Archer MSA as of the
date of death, and
(II) an amount equal to the
fair market value of the assets
in such account on such date
shall be includible if such
person is not the estate of
such holder, in such person's
gross income for the taxable
year which includes such date,
or if such person is the estate
of such holder, in such
holder's gross income for the
last taxable year of such
holder.
(ii) Special rules.--
(I) Reduction of inclusion
for pre-death expenses.--The
amount includible in gross
income under clause (i) by any
person (other than the estate)
shall be reduced by the amount
of qualified medical expenses
which were incurred by the
decedent before the date of the
decedent's death and paid by
such person within 1 year after
such date.
(II) Deduction for estate
taxes.--An appropriate
deduction shall be allowed
under section 691(c) to any
person (other than the decedent
or the decedent's spouse) with
respect to amounts included in
gross income under clause (i)
by such person.
(g) Cost-Of-Living Adjustment.--In the case of any taxable
year beginning in a calendar year after 1998, each dollar
amount in subsection (c)(2) shall be increased by an amount
equal to--
(1) such dollar amount, multiplied by
(2) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which such
taxable year begins by substituting ``calendar year
1997'' for ``calendar year 1992'' in subparagraph (B)
thereof.
If any increase under the preceding sentence is not a multiple
of $50, such increase shall be rounded to the nearest multiple
of $50.
(h) Reports.--The Secretary may require the trustee of an
Archer MSA to make such reports regarding such account to the
Secretary and to the account holder with respect to
contributions, distributions, and such other matters as the
Secretary determines appropriate. The reports required by this
subsection shall be filed at such time and in such manner and
furnished to such individuals at such time and in such manner
as may be required by the Secretary.
(i) Limitation on Number of Taxpayers Having Archer Msas.--
(1) In general.--Except as provided in paragraph (5),
no individual shall be treated as an eligible
individual for any taxable year beginning after the
cut-off year unless--
(A) such individual was an active MSA
participant for any taxable year ending on or
before the close of the cut-off year, or
(B) such individual first became an active
MSA participant for a taxable year ending after
the cut-off year by reason of coverage under a
high deductible health plan of an MSA-
participating employer.
(2) Cut-off year.--For purposes of paragraph (1), the
term ``cut-off year'' means the earlier of--
(A) calendar year 2007, or
(B) the first calendar year before 2007 for
which the Secretary determines under subsection
(j) that the numerical limitation for such year
has been exceeded.
(3) Active MSA participant.--For purposes of this
subsection--
(A) In general.--The term ``active MSA
participant'' means, with respect to any
taxable year, any individual who is the account
holder of any Archer MSA into which any
contribution was made which was excludable from
gross income under section 106(b), or allowable
as a deduction under this section, for such
taxable year.
(B) Special rule for cut-off years before
2007.--In the case of a cut-off year before
2007--
(i) an individual shall not be
treated as an eligible individual for
any month of such year or an active MSA
participant under paragraph (1)(A)
unless such individual is, on or before
the cut-off date, covered under a high
deductible health plan, and
(ii) an employer shall not be treated
as an MSA-participating employer unless
the employer, on or before the cut-off
date, offered coverage under a high
deductible health plan to any employee.
(C) Cut-off date.--For purposes of
subparagraph (B)--
(i) In general.--Except as otherwise
provided in this subparagraph, the cut-
off date is October 1 of the cut-off
year.
(ii) Employees with enrollment
periods after October 1.--In the case
of an individual described in subclause
(I) of subsection (c)(1)(A)(iii), if
the regularly scheduled enrollment
period for health plans of the
individual's employer occurs during the
last 3 months of the cut-off year, the
cut-off date is December 31 of the cut-
off year.
(iii) Self-employed individuals.--In
the case of an individual described in
subclause (II) of subsection
(c)(1)(A)(iii), the cut-off date is
November 1 of the cut-off year.
(iv) Special rules for 1997.--If 1997
is a cut-off year by reason of
subsection (j)(1)(A)--
(I) each of the cut-off dates
under clauses (i) and (iii)
shall be 1 month earlier than
the date determined without
regard to this clause, and
(II) clause (ii) shall be
applied by substituting ``4
months'' for ``3 months''.
(4) MSA-participating employer.--For purposes of this
subsection, the term ``MSA-participating employer''
means any small employer if--
(A) such employer made any contribution to
the Archer MSA of any employee during the cut-
off year or any preceding calendar year which
was excludable from gross income under section
106(b), or
(B) at least 20 percent of the employees of
such employer who are eligible individuals for
any month of the cut-off year by reason of
coverage under a high deductible health plan of
such employer each made a contribution of at
least $100 to their Archer MSAs for any taxable
year ending with or within the cut-off year
which was allowable as a deduction under this
section.
(5) Additional eligibility after cut-off year.--If
the Secretary determines under subsection (j)(2)(A)
that the numerical limit for the calendar year
following a cut-off year described in paragraph (2)(B)
has not been exceeded--
(A) this subsection shall not apply to any
otherwise eligible individual who is covered
under a high deductible health plan during the
first 6 months of the second calendar year
following the cut-off year (and such individual
shall be treated as an active MSA participant
for purposes of this subsection if a
contribution is made to any Archer MSA with
respect to such coverage), and
(B) any employer who offers coverage under a
high deductible health plan to any employee
during such 6-month period shall be treated as
an MSA-participating employer for purposes of
this subsection if the requirements of
paragraph (4) are met with respect to such
coverage.
For purposes of this paragraph, subsection (j)(2)(A)
shall be applied for 1998 by substituting ``750,000''
for ``600,000''.
(j) Determination of Whether Numerical Limits Are Exceeded.--
(1) Determination of whether limit exceeded for
1997.--The numerical limitation for 1997 is exceeded
if, based on the reports required under paragraph (4),
the number of Archer MSAs established as of--
(A) April 30, 1997, exceeds 375,000, or
(B) June 30, 1997, exceeds 525,000.
(2) Determination of whether limit exceeded for 1998,
1999, 2001, 2002, 2004, 2005, or 2006.--
(A) In general.--The numerical limitation for
1998, 1999, 2001, 2002, 2004, 2005, or 2006 is
exceeded if the sum of--
(i) the number of MSA returns filed
on or before April 15 of such calendar
year for taxable years ending with or
within the preceding calendar year,
plus
(ii) the Secretary's estimate
(determined on the basis of the returns
described in clause (i)) of the number
of MSA returns for such taxable years
which will be filed after such date,
exceeds 750,000 (600,000 in the case of 1998).
For purposes of the preceding sentence, the
term ``MSA return'' means any return on which
any exclusion is claimed under section 106(b)
or any deduction is claimed under this section.
(B) Alternative computation of limitation.--
The numerical limitation for 1998, 1999, 2001,
2002, 2004, 2005, or 2006 is also exceeded if
the sum of--
(i) 90 percent of the sum determined
under subparagraph (A) for such
calendar year, plus
(ii) the product of 2.5 and the
number of Archer MSAs established
during the portion of such year
preceding July 1 (based on the reports
required under paragraph (4)) for
taxable years beginning in such year,
exceeds 750,000.
(C) No limitation for 2000 or 2003.--The
numerical limitation shall not apply for 2000
or 2003.
(3) Previously uninsured individuals not included in
determination.--
(A) In general.--The determination of whether
any calendar year is a cut-off year shall be
made by not counting the Archer MSA of any
previously uninsured individual.
(B) Previously uninsured individual.--For
purposes of this subsection, the term
``previously uninsured individual'' means, with
respect to any Archer MSA, any individual who
had no health plan coverage (other than
coverage referred to in subsection (c)(1)(B))
at any time during the 6-month period before
the date such individual's coverage under the
high deductible health plan commences.
(4) Reporting by MSA trustees.--
(A) In general.--Not later than August 1 of
1997, 1998, 1999, 2001, 2002, 2004, 2005, and
2006, each person who is the trustee of an
Archer MSA established before July 1 of such
calendar year shall make a report to the
Secretary (in such form and manner as the
Secretary shall specify) which specifies--
(i) the number of Archer MSAs
established before such July 1 (for
taxable years beginning in such
calendar year) of which such person is
the trustee,
(ii) the name and TIN of the account
holder of each such account, and
(iii) the number of such accounts
which are accounts of previously
uninsured individuals.
(B) Additional report for 1997.--Not later
than June 1, 1997, each person who is the
trustee of an Archer MSA established before May
1, 1997, shall make an additional report
described in subparagraph (A) but only with
respect to accounts established before May 1,
1997.
(C) Penalty for failure to file report.--The
penalty provided in section 6693(a) shall apply
to any report required by this paragraph,
except that--
(i) such section shall be applied by
substituting ``$25'' for ``$50'', and
(ii) the maximum penalty imposed on
any trustee shall not exceed $5,000.
(D) Aggregation of accounts.--To the extent
practicable, in determining the number of
Archer MSAs on the basis of the reports under
this paragraph, all Archer MSAs of an
individual shall be treated as 1 account and
all accounts of individuals who are married to
each other shall be treated as 1 account.
(5) Date of making determinations.--Any determination
under this subsection that a calendar year is a cut-off
year shall be made by the Secretary and shall be
published not later than October 1 of such year.
* * * * * * *
SEC. 223. HEALTH SAVINGS ACCOUNTS.
(a) Deduction Allowed.--In the case of an individual who is
an eligible individual for any month during the taxable year,
there shall be allowed as a deduction for the taxable year an
amount equal to the aggregate amount paid in cash during such
taxable year by or on behalf of such individual to a health
savings account of such individual.
(b) Limitations.--
(1) In general.--The amount allowable as a deduction
under subsection (a) to an individual for the taxable
year shall not exceed the sum of the monthly
limitations for months during such taxable year that
the individual is an eligible individual.
(2) Monthly limitation.--The monthly limitation for
any month is \1/12\ of--
(A) in the case of an eligible individual who
has self- only coverage under a high deductible
health plan as of the first day of such month,
[$2,250] the amount in effect under subsection
(c)(2)(A)(ii)(I).
(B) in the case of an eligible individual who
has family coverage under a high deductible
health plan as of the first day of such month,
[$4,500] the amount in effect under subsection
(c)(2)(A)(ii)(II).
(3) Additional contributions for individuals 55 or
older.--
(A) In general.--In the case of an individual
who has attained age 55 before the close of the
taxable year, the applicable limitation under
subparagraphs (A) and (B) of paragraph (2)
shall be increased by the additional
contribution amount.
(B) Additional contribution amount.--For
purposes of this section, the additional
contribution amount is the amount determined in
accordance with the following table:
------------------------------------------------------------------------
The additional contribution amount
For taxable years beginning in: is:
------------------------------------------------------------------------
2004 $500
2005 $600
2006 $700
2007 $800
2008 $900
2009 and thereafter $1,000.
------------------------------------------------------------------------
(4) Coordination with other contributions.--The
limitation which would (but for this paragraph) apply
under this subsection to an individual for any taxable
year shall be reduced (but not below zero) by the sum
of--
(A) the aggregate amount paid for such
taxable year to Archer MSAs of such individual,
(B) the aggregate amount contributed to
health savings accounts of such individual
which is excludable from the taxpayer's gross
income for such taxable year under section
106(d) (and such amount shall not be allowed as
a deduction under subsection (a)), and
(C) the aggregate amount contributed to
health savings accounts of such individual for
such taxable year under section 408(d)(9) (and
such amount shall not be allowed as a deduction
under subsection (a)).
Subparagraph (A) shall not apply with respect to any
individual to whom paragraph (5) applies.
[(5) Special rule for married individuals.--In the
case of individuals who are married to each other, if
either spouse has family coverage--
[(A) both spouses shall be treated as having
only such family coverage (and if such spouses
each have family coverage under different
plans, as having the family coverage with the
lowest annual deductible), and
[(B) the limitation under paragraph (1)
(after the application of subparagraph (A) and
without regard to any additional contribution
amount under paragraph (3))--
[(i) shall be reduced by the
aggregate amount paid to Archer MSAs of
such spouses for the taxable year, and
[(ii) after such reduction, shall be
divided equally between them unless
they agree on a different division.]
(5) Special rule for married individuals with family
coverage.--
(A) In general.--In the case of individuals
who are married to each other, if both spouses
are eligible individuals and either spouse has
family coverage under a high deductible health
plan as of the first day of any month--
(i) the limitation under paragraph
(1) shall be applied by not taking into
account any other high deductible
health plan coverage of either spouse
(and if such spouses both have family
coverage under separate high deductible
health plans, only one such coverage
shall be taken into account),
(ii) such limitation (after
application of clause (i)) shall be
reduced by the aggregate amount paid to
Archer MSAs of such spouses for the
taxable year, and
(iii) such limitation (after
application of clauses (i) and (ii))
shall be divided equally between such
spouses unless they agree on a
different division.
(B) Treatment of additional contribution
amounts.--If both spouses referred to in
subparagraph (A) have attained age 55 before
the close of the taxable year, the limitation
referred to in subparagraph (A)(iii) which is
subject to division between the spouses shall
include the additional contribution amounts
determined under paragraph (3) for both
spouses. In any other case, any additional
contribution amount determined under paragraph
(3) shall not be taken into account under
subparagraph (A)(iii) and shall not be subject
to division between the spouses.
(6) Denial of deduction to dependents.--No deduction
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.
(7) Medicare eligible individuals.--The limitation
under this subsection for any month with respect to an
individual shall be zero for the first month such
individual is entitled to benefits under title XVIII of
the Social Security Act and for each month thereafter.
(8) Increase in limit for individuals becoming
eligible individuals after the beginning of the year.--
(A) In general.--For purposes of computing
the limitation under paragraph (1) for any
taxable year, an individual who is an eligible
individual during the last month of such
taxable year shall be treated--
(i) as having been an eligible
individual during each of the months in
such taxable year, and
(ii) as having been enrolled, during
each of the months such individual is
treated as an eligible individual
solely by reason of clause (i), in the
same high deductible health plan in
which the individual was enrolled for
the last month of such taxable year.
(B) Failure to maintain high deductible
health plan coverage.--
(i) In general.--If, at any time
during the testing period, the
individual is not an eligible
individual, then--
(I) gross income of the
individual for the taxable year
in which occurs the first month
in the testing period for which
such individual is not an
eligible individual is
increased by the aggregate
amount of all contributions to
the health savings account of
the individual which could not
have been made but for
subparagraph (A), and
(II) the tax imposed by this
chapter for any taxable year on
the individual shall be
increased by 10 percent of the
amount of such increase.
(ii) Exception for disability or
death.--Subclauses (I) and (II) of
clause (i) shall not apply if the
individual ceased to be an eligible
individual by reason of the death of
the individual or the individual
becoming disabled (within the meaning
of section 72(m)(7)).
(iii) Testing period.--The term
``testing period'' means the period
beginning with the last month of the
taxable year referred to in
subparagraph (A) and ending on the last
day of the 12th month following such
month.
(c) Definitions and Special Rules.--For purposes of this
section--
(1) Eligible individual.--
(A) In general.--The term ``eligible
individual'' means, with respect to any month,
any individual if--
(i) such individual is covered under
a high deductible health plan as of the
1st day of such month, and
(ii) such individual is not, while
covered under a high deductible health
plan, covered under any health plan--
(I) which is not a high
deductible health plan, and
(II) which provides coverage
for any benefit which is
covered under the high
deductible health plan.
(B) Certain coverage disregarded.--
Subparagraph (A)(ii) shall be applied without
regard to--
(i) coverage for any benefit provided
by permitted insurance,
(ii) coverage (whether through
insurance or otherwise) for accidents,
disability, dental care, vision care,
or long-term care, and
(iii) for taxable years beginning
after December 31, 2006, coverage under
a health flexible spending arrangement
during any period immediately following
the end of a plan year of such
arrangement during which unused
benefits or contributions remaining at
the end of such plan year may be paid
or reimbursed to plan participants for
qualified benefit expenses incurred
during such period if--
(I) the balance in such
arrangement at the end of such
plan year is zero, or
(II) the individual is making
a qualified HSA distribution
(as defined in section 106(e))
in an amount equal to the
remaining balance in such
arrangement as of the end of
such plan year, in accordance
with rules prescribed by the
Secretary.
(C) Special rule for individuals eligible for
certain veterans benefits.--An individual shall
not fail to be treated as an eligible
individual for any period merely because the
individual receives hospital care or medical
services under any law administered by the
Secretary of Veterans Affairs for a service-
connected disability (within the meaning of
section 101(16) of title 38, United States
Code).
(2) High deductible health plan.--
(A) In general.--The term ``high deductible
health plan'' means a health plan--
(i) which has an annual deductible
which is not less than--
(I) $1,000 for self-only
coverage, and
(II) twice the dollar amount
in subclause (I) for family
coverage, and
(ii) the sum of the annual deductible
and the other annual out-of-pocket
expenses required to be paid under the
plan (other than for premiums) for
covered benefits does not exceed--
(I) $5,000 for self-only
coverage, and
(II) twice the dollar amount
in subclause (I) for family
coverage.
(B) Exclusion of certain plans.--Such term
does not include a health plan if substantially
all of its coverage is coverage described in
paragraph (1)(B).
(C) Safe harbor for absence of preventive
care deductible.--A plan shall not fail to be
treated as a high deductible health plan by
reason of failing to have a deductible for
preventive care (within the meaning of section
1871 of the Social Security Act, except as
otherwise provided by the Secretary).
(D) Special rules for network plans.--In the
case of a plan using a network of providers--
(i) Annual out-of-pocket
limitation.--Such plan shall not fail
to be treated as a high deductible
health plan by reason of having an out-
of-pocket limitation for services
provided outside of such network which
exceeds the applicable limitation under
subparagraph (A)(ii).
(ii) Annual deductible.--Such plan's
annual deductible for services provided
outside of such network shall not be
taken into account for purposes of
subsection (b)(2).
(3) Permitted insurance.--The term ``permitted
insurance'' means--
(A) insurance if substantially all of the
coverage provided under such insurance relates
to--
(i) liabilities incurred under
workers' compensation laws,
(ii) tort liabilities,
(iii) liabilities relating to
ownership or use of property, or
(iv) such other similar liabilities
as the Secretary may specify by
regulations,
(B) insurance for a specified disease or
illness, and
(C) insurance paying a fixed amount per day
(or other period) of hospitalization.
(4) Family coverage.--The term ``family coverage''
means any coverage other than self-only coverage.
(5) Archer MSA.--The term ``Archer MSA'' has the
meaning given such term in section 220(d).
(d) Health Savings Account.--For purposes of this section--
(1) In general.--The term ``health savings account''
means a trust created or organized in the United States
as a health savings account exclusively for the purpose
of paying the qualified medical expenses of the account
beneficiary, but only if the written governing
instrument creating the trust meets the following
requirements:
(A) Except in the case of a rollover
contribution described in subsection (f)(5) or
section 220(f)(5), no contribution will be
accepted--
(i) unless it is in cash, or
(ii) to the extent such contribution,
when added to previous contributions to
the trust for the calendar year,
exceeds the sum of--
(I) the dollar amount in
effect under subsection
(b)(2)(B), and
(II) the dollar amount in
effect under subsection
(b)(3)(B).
(B) The trustee is a bank (as defined in
section 408(n)), an insurance company (as
defined in section 816), or another person who
demonstrates to the satisfaction of the
Secretary that the manner in which such person
will administer the trust will be consistent
with the requirements of this section.
(C) No part of the trust assets will be
invested in life insurance contracts.
(D) The assets of the trust will not be
commingled with other property except in a
common trust fund or common investment fund.
(E) The interest of an individual in the
balance in his account is nonforfeitable.
(2) Qualified medical expenses.--
(A) In general.--The term ``qualified medical
expenses'' means, with respect to an account
beneficiary, amounts paid by such beneficiary
for medical care (as defined in section 213(d)
for such individual, the spouse of such
individual, and any dependent (as defined in
section 152, determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B)
thereof) of such individual, but only to the
extent such amounts are not compensated for by
insurance or otherwise. [Such term shall
include an amount paid for medicine or a drug
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.]
(B) Health insurance may not be purchased
from account.--Subparagraph (A) shall not apply
to any payment for insurance.
(C) Exceptions.--Subparagraph (B) shall not
apply to any expense for coverage under--
(i) a health plan during any period
of continuation coverage required under
any Federal law,
(ii) a qualified long-term care
insurance contract (as defined in
section 7702B(b)),
(iii) a health plan during a period
in which the individual is receiving
unemployment compensation under any
Federal or State law, or
(iv) in the case of an account
beneficiary who has attained the age
specified in section 1811 of the Social
Security Act, any health insurance
other than a medicare supplemental
policy (as defined in section 1882 of
the Social Security Act).
(D) Treatment of certain medical expenses
incurred before establishment of account.--If a
health savings account is established during
the 60-day period beginning on the date that
coverage of the account beneficiary under a
high deductible health plan begins, then,
solely for purposes of determining whether an
amount paid is used for a qualified medical
expense, such account shall be treated as
having been established on the date that such
coverage begins.
(3) Account beneficiary.--The term ``account
beneficiary'' means the individual on whose behalf the
health savings account was established.
(4) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this
section:
(A) Section 219(d)(2) (relating to no
deduction for rollovers).
(B) Section 219(f)(3) (relating to time when
contributions deemed made).
(C) Except as provided in section 106(d),
section 219(f)(5) (relating to employer
payments).
(D) Section 408(g) (relating to community
property laws).
(E) Section 408(h) (relating to custodial
accounts).
(e) Tax Treatment of Accounts.--
(1) In general.--A health savings account is exempt
from taxation under this subtitle unless such account
has ceased to be a health savings account.
Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business
income of charitable, etc. organizations).
(2) Account terminations.--Rules similar to the rules
of paragraphs (2) and (4) of section 408(e) shall apply
to health savings accounts, and any amount treated as
distributed under such rules shall be treated as not
used to pay qualified medical expenses.
(f) Tax Treatment of Distributions.--
(1) Amounts used for qualified medical expenses.--Any
amount paid or distributed out of a health savings
account which is used exclusively to pay qualified
medical expenses of any account beneficiary shall not
be includible in gross income.
(2) Inclusion of amounts not used for qualified
medical expenses.--Any amount paid or distributed out
of a health savings account which is not used
exclusively to pay the qualified medical expenses of
the account beneficiary shall be included in the gross
income of such beneficiary.
(3) Excess contributions returned before due date of
return.--
(A) In general.--If any excess contribution
is contributed for a taxable year to any health
savings account of an individual, paragraph (2)
shall not apply to distributions from the
health savings accounts of such individual (to
the extent such distributions do not exceed the
aggregate excess contributions to all such
accounts of such individual for such year) if--
(i) such distribution is received by
the individual on or before the last
day prescribed by law (including
extensions of time) for filing such
individual's return for such taxable
year, and
(ii) such distribution is accompanied
by the amount of net income
attributable to such excess
contribution.
Any net income described in clause (ii) shall
be included in the gross income of the
individual for the taxable year in which it is
received.
(B) Excess contribution.--For purposes of
subparagraph (A), the term ``excess
contribution'' means any contribution (other
than a rollover contribution described in
paragraph (5) or section 220(f)(5)) which is
neither excludable from gross income under
section 106(d) nor deductible under this
section.
(4) Additional tax on distributions not used for
qualified medical expenses.--
(A) In general.--The tax imposed by this
chapter on the account beneficiary for any
taxable year in which there is a payment or
distribution from a health savings account of
such beneficiary which is includible in gross
income under paragraph (2) shall be increased
by [20 percent] 10 percent of the amount which
is so includible.
(B) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment
or distribution is made after the account
beneficiary becomes disabled within the meaning
of section 72(m)(7) or dies.
(C) Exception for distributions after
medicare eligibility.--Subparagraph (A) shall
not apply to any payment or distribution after
the date on which the account beneficiary
attains the age specified in section 1811 of
the Social Security Act.
(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets
the requirements of subparagraphs (A) and (B).
(A) In general.--Paragraph (2) shall not
apply to any amount paid or distributed from a
health savings account to the account
beneficiary to the extent the amount received
is paid into a health savings account for the
benefit of such beneficiary not later than the
60th day after the day on which the beneficiary
receives the payment or distribution.
(B) Limitation.--This paragraph shall not
apply to any amount described in subparagraph
(A) received by an individual from a health
savings account if, at any time during the 1-
year period ending on the day of such receipt,
such individual received any other amount
described in subparagraph (A) from a health
savings account which was not includible in the
individual's gross income because of the
application of this paragraph.
(6) Coordination with medical expense deduction.--For
purposes of determining the amount of the deduction
under section 213, any payment or distribution out of a
health savings account for qualified medical expenses
shall not be treated as an expense paid for medical
care.
(7) Transfer of account incident to divorce.--The
transfer of an individual's interest in a health
savings account to an individual's spouse or former
spouse under a divorce or separation instrument
described in subparagraph (A) of section 71(b)(2) shall
not be considered a taxable transfer made by such
individual notwithstanding any other provision of this
subtitle, and such interest shall, after such transfer,
be treated as a health savings account with respect to
which such spouse is the account beneficiary.
(8) Treatment after death of account beneficiary.--
(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving
spouse acquires such beneficiary's interest in
a health savings account by reason of being the
designated beneficiary of such account at the
death of the account beneficiary, such health
savings account shall be treated as if the
spouse were the account beneficiary.
(B) Other cases.--
(i) In general.--If, by reason of the
death of the account beneficiary, any
person acquires the account
beneficiary's interest in a health
savings account in a case to which
subparagraph (A) does not apply--
(I) such account shall cease
to be a health savings account
as of the date of death, and
(II) an amount equal to the
fair market value of the assets
in such account on such date
shall be includible if such
person is not the estate of
such beneficiary, in such
person's gross income for the
taxable year which includes
such date, or if such person is
the estate of such beneficiary,
in such beneficiary's gross
income for the last taxable
year of such beneficiary.
(ii) Special rules.--
(I) Reduction of inclusion
for predeath expenses.--The
amount includible in gross
income under clause (i) by any
person (other than the estate)
shall be reduced by the amount
of qualified medical expenses
which were incurred by the
decedent before the date of the
decedent's death and paid by
such person within 1 year after
such date.
(II) Deduction for estate
taxes.--An appropriate
deduction shall be allowed
under section 691(c) to any
person (other than the decedent
or the decedent's spouse) with
respect to amounts included in
gross income under clause (i)
by such person.
(g) Cost-Of-Living Adjustment.--
(1) In general.--Each dollar amount in [subsections
(b)(2) and] subsection (c)(2)(A) shall be increased by
an amount equal to--
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in
which such taxable year begins [determined by
substituting for ``calendar year 1992'' in
subparagraph (B) thereof--] determined by
substituting ``calendar year 2003'' for
``calendar year 1992'' in subparagraph (B)
thereof.
[(i) except as provided in clause
(ii), ``calendar year 1997'', and
[(ii) in the case of each dollar
amount in subsection (c)(2)(A),
``calendar year 2003''.]
In the case of adjustments made for any taxable year
beginning after 2007, section 1(f)(4) shall be applied
for purposes of this paragraph by substituting ``March
31'' for ``August 31'', and the Secretary shall publish
the adjusted amounts under [subsections (b)(2) and]
subsection (c)(2)(A) for taxable years beginning in any
calendar year no later than June 1 of the preceding
calendar year.
(2) Rounding.--If any increase under paragraph (1) is
not a multiple of $50, such increase shall be rounded
to the nearest multiple of $50.
(h) Reports.--The Secretary may require--
(1) the trustee of a health savings account to make
such reports regarding such account to the Secretary
and to the account beneficiary with respect to
contributions, distributions, the return of excess
contributions, and such other matters as the Secretary
determines appropriate, and
(2) any person who provides an individual with a high
deductible health plan to make such reports to the
Secretary and to the account beneficiary with respect
to such plan as the Secretary determines appropriate.
The reports required by this subsection shall be filed at such
time and in such manner and furnished to such individuals at
such time and in such manner as may be required by the
Secretary.
* * * * * * *
CHAPTER 2--TAX ON SELF-EMPLOYMENT INCOME
SEC. 1401. RATE OF TAX.
(a) Old-Age, Survivors, and Disability Insurance.--In
addition to other taxes, there shall be imposed for each
taxable year, on the self-employment income of every
individual, a tax equal to 12.4 percent of the amount of the
self-employment income for such taxable year.
[(b) Hospital Insurance.--
[(1) In general.--In addition to the tax imposed by
the preceding subsection, there shall be imposed for
each taxable year, on the self-employment income of
every individual, a tax equal to 2.9 percent of the
amount of the self-employment income for such taxable
year.
[(2) Additional tax.--
[(A) In general.--In addition to the tax
imposed by paragraph (1) and the preceding
subsection, there is hereby imposed on every
taxpayer (other than a corporation, estate, or
trust) for each taxable year beginning after
December 31, 2012, a tax equal to 0.9 percent
of the self-employment income for such taxable
year which is in excess of--
[(i) in the case of a joint return,
$250,000,
[(ii) in the case of a married
taxpayer (as defined in section 7703)
filing a separate return, \1/2\ of the
dollar amount determined under clause
(i), and
[(iii) in any other case, $200,000.
[(B) Coordination with FICA.--The amounts
under clause (i), (ii), or (iii) (whichever is
applicable) of subparagraph (A) shall be
reduced (but not below zero) by the amount of
wages taken into account in determining the tax
imposed under section 3121(b)(2) with respect
to the taxpayer.]
(b) Hospital Insurance.--In addition to the tax imposed by
the preceding subsection, there shall be imposed for each
taxable year, on the self-employment income of every
individual, a tax equal to 2.9 percent of the amount of the
self-employment income for such taxable year.
(c) Relief from Taxes in Cases Covered by Certain
International Agreements.--During any period in which there is
in effect an agreement entered into pursuant to section 233 of
the Social Security Act with any foreign country, the self-
employment income of an individual shall be exempt from the
taxes imposed by this section to the extent that such self-
employment income is subject under such agreement exclusively
to the laws applicable to the social security system of such
foreign country.
* * * * * * *
[CHAPTER 2A--UNEARNED INCOME MEDICARE CONTRIBUTION
[SEC. 1411. IMPOSITION OF TAX.
[(a) In General.--Except as provided in subsection (e)--
[(1) Application to individuals.--In the case of an
individual, there is hereby imposed (in addition to any
other tax imposed by this subtitle) for each taxable
year a tax equal to 3.8 percent of the lesser of--
[(A) net investment income for such taxable
year, or
[(B) the excess (if any) of--
[(i) the modified adjusted gross
income for such taxable year, over
[(ii) the threshold amount.
[(2) Application to estates and trusts.--In the case
of an estate or trust, there is hereby imposed (in
addition to any other tax imposed by this subtitle) for
each taxable year a tax of 3.8 percent of the lesser
of--
[(A) the undistributed net investment income
for such taxable year, or
[(B) the excess (if any) of--
[(i) the adjusted gross income (as
defined in section 67(e)) for such
taxable year, over
[(ii) the dollar amount at which the
highest tax bracket in section 1(e)
begins for such taxable year.
[(b) Threshold Amount.--For purposes of this chapter, the
term ``threshold amount'' means--
[(1) in the case of a taxpayer making a joint return
under section 6013 or a surviving spouse (as defined in
section 2(a)), $250,000,
[(2) in the case of a married taxpayer (as defined in
section 7703) filing a separate return, \1/2\ of the
dollar amount determined under paragraph (1), and
[(3) in any other case, $200,000.
[(c) Net Investment Income.--For purposes of this chapter--
[(1) In general.--The term ``net investment income''
means the excess (if any) of--
[(A) the sum of--
[(i) gross income from interest,
dividends, annuities, royalties, and
rents, other than such income which is
derived in the ordinary course of a
trade or business not described in
paragraph (2),
[(ii) other gross income derived from
a trade or business described in
paragraph (2), and
[(iii) net gain (to the extent taken
into account in computing taxable
income) attributable to the disposition
of property other than property held in
a trade or business not described in
paragraph (2), over (B) the deductions
allowed by this subtitle which are
properly allocable to such gross income
or net gain.
[(2) Trades and businesses to which tax applies.--A
trade or business is described in this paragraph if
such trade or business is--
[(A) a passive activity (within the meaning
of section 469) with respect to the taxpayer,
or
[(B) a trade or business of trading in
financial instruments or commodities (as
defined in section 475(e)(2)).
[(3) Income on investment of working capital subject
to tax.--A rule similar to the rule of section
469(e)(1)(B) shall apply for purposes of this
subsection.
[(4) Exception for certain active interests in
partnerships and S corporations.--In the case of a
disposition of an interest in a partnership or S
corporation--
[(A) gain from such disposition shall be
taken into account under clause (iii) of
paragraph (1)(A) only to the extent of the net
gain which would be so taken into account by
the transferor if all property of the
partnership or S corporation were sold for fair
market value immediately before the disposition
of such interest, and
[(B) a rule similar to the rule of
subparagraph (A) shall apply to a loss from
such disposition.
[(5) Exception for distributions from qualified
plans.--The term ``net investment income'' shall not
include any distribution from a plan or arrangement
described in section 401(a), 403(a), 403(b), 408, 408A,
or 457(b).
[(6) Special rule.--Net investment income shall not
include any item taken into account in determining
self-employment income for such taxable year on which a
tax is imposed by section 1401(b).
[(d) Modified Adjusted Gross Income.--For purposes of this
chapter, the term ``modified adjusted gross income'' means
adjusted gross income increased by the excess of--
[(1) the amount excluded from gross income under
section 911(a)(1), over
[(2) the amount of any deductions (taken into account
in computing adjusted gross income) or exclusions
disallowed under section 911(d)(6) with respect to the
amounts described in paragraph (1).
[(e) Nonapplication of Section.--This section shall not apply
to--
[(1) a nonresident alien, or
[(2) a trust all of the unexpired interests in which
are devoted to one or more of the purposes described in
section 170(c)(2)(B).]
* * * * * * *
Subtitle C--Employment Taxes
* * * * * * *
CHAPTER 21--FEDERAL INSURANCE CONTRIBUTIONS ACT
* * * * * * *
Subchapter A--Tax on Employees
SEC. 3101. RATE OF TAX.
(a) Old-Age, Survivors, and Disability Insurance.--In
addition to other taxes, there is hereby imposed on the income
of every individual a tax equal to 6.2 percent of the wages (as
defined in section 3121(a)) received by the individual with
respect to employment (as defined in section 3121(b))
[(b) Hospital Insurance.--
[(1) In general.--In addition to the tax imposed by
the preceding subsection, there is hereby imposed on
the income of every individual a tax equal to 1.45
percent of the wages (as defined in section 3121(a))
received by him with respect to employment (as defined
in section 3121(b)).
[(2) Additional tax.--In addition to the tax imposed
by paragraph (1) and the preceding subsection, there is
hereby imposed on every taxpayer (other than a
corporation, estate, or trust) a tax equal to 0.9
percent of wages which are received with respect to
employment (as defined in section 3121(b)) during any
taxable year beginning after December 31, 2012, and
which are in excess of--
[(A) in the case of a joint return, $250,000,
[(B) in the case of a married taxpayer (as
defined in section 7703) filing a separate
return, \1/2\ of the dollar amount determined
under subparagraph (A), and
[(C) in any other case, $200,000.]
(b) Hospital Insurance.--In addition to the tax imposed by
the preceding subsection, there is hereby imposed on the income
of every individual a tax equal to 1.45 percent of the wages
(as defined in section 3121(a)) received by such individual
with respect to employment (as defined in section 3121(b)).
(c) Relief from Taxes in Cases Covered by Certain
International Agreements.--During any period in which there is
in effect an agreement entered into pursuant to section 233 of
the Social Security Act with any foreign country, wages
received by or paid to an individual shall be exempt from the
taxes imposed by this section to the extent that such wages are
subject under such agreement exclusively to the laws applicable
to the social security system of such foreign country.
* * * * * * *
Subtitle D--Miscellaneous Excise Taxes
* * * * * * *
CHAPTER 32--MANUFACTURERS EXCISE TAXES
* * * * * * *
Subchapter E--Medical Devices
SEC. 4191. MEDICAL DEVICES.
(a) In General.--There is hereby imposed on the sale of any
taxable medical device by the manufacturer, producer, or
importer a tax equal to 2.3 percent of the price for which so
sold.
(b) Taxable Medical Device.--For purposes of this section--
(1) In general.--The term ``taxable medical device''
means any device (as defined in section 201(h) of the
Federal Food, Drug, and Cosmetic Act) intended for
humans.
(2) Exemptions.--Such term shall not include--
(A) eyeglasses,
(B) contact lenses,
(C) hearing aids, and
(D) any other medical device determined by
the Secretary to be of a type which is
generally purchased by the general public at
retail for individual use.
(c) Moratorium.--The tax imposed under subsection (a) shall
not apply to sales during the period beginning on January 1,
2016, and ending on December 31, 2017.
(d) Applicability.--The tax imposed under subsection (a)
shall not apply to sales after December 31, 2017.
* * * * * * *
CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
* * * * * * *
SEC. 4980H. SHARED RESPONSIBILITY FOR EMPLOYERS REGARDING HEALTH
COVERAGE.
(a) Large Employers Not Offering Health Coverage.--If--
(1) any applicable large employer fails to offer to
its full-time employees (and their dependents) the
opportunity to enroll in minimum essential coverage
under an eligible employer-sponsored plan (as defined
in section 5000A(f)(2)) for any month, and
(2) at least one full-time employee of the applicable
large employer has been certified to the employer under
section 1411 of the Patient Protection and Affordable
Care Act as having enrolled for such month in a
qualified health plan with respect to which an
applicable premium tax credit or cost-sharing reduction
is allowed or paid with respect to the employee,
then there is hereby imposed on the employer an assessable
payment equal to the product of the applicable payment amount
and the number of individuals employed by the employer as full-
time employees during such month.
(b) Large Employers Offering Coverage With Employees Who
Qualify for Premium Tax Credits or Cost-Sharing Reductions.--
(1) In general.--If--
(A) an applicable large employer offers to
its full-time employees (and their dependents)
the opportunity to enroll in minimum essential
coverage under an eligible employer-sponsored
plan (as defined in section 5000A(f)(2)) for
any month, and
(B) 1 or more full-time employees of the
applicable large employer has been certified to
the employer under section 1411 of the Patient
Protection and Affordable Care Act as having
enrolled for such month in a qualified health
plan with respect to which an applicable
premium tax credit or cost-sharing reduction is
allowed or paid with respect to the employee,
then there is hereby imposed on the employer an
assessable payment equal to the product of the number
of full-time employees of the applicable large employer
described in subparagraph (B) for such month and an
amount equal to \1/12\ of $3,000 ($0 in the case of
months beginning after December 31, 2015).
(2) Overall limitation.--The aggregate amount of tax
determined under paragraph (1) with respect to all
employees of an applicable large employer for any month
shall not exceed the product of the applicable payment
amount and the number of individuals employed by the
employer as full-time employees during such month.
(c) Definitions and Special Rules.--For purposes of this
section--
(1) Applicable payment amount.--The term ``applicable
payment amount'' means, with respect to any month, \1/
12\ of $2,000 ($0 in the case of months beginning after
December 31, 2015).
(2) Applicable large employer.--
(A) In general.--The term ``applicable large
employer'' 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.
(B) Exemption for certain employers.--
(i) In general.--An employer shall
not be considered to employ more than
50 full-time employees if--
(I) the employer's workforce
exceeds 50 full-time employees
for 120 days or fewer during
the calendar year, and
(II) the employees in excess
of 50 employed during such 120-
day period were seasonal
workers.
(ii) Definition of seasonal
workers.--The term ``seasonal worker''
means a worker who performs labor or
services on a seasonal basis as defined
by the Secretary of Labor, including
workers covered by section 500.20(s)(1)
of title 29, Code of Federal
Regulations and retail workers employed
exclusively during holiday seasons.
(C) Rules for determining employer size.--For
purposes of this paragraph--
(i) 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.
(ii) 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 an applicable 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.
(iii) Predecessors.--Any reference in
this subsection to an employer shall
include a reference to any predecessor
of such employer.
(D) Application of employer size to
assessable penalties.--
(i) In general.--The number of
individuals employed by an applicable
large employer as full-time employees
during any month shall be reduced by 30
solely for purposes of calculating--
(I) the assessable payment
under subsection (a), or
(II) the overall limitation
under subsection (b)(2).
(ii) Aggregation.--In the case of
persons treated as 1 employer under
subparagraph (C)(i), only 1 reduction
under subclause (I) or (II) shall be
allowed with respect to such persons
and such reduction shall be allocated
among such persons ratably on the basis
of the number of full-time employees
employed by each such person.
(E) Full-time equivalents treated as full-
time employees.--Solely for purposes of
determining whether an employer is an
applicable large employer under this paragraph,
an employer shall, in addition to the number of
full-time employees for any month otherwise
determined, include for such month a number of
full-time employees determined by dividing the
aggregate number of hours of service of
employees who are not full-time employees for
the month by 120.
(F) Exemption for health coverage under
TRICARE or the Veterans Administration.--Solely
for purposes of determining whether an employer
is an applicable large employer under this
paragraph for any month, an individual shall
not be taken into account as an employee for
such month if such individual has medical
coverage for such month under--
(i) chapter 55 of title 10, United
States Code, including coverage under
the TRICARE program, or
(ii) under a health care program
under chapter 17 or 18 of title 38,
United States Code, as determined by
the Secretary of Veterans Affairs, in
coordination with the Secretary of
Health and Human Services and the
Secretary.
(3) Applicable premium tax credit and cost-sharing
reduction.--The term ``applicable premium tax credit
and cost-sharing reduction'' means--
(A) any premium tax credit allowed under
section 36B,
(B) any cost-sharing reduction under section
1402 of the Patient Protection and Affordable
Care Act, and
(C) any advance payment of such credit or
reduction under section 1412 of such Act.
(4) Full-time employee.--
(A) In general.--The term ``full-time
employee'' means, with respect to any month, an
employee who is employed on average at least 30
hours of service per week.
(B) Hours of service.--The Secretary, in
consultation with the Secretary of Labor, shall
prescribe such regulations, rules, and guidance
as may be necessary to determine the hours of
service of an employee, including rules for the
application of this paragraph to employees who
are not compensated on an hourly basis.
(5) Inflation adjustment.--
(A) In general.--In the case of any calendar
year after 2014, each of the dollar amounts in
subsection (b) and paragraph (1) shall be
increased by an amount equal to the product
of--
(i) such dollar amount, and
(ii) the premium adjustment
percentage (as defined in section
1302(c)(4) of the Patient Protection
and Affordable Care Act) for the
calendar year.
(B) Rounding.--If the amount of any increase
under subparagraph (A) is not a multiple of
$10, such increase shall be rounded to the next
lowest multiple of $10.
(6) Other definitions.--Any term used in this section
which is also used in the Patient Protection and
Affordable Care Act shall have the same meaning as when
used in such Act.
(7) Tax nondeductible.--For denial of deduction for
the tax imposed by this section, see section 275(a)(6).
(d) Administration and Procedure.--
(1) In general.--Any assessable payment provided by
this section shall be paid upon notice and demand by
the Secretary, and shall be assessed and collected in
the same manner as an assessable penalty under
subchapter B of chapter 68.
(2) Time for payment.--The Secretary may provide for
the payment of any assessable payment provided by this
section on an annual, monthly, or other periodic basis
as the Secretary may prescribe.
(3) Coordination with credits, etc..--The Secretary
shall prescribe rules, regulations, or guidance for the
repayment of any assessable payment (including
interest) if such payment is based on the allowance or
payment of an applicable premium tax credit or cost-
sharing reduction with respect to an employee, such
allowance or payment is subsequently disallowed, and
the assessable payment would not have been required to
be made but for such allowance or payment.
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).
(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.
(h) Shall Not Apply.--No tax shall be imposed under this
section with respect to any taxable period beginning after
December 31, 2019, and before January 1, 2025.
* * * * * * *
CHAPTER 48--MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE
SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.
(a) Requirement to Maintain Minimum Essential Coverage.--An
applicable individual shall for each month beginning after 2013
ensure that the individual, and any dependent of the individual
who is an applicable individual, is covered under minimum
essential coverage for such month.
(b) Shared Responsibility Payment.--
(1) In general.--If a taxpayer who is an applicable
individual, or an applicable individual for whom the
taxpayer is liable under paragraph (3), fails to meet
the requirement of subsection (a) for 1 or more months,
then, except as provided in subsection (e), there is
hereby imposed on the taxpayer a penalty with respect
to such failures in the amount determined under
subsection (c).
(2) Inclusion with return.--Any penalty imposed by
this section with respect to any month shall be
included with a taxpayer's return under chapter 1 for
the taxable year which includes such month.
(3) Payment of penalty.--If an individual with
respect to whom a penalty is imposed by this section
for any month--
(A) is a dependent (as defined in section
152) of another taxpayer for the other
taxpayer's taxable year including such month,
such other taxpayer shall be liable for such
penalty, or
(B) files a joint return for the taxable year
including such month, such individual and the
spouse of such individual shall be jointly
liable for such penalty.
(c) Amount of Penalty.--
(1) In general.--The amount of the penalty imposed by
this section on any taxpayer for any taxable year with
respect to failures described in subsection (b)(1)
shall be equal to the lesser of--
(A) the sum of the monthly penalty amounts
determined under paragraph (2) for months in
the taxable year during which 1 or more such
failures occurred, or
(B) an amount equal to the national average
premium for qualified health plans which have a
bronze level of coverage, provide coverage for
the applicable family size involved, and are
offered through Exchanges for plan years
beginning in the calendar year with or within
which the taxable year ends.
(2) Monthly penalty amounts.--For purposes of
paragraph (1)(A), the monthly penalty amount with
respect to any taxpayer for any month during which any
failure described in subsection (b)(1) occurred is an
amount equal to \1/12\ of the greater of the following
amounts:
(A) Flat dollar amount.--An amount equal to
the lesser of--
(i) the sum of the applicable dollar
amounts for all individuals with
respect to whom such failure occurred
during such month, or
(ii) 300 percent of the applicable
dollar amount (determined without
regard to paragraph (3)(C)) for the
calendar year with or within which the
taxable year ends.
(B) Percentage of income.--An amount equal to
the following percentage of the excess of the
taxpayer's household income for the taxable
year over the amount of gross income specified
in section 6012(a)(1) with respect to the
taxpayer for the taxable year:
(i) 1.0 percent for taxable years
beginning in 2014.
(ii) 2.0 percent for taxable years
beginning in 2015.
(iii) [2.5 percent] Zero percent for
taxable years beginning after 2015.
(3) Applicable dollar amount.--For purposes of
paragraph (1)--
(A) In general.--Except as provided in
subparagraphs (B) and (C), the applicable
dollar amount is [$695] $0.
(B) Phase in.--The applicable dollar amount
is $95 for 2014 and $325 for 2015.
(C) Special rule for individuals under age
18.--If an applicable individual has not
attained the age of 18 as of the beginning of a
month, the applicable dollar amount with
respect to such individual for the month shall
be equal to one-half of the applicable dollar
amount for the calendar year in which the month
occurs.
[(D) Indexing of amount.--In the case of any
calendar year beginning after 2016, the
applicable dollar amount shall be equal to
$695, increased by an amount equal to--
[(i) $695, multiplied by
[(ii) the cost-of-living adjustment
determined under section 1(f)(3) for
the calendar year, determined by
substituting ``calendar year 2015'' 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.]
(4) Terms relating to income and families.--For
purposes of this section--
(A) 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.
(B) Household income.--The term ``household
income'' means, with respect to any taxpayer
for any taxable year, 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.
(C) 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, and
(ii) any amount of interest received
or accrued by the taxpayer during the
taxable year which is exempt from tax.
(d) Applicable Individual.--For purposes of this section--
(1) In general.--The term ``applicable individual''
means, with respect to any month, an individual other
than an individual described in paragraph (2), (3), or
(4).
(2) Religious exemptions.--
(A) Religious conscience exemption.--Such
term shall not include any individual for any
month if such individual has in effect an
exemption under section 1311(d)(4)(H) of the
Patient Protection and Affordable Care Act
which certifies that such individual is--
(i) a member of a recognized
religious sect or division thereof
which is described in section
1402(g)(1), and
(ii) an adherent of established
tenets or teachings of such sect or
division as described in such section.
(B) Health care sharing ministry.--
(i) In general.--Such term shall not
include any individual for any month if
such individual is a member of a health
care sharing ministry for the month.
(ii) Health care sharing ministry.--
The term ``health care sharing
ministry'' means an organization--
(I) which is described in
section 501(c)(3) and is exempt
from taxation under section
501(a),
(II) members of which share a
common set of ethical or
religious beliefs and share
medical expenses among members
in accordance with those
beliefs and without regard to
the State in which a member
resides or is employed,
(III) members of which retain
membership even after they
develop a medical condition,
(IV) which (or a predecessor
of which) has been in existence
at all times since December 31,
1999, and medical expenses of
its members have been shared
continuously and without
interruption since at least
December 31, 1999, and
(V) which conducts an annual
audit which is performed by an
independent certified public
accounting firm in accordance
with generally accepted
accounting principles and which
is made available to the public
upon request.
(3) Individuals not lawfully present.--Such term
shall not include an individual for any month if for
the month the individual is not a citizen or national
of the United States or an alien lawfully present in
the United States.
(4) Incarcerated individuals.--Such term shall not
include an individual for any month if for the month
the individual is incarcerated, other than
incarceration pending the disposition of charges.
(e) Exemptions.--No penalty shall be imposed under subsection
(a) with respect to--
(1) Individuals who cannot afford coverage.--
(A) In general.--Any applicable individual
for any month if the applicable individual's
required contribution (determined on an annual
basis) for coverage for the month exceeds 8
percent of such individual's household income
for the taxable year described in section
1412(b)(1)(B) of the Patient Protection and
Affordable Care Act. For purposes of applying
this subparagraph, the taxpayer's household
income shall be increased by any exclusion from
gross income for any portion of the required
contribution made through a salary reduction
arrangement.
(B) Required contribution.--For purposes of
this paragraph, the term ``required
contribution'' means--
(i) in the case of an individual
eligible to purchase minimum essential
coverage consisting of coverage through
an eligible-employer-sponsored plan,
the portion of the annual premium which
would be paid by the individual
(without regard to whether paid through
salary reduction or otherwise) for
self-only coverage, or
(ii) in the case of an individual
eligible only to purchase minimum
essential coverage described in
subsection (f)(1)(C), the annual
premium for the lowest cost bronze plan
available in the individual market
through the Exchange in the State in
the rating area in which the individual
resides (without regard to whether the
individual purchased a qualified health
plan through the Exchange), reduced by
the amount of the credit allowable
under section 36B for the taxable year
(determined as if the individual was
covered by a qualified health plan
offered through the Exchange for the
entire taxable year).
(C) Special rules for individuals related to
employees.--For purposes of subparagraph
(B)(i), if an applicable individual is eligible
for minimum essential coverage through an
employer by reason of a relationship to an
employee, the determination under subparagraph
(A) shall be made by reference to required
contribution of the employee.
(D) Indexing.--In the case of plan years
beginning in any calendar year after 2014,
subparagraph (A) shall be applied by
substituting for ``8 percent'' the percentage
the Secretary of Health and Human Services
determines reflects the excess of the rate of
premium growth between the preceding calendar
year and 2013 over the rate of income growth
for such period.
(2) Taxpayers with income below filing threshold.--
Any applicable individual for any month during a
calendar year if the individual's household income for
the taxable year described in section 1412(b)(1)(B) of
the Patient Protection and Affordable Care Act is the
amount of gross income specified in section 6012(a)(1)
with respect to the taxpayer.
(3) Members of Indian tribes.--Any applicable
individual for any month during which the individual is
a member of an Indian tribe (as defined in section
45A(c)(6)).
(4) Months during short coverage gaps.--
(A) In general.--Any month the last day of
which occurred during a period in which the
applicable individual was not covered by
minimum essential coverage for a continuous
period of less than 3 months.
(B) Special rules.--For purposes of applying
this paragraph--
(i) the length of a continuous period
shall be determined without regard to
the calendar years in which months in
such period occur,
(ii) if a continuous period is
greater than the period allowed under
subparagraph (A), no exception shall be
provided under this paragraph for any
month in the period, and
(iii) if there is more than 1
continuous period described in
subparagraph (A) covering months in a
calendar year, the exception provided
by this paragraph shall only apply to
months in the first of such periods.
The Secretary shall prescribe rules for the
collection of the penalty imposed by this
section in cases where continuous periods
include months in more than 1 taxable year.
(5) Hardships.--Any applicable individual who for any
month is determined by the Secretary of Health and
Human Services under section 1311(d)(4)(H) to have
suffered a hardship with respect to the capability to
obtain coverage under a qualified health plan.
(f) Minimum Essential Coverage.--For purposes of this
section--
(1) In general.--The term ``minimum essential
coverage'' means any of the following:
(A) Government sponsored programs.--Coverage
under--
(i) the Medicare program under part A
of title XVIII of the Social Security
Act,
(ii) the Medicaid program under title
XIX of the Social Security Act,
(iii) the CHIP program under title
XXI of the Social Security Act,
(iv) medical coverage under chapter
55 of title 10, United States Code,
including coverage under the TRICARE
program;
(v) a health care program under
chapter 17 or 18 of title 38, United
States Code, as determined by the
Secretary of Veterans Affairs, in
coordination with the Secretary of
Health and Human Services and the
Secretary,
(vi) a health plan under section
2504(e) of title 22, United States Code
(relating to Peace Corps volunteers);
or
(vii) the Nonappropriated Fund Health
Benefits Program of the Department of
Defense, established under section 349
of the National Defense Authorization
Act for Fiscal Year 1995 (Public Law
103-337; 10 U.S.C. 1587 note).
(B) Employer-sponsored plan.--Coverage under
an eligible employer-sponsored plan.
(C) Plans in the individual market.--Coverage
under a health plan offered in the individual
market within a State.
(D) Grandfathered health plan.--Coverage
under a grandfathered health plan.
(E) Other coverage.--Such other health
benefits coverage, such as a State health
benefits risk pool, as the Secretary of Health
and Human Services, in coordination with the
Secretary, recognizes for purposes of this
subsection.
(2) Eligible employer-sponsored plan.--The term
``eligible employer-sponsored plan'' means, with
respect to any employee, a group health plan or group
health insurance coverage offered by an employer to the
employee which is--
(A) a governmental plan (within the meaning
of section 2791(d)(8) of the Public Health
Service Act), or
(B) any other plan or coverage offered in the
small or large group market within a State.
Such term shall include a grandfathered health plan
described in paragraph (1)(D) offered in a group
market.
(3) Excepted benefits not treated as minimum
essential coverage.--The term ``minimum essential
coverage'' shall not include health insurance coverage
which consists of coverage of excepted benefits--
(A) described in paragraph (1) of subsection
(c) of section 2791 of the Public Health
Service Act; or
(B) described in paragraph (2), (3), or (4)
of such subsection if the benefits are provided
under a separate policy, certificate, or
contract of insurance.
(4) Individuals residing outside United States or
residents of territories.--Any applicable individual
shall be treated as having minimum essential coverage
for any month--
(A) if such month occurs during any period
described in subparagraph (A) or (B) of section
911(d)(1) which is applicable to the
individual, or
(B) if such individual is a bona fide
resident of any possession of the United States
(as determined under section 937(a)) for such
month.
(5) Insurance-related terms.--Any term used in this
section which is also used in title I of the Patient
Protection and Affordable Care Act shall have the same
meaning as when used in such title.
(g) Administration and Procedure.--
(1) In general.--The penalty provided by this section
shall be paid upon notice and demand by the Secretary,
and except as provided in paragraph (2), shall be
assessed and collected in the same manner as an
assessable penalty under subchapter B of chapter 68.
(2) Special rules.--Notwithstanding any other
provision of law--
(A) Waiver of criminal penalties.--In the
case of any failure by a taxpayer to timely pay
any penalty imposed by this section, such
taxpayer shall not be subject to any criminal
prosecution or penalty with respect to such
failure.
(B) Limitations on liens and levies.--The
Secretary shall not--
(i) file notice of lien with respect
to any property of a taxpayer by reason
of any failure to pay the penalty
imposed by this section, or
(ii) levy on any such property with
respect to such failure.
* * * * * * *
[CHAPTER 49--COSMETIC SERVICES
[SEC. 5000B. IMPOSITION OF TAX ON INDOOR TANNING SERVICES.
[(a) In General.--There is hereby imposed on any indoor
tanning service a tax equal to 10 percent of the amount paid
for such service (determined without regard to this section),
whether paid by insurance or otherwise.
[(b) Indoor Tanning Service.--For purposes of this section--
[(1) In general.--The term ``indoor tanning service''
means a service employing any electronic product
designed to incorporate 1 or more ultraviolet lamps and
intended for the irradiation of an individual by
ultraviolet radiation, with wavelengths in air between
200 and 400 nanometers, to induce skin tanning.
[(2) Exclusion of phototherapy services.--Such term
does not include any phototherapy service performed by
a licensed medical professional.
[(c) Payment of Tax.--
[(1) In general.--The tax imposed by this section
shall be paid by the individual on whom the service is
performed.
[(2) Collection.--Every person receiving a payment
for services on which a tax is imposed under subsection
(a) shall collect the amount of the tax from the
individual on whom the service is performed and remit
such tax quarterly to the Secretary at such time and in
such manner as provided by the Secretary.
[(3) Secondary liability.--Where any tax imposed by
subsection (a) is not paid at the time payments for
indoor tanning services are made, then to the extent
that such tax is not collected, such tax shall be paid
by the person who performs the service.]
* * * * * * *
Subtitle F--Procedure and Administration
* * * * * * *
CHAPTER 61--INFORMATION AND RETURNS
* * * * * * *
Subchapter A--Returns and Records
* * * * * * *
PART III--INFORMATION RETURNS
* * * * * * *
Subpart B--Information Concerning Transactions with Other Persons
Sec. 6041. Information at source.
* * * * * * *
Sec. 6050X. Returns by health insurance providers relating to health
insurance coverage credit.
* * * * * * *
SEC. 6050X. RETURNS BY HEALTH INSURANCE PROVIDERS RELATING TO HEALTH
INSURANCE COVERAGE CREDIT.
(a) Requirement of Reporting.--Every person who provides
eligible health insurance for any month of any calendar year
with respect to any individual shall, at such time as the
Secretary may prescribe, make the return described in
subsection (b) with respect to each such individual. With
respect to any individual with respect to whom payments under
section 7529 are made by the Secretary, the reporting under
subsection (b) shall be made on a monthly basis.
(b) Form and Manner of Returns.--A return is described in
this subsection if such return--
(1) is in such form as the Secretary may prescribe,
and
(2) contains, with respect to each policy of eligible
health insurance--
(A) the name, address, and TIN of each
individual covered under such policy,
(B) the premiums paid with respect to such
policy,
(C) the amount of advance payments made on
behalf of the individual under section 7529,
(D) the months during which such health
insurance is provided to the individual,
(E) whether such policy constitutes a high
deductible health plan (as defined in section
223(c)(2)), and
(F) such other information as the Secretary
may prescribe.
(c) Statements to Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a
return under subsection (a) shall furnish to each individual
whose name is required to be set forth in such return a written
statement showing--
(1) the name and address of the person required to
make such return and the phone number of the
information contact for such person, and
(2) the information required to be shown on the
return with respect to such individual.
The written statement required under the preceding sentence
shall be furnished on or before January 31 of the year
following the calendar year to which such statement relates.
(d) Definitions.--For purposes of this section, terms used in
this section which are also used in section 36C shall have the
same meaning as when used in section 36C.
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), [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[.], and
(16) each month with respect to which the employee is
eligible for other specified coverage (as defined in
section 36C(g)) in connection with employment with the
employer.
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).
* * * * * * *
Subpart D--Information Regarding Health Insurance Coverage
SEC. 6055. REPORTING OF HEALTH INSURANCE COVERAGE.
(a) In General.--Every person who provides minimum essential
coverage to an individual during a calendar year shall, at such
time as the Secretary may prescribe, make a return described in
subsection (b).
(b) Form and Manner of Return.--
(1) In general.--A return is described in this
subsection if such return--
(A) is in such form as the Secretary may
prescribe, and
(B) contains--
(i) the name, address and TIN of the
primary insured and the name and TIN of
each other individual obtaining
coverage under the policy,
(ii) the dates during which such
individual was covered under minimum
essential coverage during the calendar
year,
(iii) in the case of minimum
essential coverage which consists of
health insurance coverage, information
concerning--
(I) whether or not the
coverage is a qualified health
plan offered through an
Exchange established under
section 1311 of the Patient
Protection and Affordable Care
Act, and
(II) in the case of a
qualified health plan, the
amount (if any) of any advance
payment under section 1412 of
the Patient Protection and
Affordable Care Act of any
cost-sharing reduction under
section 1402 of such Act or of
any premium tax credit under
section 36B with respect to
such coverage, and
(iv) such other information as the
Secretary may require.
(2) Information relating to employer-provided
coverage.--If minimum essential coverage provided to an
individual under subsection (a) consists of health
insurance coverage of a health insurance issuer
provided through a group health plan of an employer, a
return described in this subsection shall include--
(A) the name, address, and employer
identification number of the employer
maintaining the plan,
(B) the portion of the premium (if any)
required to be paid by the employer, and
(C) if the health insurance coverage is a
qualified health plan in the small group market
offered through an Exchange, such other
information as the Secretary may require for
administration of the credit under section 45R
(relating to credit for employee health
insurance expenses of small employers).
(3) Information relating to off-exchange premium
credit eligible coverage.--If minimum essential
coverage provided to an individual under subsection (a)
consists of a qualified health plan (as defined in
section 36B(c)(3)) which is not enrolled in through an
Exchange established under title I of the Patient
Protection and Affordable Care Act, a return described
in this subsection shall include--
(A) a statement that such plan is a qualified
health plan (as defined in section 36B(c)(3)),
(B) the premiums paid with respect to such
coverage,
(C) the months during which such coverage is
provided to the individual,
(D) the adjusted monthly premium for the
applicable second lowest cost silver plan (as
defined in section 36B(b)(3)) for each such
month with respect to such individual, and
(E) such other information as the Secretary
may prescribe.
This paragraph shall not apply with respect to coverage
provided for any month beginning after December 31,
2019.
(c) Statements to be Furnished to Individuals With Respect to
Whom Information Is Reported.--
(1) In general.--Every person required to make a
return under subsection (a) shall furnish to each
individual whose name is required to be set forth in
such return a written statement showing--
(A) the name and address of the person
required to make such return and the phone
number of the information contact for such
person, and
(B) the information required to be shown on
the return with respect to such individual.
(2) Time for furnishing statements.--The written
statement required under paragraph (1) shall be
furnished on or before January 31 of the year following
the calendar year for which the return under subsection
(a) was required to be made.
(d) Coverage Provided by Governmental Units.--In the case of
coverage provided by any governmental unit or any agency or
instrumentality thereof, the officer or employee who enters
into the agreement to provide such coverage (or the person
appropriately designated for purposes of this section) shall
make the returns and statements required by this section.
(e) Minimum Essential Coverage.--For purposes of this
section, the term ``minimum essential coverage'' has the
meaning given such term by section 5000A(f).
* * * * * * *
Subchapter B--Miscellaneous Provisions
* * * * * * *
SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN
INFORMATION.
(a) General Rule.--Returns and return information shall be
confidential, and except as authorized by this title--
(1) no officer or employee of the United States,
(2) no officer or employee of any State, any local
law enforcement agency receiving information under
subsection (i)(1)(C) or (7)(A), any local child support
enforcement agency, or any local agency administering a
program listed in subsection (l)(7)(D) who has or had
access to returns or return information under this
section or section 6104(c), and
(3) no other person (or officer or employee thereof)
who has or had access to returns or return information
under subsection (e)(1)(D)(iii), subsection (k)(10),
paragraph (6), (10), (12), (16), (19), (20), or (21) of
subsection (l), paragraph (2) or (4)(B) of subsection
(m), or subsection (n),
shall disclose any return or return information obtained by him
in any manner in connection with his service as such an officer
or an employee or otherwise or under the provisions of this
section. For purposes of this subsection, the term ``officer or
employee'' includes a former officer or employee.
(b) Definitions.--For purposes of this section--
(1) Return.--The term ``return'' means any tax or
information return, declaration of estimated tax, or
claim for refund required by, or provided for or
permitted under, the provisions of this title which is
filed with the Secretary by, on behalf of, or with
respect to any person, and any amendment or supplement
thereto, including supporting schedules, attachments,
or lists which are supplemental to, or part of, the
return so filed.
(2) Return information.--The term ``return
information'' means--
(A) a taxpayer's identity, the nature,
source, or amount of his income, payments,
receipts, deductions, exemptions, credits,
assets, liabilities, net worth, tax liability,
tax withheld, deficiencies, overassessments, or
tax payments, whether the taxpayer's return
was, is being, or will be examined or subject
to other investigation or processing, or any
other data, received by, recorded by, prepared
by, furnished to, or collected by the Secretary
with respect to a return or with respect to the
determination of the existence, or possible
existence, of liability (or the amount thereof)
of any person under this title for any tax,
penalty, interest, fine, forfeiture, or other
imposition, or offense,
(B) any part of any written determination or
any background file document relating to such
written determination (as such terms are
defined in section 6110(b)) which is not open
to public inspection under section 6110,
(C) any advance pricing agreement entered
into by a taxpayer and the Secretary and any
background information related to such
agreement or any application for an advance
pricing agreement, and
(D) any agreement under section 7121, and any
similar agreement, and any background
information related to such an agreement or
request for such an agreement,
but such term does not include data in a form which
cannot be associated with, or otherwise identify,
directly or indirectly, a particular taxpayer. Nothing
in the preceding sentence, or in any other provision of
law, shall be construed to require the disclosure of
standards used or to be used for the selection of
returns for examination, or data used or to be used for
determining such standards, if the Secretary determines
that such disclosure will seriously impair assessment,
collection, or enforcement under the internal revenue
laws.
(3) Taxpayer return information.--The term ``taxpayer
return information'' means return information as
defined in paragraph (2) which is filed with, or
furnished to, the Secretary by or on behalf of the
taxpayer to whom such return information relates.
(4) Tax administration.--The term ``tax
administration''--
(A) means--
(i) the administration, management,
conduct, direction, and supervision of
the execution and application of the
internal revenue laws or related
statutes (or equivalent laws and
statutes of a State) and tax
conventions to which the United States
is a party, and
(ii) the development and formulation
of Federal tax policy relating to
existing or proposed internal revenue
laws, related statutes, and tax
conventions, and
(B) includes assessment, collection,
enforcement, litigation, publication, and
statistical gathering functions under such
laws, statutes, or conventions.
(5) State.--
(A) In general.--The term ``State'' means--
(i) any of the 50 States, the
District of Columbia, the Commonwealth
of Puerto Rico, the Virgin Islands,
Guam, American Samoa, and the
Commonwealth of the Northern Mariana
Islands,
(ii) for purposes of subsections
(a)(2), (b)(4), (d)(1), (h)(4), and
(p), any municipality--
(I) with a population in
excess of 250,000 (as
determined under the most
recent decennial United States
census data available),
(II) which imposes a tax on
income or wages, and
(III) with which the
Secretary (in his sole
discretion) has entered into an
agreement regarding disclosure,
and
(iii) for purposes of subsections
(a)(2), (b)(4), (d)(1), (h)(4), and
(p), any governmental entity--
(I) which is formed and
operated by a qualified group
of municipalities, and
(II) with which the Secretary
(in his sole discretion) has
entered into an agreement
regarding disclosure.
(B) Regional income tax agencies.--For
purposes of subparagraph (A)(iii)--
(i) Qualified group of
municipalities.--The term ``qualified
group of municipalities'' means, with
respect to any governmental entity, 2
or more municipalities--
(I) each of which imposes a
tax on income or wages,
(II) each of which, under the
authority of a State statute,
administers the laws relating
to the imposition of such taxes
through such entity, and
(III) which collectively have
a population in excess of
250,000 (as determined under
the most recent decennial
United States census data
available).
(ii) References to state law, etc.--
For purposes of applying subparagraph
(A)(iii) to the subsections referred to
in such subparagraph, any reference in
such subsections to State law,
proceedings, or tax returns shall be
treated as references to the law,
proceedings, or tax returns, as the
case may be, of the municipalities
which form and operate the governmental
entity referred to in such
subparagraph.
(iii) Disclosure to contractors and
other agents.--Notwithstanding any
other provision of this section, no
return or return information shall be
disclosed to any contractor or other
agent of a governmental entity referred
to in subparagraph (A)(iii) unless such
entity, to the satisfaction of the
Secretary--
(I) has requirements in
effect which require each such
contractor or other agent which
would have access to returns or
return information to provide
safeguards (within the meaning
of subsection (p)(4)) to
protect the confidentiality of
such returns or return
information,
(II) agrees to conduct an on-
site review every 3 years (or a
mid-point review in the case of
contracts or agreements of less
than 3 years in duration) of
each contractor or other agent
to determine compliance with
such requirements,
(III) submits the findings of
the most recent review
conducted under subclause (II)
to the Secretary as part of the
report required by subsection
(p)(4)(E), and
(IV) certifies to the
Secretary for the most recent
annual period that such
contractor or other agent is in
compliance with all such
requirements.
The certification required by subclause
(IV) shall include the name and address
of each contractor and other agent, a
description of the contract or
agreement with such contractor or other
agent, and the duration of such
contract or agreement. The requirements
of this clause shall not apply to
disclosures pursuant to subsection (n)
for purposes of Federal tax
administration and a rule similar to
the rule of subsection (p)(8)(B) shall
apply for purposes of this clause.
(6) Taxpayer identity.--The term ``taxpayer
identity'' means the name of a person with respect to
whom a return is filed, his mailing address, his
taxpayer identifying number (as described in section
6109), or a combination thereof.
(7) Inspection.--The terms ``inspected'' and
``inspection'' mean any examination of a return or
return information.
(8) Disclosure.--The term ``disclosure'' means the
making known to any person in any manner whatever a
return or return information.
(9) Federal agency.--The term ``Federal agency''
means an agency within the meaning of section 551(1) of
title 5, United States Code.
(10) Chief executive officer.--The term ``chief
executive officer'' means, with respect to any
municipality, any elected official and the chief
official (even if not elected) of such municipality.
(11) Terrorist incident, threat, or activity.--The
term ``terrorist incident, threat, or activity'' means
an incident, threat, or activity involving an act of
domestic terrorism (as defined in section 2331(5) of
title 18, United States Code) or international
terrorism (as defined in section 2331(1) of such
title).
(c) Disclosure of Returns and Return Information to Designee
of Taxpayer.--The Secretary may, subject to such requirements
and conditions as he may prescribe by regulations, disclose the
return of any taxpayer, or return information with respect to
such taxpayer, to such person or persons as the taxpayer may
designate in a request for or consent to such disclosure, or to
any other person at the taxpayer's request to the extent
necessary to comply with a request for information or
assistance made by the taxpayer to such other person. However,
return information shall not be disclosed to such person or
persons if the Secretary determines that such disclosure would
seriously impair Federal tax administration.
(d) Disclosure to State Tax Officials and State and Local Law
Enforcement Agencies.--
(1) In general.--Returns and return information with
respect to taxes imposed by chapters 1, 2, 6, 11, 12,
21, 23, 24, 31, 32, 44, 51, and 52 and subchapter D of
chapter 36 shall be open to inspection by, or
disclosure to, any State agency, body, or commission,
or its legal representative, which is charged under the
laws of such State with responsibility for the
administration of State tax laws for the purpose of,
and only to the extent necessary in, the administration
of such laws, including any procedures with respect to
locating any person who may be entitled to a refund.
Such inspection shall be permitted, or such disclosure
made, only upon written request by the head of such
agency, body, or commission, and only to the
representatives of such agency, body, or commission
designated in such written request as the individuals
who are to inspect or to receive the returns or return
information on behalf of such agency, body, or
commission. Such representatives shall not include any
individual who is the chief executive officer of such
State or who is neither an employee or legal
representative of such agency, body, or commission nor
a person described in subsection (n). However, such
return information shall not be disclosed to the extent
that the Secretary determines that such disclosure
would identify a confidential informant or seriously
impair any civil or criminal tax investigation.
(2) Disclosure to State audit agencies.--
(A) In general.--Any returns or return
information obtained under paragraph (1) by any
State agency, body, or commission may be open
to inspection by, or disclosure to, officers
and employees of the State audit agency for the
purpose of, and only to the extent necessary
in, making an audit of the State agency, body,
or commission referred to in paragraph (1).
(B) State audit agency.--For purposes of
subparagraph (A), the term ``State audit
agency'' means any State agency, body, or
commission which is charged under the laws of
the State with the responsibility of auditing
State revenues and programs.
(3) Exception for reimbursement under section 7624.--
Nothing in this section shall be construed to prevent
the Secretary from disclosing to any State or local law
enforcement agency which may receive a payment under
section 7624 the amount of the recovered taxes with
respect to which such a payment may be made.
(4) Availability and use of death information.--
(A) In general.--No returns or return
information may be disclosed under paragraph
(1) to any agency, body, or commission of any
State (or any legal representative thereof)
during any period during which a contract
meeting the requirements of subparagraph (B) is
not in effect between such State and the
Secretary of Health and Human Services.
(B) Contractual requirements.--A contract
meets the requirements of this subparagraph
if--
(i) such contract requires the State
to furnish the Secretary of Health and
Human Services information concerning
individuals with respect to whom death
certificates (or equivalent documents
maintained by the State or any
subdivision thereof) have been
officially filed with it, and
(ii) such contract does not include
any restriction on the use of
information obtained by such Secretary
pursuant to such contract, except that
such contract may provide that such
information is only to be used by the
Secretary (or any other Federal agency)
for purposes of ensuring that Federal
benefits or other payments are not
erroneously paid to deceased
individuals.
Any information obtained by the Secretary of
Health and Human Services under such a contract
shall be exempt from disclosure under section
552 of title 5, United States Code, and from
the requirements of section 552a of such title
5.
(C) Special exception.--The provisions of
subparagraph (A) shall not apply to any State
which on July 1, 1993, was not, pursuant to a
contract, furnishing the Secretary of Health
and Human Services information concerning
individuals with respect to whom death
certificates (or equivalent documents
maintained by the State or any subdivision
thereof) have been officially filed with it.
(5) Disclosure for combined employment tax
reporting.--
(A) In general.--The Secretary may disclose
taxpayer identity information and signatures to
any agency, body, or commission of any State
for the purpose of carrying out with such
agency, body, or commission a combined Federal
and State employment tax reporting program
approved by the Secretary. Subsections (a)(2)
and (p)(4) and sections 7213 and 7213A shall
not apply with respect to disclosures or
inspections made pursuant to this paragraph.
(B) Termination.--The Secretary may not make
any disclosure under this paragraph after
December 31, 2007.
(6) Limitation on disclosure regarding regional
income tax agencies treated as States.--For purposes of
paragraph (1), inspection by or disclosure to an entity
described in subsection (b)(5)(A)(iii) shall be for the
purpose of, and only to the extent necessary in, the
administration of the laws of the member municipalities
in such entity relating to the imposition of a tax on
income or wages. Such entity may not redisclose any
return or return information received pursuant to
paragraph (1) to any such member municipality.
(e) Disclosure to Persons Having Material Interest.--
(1) In general.--The return of a person shall, upon
written request, be open to inspection by or disclosure
to--
(A) in the case of the return of an
individual--
(i) that individual,
(ii) the spouse of that individual if
the individual and such spouse have
signified their consent to consider a
gift reported on such return as made
one-half by him and one-half by the
spouse pursuant to the provisions of
section 2513; or
(iii) the child of that individual
(or such child's legal representative)
to the extent necessary to comply with
the provisions of section 1(g);
(B) in the case of an income tax return filed
jointly, either of the individuals with respect
to whom the return is filed;
(C) in the case of the return of a
partnership, any person who was a member of
such partnership during any part of the period
covered by the return;
(D) in the case of the return of a
corporation or a subsidiary thereof--
(i) any person designated by
resolution of its board of directors or
other similar governing body,
(ii) any officer or employee of such
corporation upon written request signed
by any principal officer and attested
to by the secretary or other officer,
(iii) any bona fide shareholder of
record owning 1 percent or more of the
outstanding stock of such corporation,
(iv) if the corporation was an S
corporation, any person who was a
shareholder during any part of the
period covered by such return during
which an election under section 1362(a)
was in effect, or
(v) if the corporation has been
dissolved, any person authorized by
applicable State law to act for the
corporation or any person who the
Secretary finds to have a material
interest which will be affected by
information contained therein;
(E) in the case of the return of an estate--
(i) the administrator, executor, or
trustee of such estate, and
(ii) any heir at law, next of kin, or
beneficiary under the will, of the
decedent, but only if the Secretary
finds that such heir at law, next of
kin, or beneficiary has a material
interest which will be affected by
information contained therein; and
(F) in the case of the return of a trust--
(i) the trustee or trustees, jointly
or separately, and
(ii) any beneficiary of such trust,
but only if the Secretary finds that
such beneficiary has a material
interest which will be affected by
information contained therein.
(2) Incompetency.--If an individual described in
paragraph (1) is legally incompetent, the applicable
return shall, upon written request, be open to
inspection by or disclosure to the committee, trustee,
or guardian of his estate.
(3) Deceased individuals.--The return of a decedent
shall, upon written request, be open to inspection by
or disclosure to--
(A) the administrator, executor, or trustee
of his estate, and
(B) any heir at law, next of kin, or
beneficiary under the will, of such decedent,
or a donee of property, but only if the
Secretary finds that such heir at law, next of
kin, beneficiary, or donee has a material
interest which will be affected by information
contained therein.
(4) Title 11 cases and receivership proceedings.--
If--
(A) there is a trustee in a title 11 case in
which the debtor is the person with respect to
whom the return is filed, or
(B) substantially all of the property of the
person with respect to whom the return is filed
is in the hands of a receiver,
such return or returns for prior years of such person
shall, upon written request, be open to inspection by
or disclosure to such trustee or receiver, but only if
the Secretary finds that such trustee or receiver, in
his fiduciary capacity, has a material interest which
will be affected by information contained therein.
(5) Individual's title 11 case.--
(A) In general.--In any case to which section
1398 applies (determined without regard to
section 1398(b)(1)), any return of the debtor
for the taxable year in which the case
commenced or any preceding taxable year shall,
upon written request, be open to inspection by
or disclosure to the trustee in such case.
(B) Return of estate available to debtor.--
Any return of an estate in a case to which
section 1398 applies shall, upon written
request, be open to inspection by or disclosure
to the debtor in such case.
(C) Special rule for involuntary cases.--In
an involuntary case, no disclosure shall be
made under subparagraph (A) until the order for
relief has been entered by the court having
jurisdiction of such case unless such court
finds that such disclosure is appropriate for
purposes of determining whether an order for
relief should be entered.
(6) Attorney in fact.--Any return to which this
subsection applies shall, upon written request, also be
open to inspection by or disclosure to the attorney in
fact duly authorized in writing by any of the persons
described in paragraph (1), (2), (3), (4), (5), (8), or
(9) to inspect the return or receive the information on
his behalf, subject to the conditions provided in such
paragraphs.
(7) Return information.--Return information with
respect to any taxpayer may be open to inspection by or
disclosure to any person authorized by this subsection
to inspect any return of such taxpayer if the Secretary
determines that such disclosure would not seriously
impair Federal tax administration.
(8) Disclosure of collection activities with respect
to joint return.--If any deficiency of tax with respect
to a joint return is assessed and the individuals
filing such return are no longer married or no longer
reside in the same household, upon request in writing
by either of such individuals, the Secretary shall
disclose in writing to the individual making the
request whether the Secretary has attempted to collect
such deficiency from such other individual, the general
nature of such collection activities, and the amount
collected. The preceding sentence shall not apply to
any deficiency which may not be collected by reason of
section 6502.
(9) Disclosure of certain information where more than
1 person subject to penalty under section 6672.--If the
Secretary determines that a person is liable for a
penalty under section 6672(a) with respect to any
failure, upon request in writing of such person, the
Secretary shall disclose in writing to such person--
(A) the name of any other person whom the
Secretary has determined to be liable for such
penalty with respect to such failure, and
(B) whether the Secretary has attempted to
collect such penalty from such other person,
the general nature of such collection
activities, and the amount collected.
(10) Limitation on certain disclosures under this
subsection.--In the case of an inspection or disclosure
under this subsection relating to the return of a
partnership, S corporation, trust, or an estate, the
information inspected or disclosed shall not include
any supporting schedule, attachment, or list which
includes the taxpayer identity information of a person
other than the entity making the return or the person
conducting the inspection or to whom the disclosure is
made.
(11) Disclosure of information regarding status of
investigation of violation of this section.--In the
case of a person who provides to the Secretary
information indicating a violation of section 7213,
7213A, or 7214 with respect to any return or return
information of such person, the Secretary may disclose
to such person (or such person's designee)--
(A) whether an investigation based on the
person's provision of such information has been
initiated and whether it is open or closed,
(B) whether any such investigation
substantiated such a violation by any
individual, and
(C) whether any action has been taken with
respect to such individual (including whether a
referral has been made for prosecution of such
individual).
(f) Disclosure to Committees of Congress.--
(1) Committee on Ways and Means, Committee on
Finance, and Joint Committee on Taxation.--Upon written
request from the chairman of the Committee on Ways and
Means of the House of Representatives, the chairman of
the Committee on Finance of the Senate, or the chairman
of the Joint Committee on Taxation, the Secretary shall
furnish such committee with any return or return
information specified in such request, except that any
return or return information which can be associated
with, or otherwise identify, directly or indirectly, a
particular taxpayer shall be furnished to such
committee only when sitting in closed executive session
unless such taxpayer otherwise consents in writing to
such disclosure.
(2) Chief of Staff of Joint Committee on Taxation.--
Upon written request by the Chief of Staff of the Joint
Committee on Taxation, the Secretary shall furnish him
with any return or return information specified in such
request. Such Chief of Staff may submit such return or
return information to any committee described in
paragraph (1), except that any return or return
information which can be associated with, or otherwise
identify, directly or indirectly, a particular taxpayer
shall be furnished to such committee only when sitting
in closed executive session unless such taxpayer
otherwise consents in writing to such disclosure.
(3) Other committees.--Pursuant to an action by, and
upon written request by the chairman of, a committee of
the Senate or the House of Representatives (other than
a committee specified in paragraph (1)) specially
authorized to inspect any return or return information
by a resolution of the Senate or the House of
Representatives or, in the case of a joint committee
(other than the joint committee specified in paragraph
(1)) by concurrent resolution, the Secretary shall
furnish such committee, or a duly authorized and
designated subcommittee thereof, sitting in closed
executive session, with any return or return
information which such resolution authorizes the
committee or subcommittee to inspect. Any resolution
described in this paragraph shall specify the purpose
for which the return or return information is to be
furnished and that such information cannot reasonably
be obtained from any other source.
(4) Agents of committees and submission of
information to Senate or House of Representatives.--
(A) Committees described in paragraph (1).--
Any committee described in paragraph (1) or the
Chief of Staff of the Joint Committee on
Taxation shall have the authority, acting
directly, or by or through such examiners or
agents as the chairman of such committee or
such chief of staff may designate or appoint,
to inspect returns and return information at
such time and in such manner as may be
determined by such chairman or chief of staff.
Any return or return information obtained by or
on behalf of such committee pursuant to the
provisions of this subsection may be submitted
by the committee to the Senate or the House of
Representatives, or to both. The Joint
Committee on Taxation may also submit such
return or return information to any other
committee described in paragraph (1), except
that any return or return information which can
be associated with, or otherwise identify,
directly or indirectly, a particular taxpayer
shall be furnished to such committee only when
sitting in closed executive session unless such
taxpayer otherwise consents in writing to such
disclosure.
(B) Other committees.--Any committee or
subcommittee described in paragraph (3) shall
have the right, acting directly, or by or
through no more than four examiners or agents,
designated or appointed in writing in equal
numbers by the chairman and ranking minority
member of such committee or subcommittee, to
inspect returns and return information at such
time and in such manner as may be determined by
such chairman and ranking minority member. Any
return or return information obtained by or on
behalf of such committee or subcommittee
pursuant to the provisions of this subsection
may be submitted by the committee to the Senate
or the House of Representatives, or to both,
except that any return or return information
which can be associated with, or otherwise
identify, directly or indirectly, a particular
taxpayer, shall be furnished to the Senate or
the House of Representatives only when sitting
in closed executive session unless such
taxpayer otherwise consents in writing to such
disclosure.
(5) Disclosure by whistleblower.--Any person who
otherwise has or had access to any return or return
information under this section may disclose such return
or return information to a committee referred to in
paragraph (1) or any individual authorized to receive
or inspect information under paragraph (4)(A) if such
person believes such return or return information may
relate to possible misconduct, maladministration, or
taxpayer abuse.
(g) Disclosure to President and Certain Other Persons.--
(1) In general.--Upon written request by the
President, signed by him personally, the Secretary
shall furnish to the President, or to such employee or
employees of the White House Office as the President
may designate by name in such request, a return or
return information with respect to any taxpayer named
in such request. Any such request shall state--
(A) the name and address of the taxpayer
whose return or return information is to be
disclosed,
(B) the kind of return or return information
which is to be disclosed,
(C) the taxable period or periods covered by
such return or return information, and
(D) the specific reason why the inspection or
disclosure is requested.
(2) Disclosure of return information as to
Presidential appointees and certain other Federal
Government appointees.--The Secretary may disclose to a
duly authorized representative of the Executive Office
of the President or to the head of any Federal agency,
upon written request by the President or head of such
agency, or to the Federal Bureau of Investigation on
behalf of and upon written request by the President or
such head, return information with respect to an
individual who is designated as being under
consideration for appointment to a position in the
executive or judicial branch of the Federal Government.
Such return information shall be limited to whether
such individual--
(A) has filed returns with respect to the
taxes imposed under chapter 1 for not more than
the immediately preceding 3 years;
(B) has failed to pay any tax within 10 days
after notice and demand, or has been assessed
any penalty under this title for negligence, in
the current year or immediately preceding 3
years;
(C) has been or is under investigation for
possible criminal offenses under the internal
revenue laws and the results of any such
investigation; or
(D) has been assessed any civil penalty under
this title for fraud.
Within 3 days of the receipt of any request for any
return information with respect to any individual under
this paragraph, the Secretary shall notify such
individual in writing that such information has been
requested under the provisions of this paragraph.
(3) Restriction on disclosure.--The employees to whom
returns and return information are disclosed under this
subsection shall not disclose such returns and return
information to any other person except the President or
the head of such agency without the personal written
direction of the President or the head of such agency.
(4) Restriction on disclosure to certain employees.--
Disclosure of returns and return information under this
subsection shall not be made to any employee whose
annual rate of basic pay is less than the annual rate
of basic pay specified for positions subject to section
5316 of title 5, United States Code.
(5) Reporting requirements.--Within 30 days after the
close of each calendar quarter, the President and the
head of any agency requesting returns and return
information under this subsection shall each file a
report with the Joint Committee on Taxation setting
forth the taxpayers with respect to whom such requests
were made during such quarter under this subsection,
the returns or return information involved, and the
reasons for such requests. The President shall not be
required to report on any request for returns and
return information pertaining to an individual who was
an officer or employee of the executive branch of the
Federal Government at the time such request was made.
Reports filed pursuant to this paragraph shall not be
disclosed unless the Joint Committee on Taxation
determines that disclosure thereof (including
identifying details) would be in the national interest.
Such reports shall be maintained by the Joint Committee
on Taxation for a period not exceeding 2 years unless,
within such period, the Joint Committee on Taxation
determines that a disclosure to the Congress is
necessary.
(h) Disclosure to Certain Federal Officers and Employees for
Purposes of Tax Administration, Etc..--
(1) Department of the Treasury.--Returns and return
information shall, without written request, be open to
inspection by or disclosure to officers and employees
of the Department of the Treasury whose official duties
require such inspection or disclosure for tax
administration purposes.
(2) Department of Justice.--In a matter involving tax
administration, a return or return information shall be
open to inspection by or disclosure to officers and
employees of the Department of Justice (including
United States attorneys) personally and directly
engaged in, and solely for their use in, any proceeding
before a Federal grand jury or preparation for any
proceeding (or investigation which may result in such a
proceeding) before a Federal grand jury or any Federal
or State court, but only if--
(A) the taxpayer is or may be a party to the
proceeding, or the proceeding arose out of, or
in connection with, determining the taxpayer's
civil or criminal liability, or the collection
of such civil liability in respect of any tax
imposed under this title;
(B) the treatment of an item reflected on
such return is or may be related to the
resolution of an issue in the proceeding or
investigation; or
(C) such return or return information relates
or may relate to a transactional relationship
between a person who is or may be a party to
the proceeding and the taxpayer which affects,
or may affect, the resolution of an issue in
such proceeding or investigation.
(3) Form of request.--In any case in which the
Secretary is authorized to disclose a return or return
information to the Department of Justice pursuant to
the provisions of this subsection--
(A) if the Secretary has referred the case to
the Department of Justice, or if the proceeding
is authorized by subchapter B of chapter 76,
the Secretary may make such disclosure on his
own motion, or
(B) if the Secretary receives a written
request from the Attorney General, the Deputy
Attorney General, or an Assistant Attorney
General for a return of, or return information
relating to, a person named in such request and
setting forth the need for the disclosure, the
Secretary shall disclose return or return the
information so requested.
(4) Disclosure in judicial and administrative tax
proceedings.--A return or return information may be
disclosed in a Federal or State judicial or
administrative proceeding pertaining to tax
administration, but only--
(A) if the taxpayer is a party to the
proceeding, or the proceeding arose out of, or
in connection with, determining the taxpayer's
civil or criminal liability, or the collection
of such civil liability, in respect of any tax
imposed under this title;
(B) if the treatment of an item reflected on
such return is directly related to the
resolution of an issue in the proceeding;
(C) if such return or return information
directly relates to a transactional
relationship between a person who is a party to
the proceeding and the taxpayer which directly
affects the resolution of an issue in the
proceeding; or
(D) to the extent required by order of a
court pursuant to section 3500 of title 18,
United States Code, or rule 16 of the Federal
Rules of Criminal Procedure, such court being
authorized in the issuance of such order to
give due consideration to congressional policy
favoring the confidentiality of returns and
return information as set forth in this title.
However, such return or return information shall not be
disclosed as provided in subparagraph (A), (B), or (C)
if the Secretary determines that such disclosure would
identify a confidential informant or seriously impair a
civil or criminal tax investigation.
(5) Withholding of tax from social security
benefits.--Upon written request of the payor agency,
the Secretary may disclose available return information
from the master files of the Internal Revenue Service
with respect to the address and status of an individual
as a nonresident alien or as a citizen or resident of
the United States to the Social Security Administration
or the Railroad Retirement Board (whichever is
appropriate) for purposes of carrying out its
responsibilities for withholding tax under section 1441
from social security benefits (as defined in section
86(d)).
(6) Internal Revenue Service Oversight Board.--
(A) In general.--Notwithstanding paragraph
(1), and except as provided in subparagraph
(B), no return or return information may be
disclosed to any member of the Oversight Board
described in subparagraph (A) or (D) of section
7802(b)(1) or to any employee or detailee of
such Board by reason of their service with the
Board. Any request for information not
permitted to be disclosed under the preceding
sentence, and any contact relating to a
specific taxpayer, made by any such individual
to an officer or employee of the Internal
Revenue Service shall be reported by such
officer or employee to the Secretary, the
Treasury Inspector General for Tax
Administration, and the Joint Committee on
Taxation.
(B) Exception for reports to the Board.--If--
(i) the Commissioner or the Treasury
Inspector General for Tax
Administration prepares any report or
other matter for the Oversight Board in
order to assist the Board in carrying
out its duties; and
(ii) the Commissioner or such
Inspector General determines it is
necessary to include any return or
return information in such report or
other matter to enable the Board to
carry out such duties, such return or
return information (other than
information regarding taxpayer
identity) may be disclosed to members,
employees, or detailees of the Board
solely for the purpose of carrying out
such duties.
(i) Disclosure to Federal Officers or Employees for
Administration of Federal Laws Not Relating to Tax
Administration.--
(1) Disclosure of returns and return information for
use in criminal investigations.--
(A) In general.--Except as provided in
paragraph (6), any return or return information
with respect to any specified taxable period or
periods shall, pursuant to and upon the grant
of an ex parte order by a Federal district
court judge or magistrate judge under
subparagraph (B), be open (but only to the
extent necessary as provided in such order) to
inspection by, or disclosure to, officers and
employees of any Federal agency who are
personally and directly engaged in--
(i) preparation for any judicial or
administrative proceeding pertaining to
the enforcement of a specifically
designated Federal criminal statute
(not involving tax administration) to
which the United States or such agency
is or may be a party, or pertaining to
the case of a missing or exploited
child,
(ii) any investigation which may
result in such a proceeding, or
(iii) any Federal grand jury
proceeding pertaining to enforcement of
such a criminal statute to which the
United States or such agency is or may
be a party, or to such a case of a
missing or exploited child,
solely for the use of such officers and
employees in such preparation, investigation,
or grand jury proceeding.
(B) Application for order.--The Attorney
General, the Deputy Attorney General, the
Associate Attorney General, any Assistant
Attorney General, any United States attorney,
any special prosecutor appointed under section
593 of title 28, United States Code, or any
attorney in charge of a criminal division
organized crime strike force established
pursuant to section 510 of title 28, United
States Code, may authorize an application to a
Federal district court judge or magistrate
judge for the order referred to in subparagraph
(A). Upon such application, such judge or
magistrate judge may grant such order if he
determines on the basis of the facts submitted
by the applicant that--
(i) there is reasonable cause to
believe, based upon information
believed to be reliable, that a
specific criminal act has been
committed,
(ii) there is reasonable cause to
believe that the return or return
information is or may be relevant to a
matter relating to the commission of
such act, and
(iii) the return or return
information is sought exclusively for
use in a Federal criminal investigation
or proceeding concerning such act (or
any criminal investigation or
proceeding, in the case of a matter
relating to a missing or exploited
child), and the information sought to
be disclosed cannot reasonably be
obtained, under the circumstances, from
another source.
(C) Disclosure to State and local law
enforcement agencies in the case of matters
pertaining to a missing or exploited child.--
(i) In general.--In the case of an
investigation pertaining to a missing
or exploited child, the head of any
Federal agency, or his designee, may
disclose any return or return
information obtained under subparagraph
(A) to officers and employees of any
State or local law enforcement agency,
but only if--
(I) such State or local law
enforcement agency is part of a
team with the Federal agency in
such investigation, and
(II) such information is
disclosed only to such officers
and employees who are
personally and directly engaged
in such investigation.
(ii) Limitation on use of
information.--Information disclosed
under this subparagraph shall be solely
for the use of such officers and
employees in locating the missing
child, in a grand jury proceeding, or
in any preparation for, or
investigation which may result in, a
judicial or administrative proceeding.
(iii) Missing child.--For purposes of
this subparagraph, the term ``missing
child'' shall have the meaning given
such term by section 403 of the Missing
Children's Assistance Act (42 U.S.C.
5772).
(iv) Exploited child.--For purposes
of this subparagraph, the term
``exploited child'' means a minor with
respect to whom there is reason to
believe that a specified offense
against a minor (as defined by section
111(7) of the Sex Offender Registration
and Notification Act (42 U.S.C.
16911(7))) has or is occurring.
(2) Disclosure of return information other than
taxpayer return information for use in criminal
investigations.--
(A) In general.--Except as provided in
paragraph (6), upon receipt by the Secretary of
a request which meets the requirements of
subparagraph (B) from the head of any Federal
agency or the Inspector General thereof, or, in
the case of the Department of Justice, the
Attorney General, the Deputy Attorney General,
the Associate Attorney General, any Assistant
Attorney General, the Director of the Federal
Bureau of Investigation, the Administrator of
the Drug Enforcement Administration, any United
States attorney, any special prosecutor
appointed under section 593 of title 28, United
States Code, or any attorney in charge of a
criminal division organized crime strike force
established pursuant to section 510 of title
28, United States Code, the Secretary shall
disclose return information (other than
taxpayer return information) to officers and
employees of such agency who are personally and
directly engaged in--
(i) preparation for any judicial or
administrative proceeding described in
paragraph (1)(A)(i),
(ii) any investigation which may
result in such a proceeding, or
(iii) any grand jury proceeding
described in paragraph (1)(A)(iii),
solely for the use of such officers and
employees in such preparation, investigation,
or grand jury proceeding.
(B) Requirements.--A request meets the
requirements of this subparagraph if the
request is in writing and sets forth--
(i) the name and address of the
taxpayer with respect to whom the
requested return information relates;
(ii) the taxable period or periods to
which such return information relates;
(iii) the statutory authority under
which the proceeding or investigation
described in subparagraph (A) is being
conducted; and
(iv) the specific reason or reasons
why such disclosure is, or may be,
relevant to such proceeding or
investigation.
(C) Taxpayer identity.--For purposes of this
paragraph, a taxpayer's identity shall not be
treated as taxpayer return information.
(3) Disclosure of return information to apprise
appropriate officials of criminal or terrorist
activities or emergency circumstances.--
(A) Possible violations of Federal criminal
law.--
(i) In general.--Except as provided
in paragraph (6), the Secretary may
disclose in writing return information
(other than taxpayer return
information) which may constitute
evidence of a violation of any Federal
criminal law (not involving tax
administration) to the extent necessary
to apprise the head of the appropriate
Federal agency charged with the
responsibility of enforcing such law.
The head of such agency may disclose
such return information to officers and
employees of such agency to the extent
necessary to enforce such law.
(ii) Taxpayer identity.--If there is
return information (other than taxpayer
return information) which may
constitute evidence of a violation by
any taxpayer of any Federal criminal
law (not involving tax administration),
such taxpayer's identity may also be
disclosed under clause (i).
(B) Emergency circumstances.--
(i) Danger of death or physical
injury.--Under circumstances involving
an imminent danger of death or physical
injury to any individual, the Secretary
may disclose return information to the
extent necessary to apprise appropriate
officers or employees of any Federal or
State law enforcement agency of such
circumstances.
(ii) Flight from Federal
prosecution.--Under circumstances
involving the imminent flight of any
individual from Federal prosecution,
the Secretary may disclose return
information to the extent necessary to
apprise appropriate officers or
employees of any Federal law
enforcement agency of such
circumstances.
(C) Terrorist activities, etc..--
(i) In general.--Except as provided
in paragraph (6), the Secretary may
disclose in writing return information
(other than taxpayer return
information) that may be related to a
terrorist incident, threat, or activity
to the extent necessary to apprise the
head of the appropriate Federal law
enforcement agency responsible for
investigating or responding to such
terrorist incident, threat, or
activity. The head of the agency may
disclose such return information to
officers and employees of such agency
to the extent necessary to investigate
or respond to such terrorist incident,
threat, or activity.
(ii) Disclosure to the Department of
Justice.--Returns and taxpayer return
information may also be disclosed to
the Attorney General under clause (i)
to the extent necessary for, and solely
for use in preparing, an application
under paragraph (7)(D).
(iii) Taxpayer identity.--For
purposes of this subparagraph, a
taxpayer's identity shall not be
treated as taxpayer return information.
(4) Use of certain disclosed returns and return
information in judicial or administrative
proceedings.--
(A) Returns and taxpayer return
information.--Except as provided in
subparagraph (C), any return or taxpayer return
information obtained under paragraph (1) or
(7)(C) may be disclosed in any judicial or
administrative proceeding pertaining to
enforcement of a specifically designated
Federal criminal statute or related civil
forfeiture (not involving tax administration)
to which the United States or a Federal agency
is a party--
(i) if the court finds that such
return or taxpayer return information
is probative of a matter in issue
relevant in establishing the commission
of a crime or the guilt or liability of
a party, or
(ii) to the extent required by order
of the court pursuant to section 3500
of title 18, United States Code, or
rule 16 of the Federal Rules of
Criminal Procedure.
(B) Return information (other than taxpayer
return information).--Except as provided in
subparagraph (C), any return information (other
than taxpayer return information) obtained
under paragraph (1), (2), (3)(A) or (C), or (7)
may be disclosed in any judicial or
administrative proceeding pertaining to
enforcement of a specifically designated
Federal criminal statute or related civil
forfeiture (not involving tax administration)
to which the United States or a Federal agency
is a party.
(C) Confidential informant; impairment of
investigations.--No return or return
information shall be admitted into evidence
under subparagraph (A)(i) or (B) if the
Secretary determines and notifies the Attorney
General or his delegate or the head of the
Federal agency that such admission would
identify a confidential informant or seriously
impair a civil or criminal tax investigation.
(D) Consideration of confidentiality
policy.--In ruling upon the admissibility of
returns or return information, and in the
issuance of an order under subparagraph
(A)(ii), the court shall give due consideration
to congressional policy favoring the
confidentiality of returns and return
information as set forth in this title.
(E) Reversible error.--The admission into
evidence of any return or return information
contrary to the provisions of this paragraph
shall not, as such, constitute reversible error
upon appeal of a judgment in the proceeding.
(5) Disclosure to locate fugitives from justice.--
(A) In general.--Except as provided in
paragraph (6), the return of an individual or
return information with respect to such
individual shall, pursuant to and upon the
grant of an ex parte order by a Federal
district court judge or magistrate judge under
subparagraph (B), be open (but only to the
extent necessary as provided in such order) to
inspection by, or disclosure to, officers and
employees of any Federal agency exclusively for
use in locating such individual.
(B) Application for order.--Any person
described in paragraph (1)(B) may authorize an
application to a Federal district court judge
or magistrate judge for an order referred to in
subparagraph (A). Upon such application, such
judge or magistrate judge may grant such order
if he determines on the basis of the facts
submitted by the applicant that--
(i) a Federal arrest warrant relating
to the commission of a Federal felony
offense has been issued for an
individual who is a fugitive from
justice,
(ii) the return of such individual or
return information with respect to such
individual is sought exclusively for
use in locating such individual, and
(iii) there is reasonable cause to
believe that such return or return
information may be relevant in
determining the location of such
individual.
(6) Confidential informants; impairment of
investigations.--The Secretary shall not disclose any
return or return information under paragraph (1), (2),
(3)(A) or (C), (5), (7), or (8) if the Secretary
determines (and, in the case of a request for
disclosure pursuant to a court order described in
paragraph (1)(B) or (5)(B), certifies to the court)
that such disclosure would identify a confidential
informant or seriously impair a civil or criminal tax
investigation.
(7) Disclosure upon request of information relating
to terrorist activities, etc..--
(A) Disclosure to law enforcement agencies.--
(i) In general.--Except as provided
in paragraph (6), upon receipt by the
Secretary of a written request which
meets the requirements of clause (iii),
the Secretary may disclose return
information (other than taxpayer return
information) to officers and employees
of any Federal law enforcement agency
who are personally and directly engaged
in the response to or investigation of
any terrorist incident, threat, or
activity.
(ii) Disclosure to State and local
law enforcement agencies.--The head of
any Federal law enforcement agency may
disclose return information obtained
under clause (i) to officers and
employees of any State or local law
enforcement agency but only if such
agency is part of a team with the
Federal law enforcement agency in such
response or investigation and such
information is disclosed only to
officers and employees who are
personally and directly engaged in such
response or investigation.
(iii) Requirements.--A request meets
the requirements of this clause if--
(I) the request is made by
the head of any Federal law
enforcement agency (or his
delegate) involved in the
response to or investigation of
any terrorist incident, threat,
or activity, and
(II) the request sets forth
the specific reason or reasons
why such disclosure may be
relevant to a terrorist
incident, threat, or activity.
(iv) Limitation on use of
information.--Information disclosed
under this subparagraph shall be solely
for the use of the officers and
employees to whom such information is
disclosed in such response or
investigation.
(v) Taxpayer identity.--For purposes
of this subparagraph, a taxpayer's
identity shall not be treated as
taxpayer return information.
(B) Disclosure to intelligence agencies.--
(i) In general.--Except as provided
in paragraph (6), upon receipt by the
Secretary of a written request which
meets the requirements of clause (ii),
the Secretary may disclose return
information (other than taxpayer return
information) to those officers and
employees of the Department of Justice,
the Department of the Treasury, and
other Federal intelligence agencies who
are personally and directly engaged in
the collection or analysis of
intelligence and counterintelligence
information or investigation concerning
any terrorist incident, threat, or
activity. For purposes of the preceding
sentence, the information disclosed
under the preceding sentence shall be
solely for the use of such officers and
employees in such investigation,
collection, or analysis.
(ii) Requirements.--A request meets
the requirements of this subparagraph
if the request--
(I) is made by an individual
described in clause (iii), and
(II) sets forth the specific
reason or reasons why such
disclosure may be relevant to a
terrorist incident, threat, or
activity.
(iii) Requesting individuals.--An
individual described in this
subparagraph is an individual--
(I) who is an officer or
employee of the Department of
Justice or the Department of
the Treasury who is appointed
by the President with the
advice and consent of the
Senate or who is the Director
of the United States Secret
Service, and
(II) who is responsible for
the collection and analysis of
intelligence and
counterintelligence information
concerning any terrorist
incident, threat, or activity.
(iv) Taxpayer identity.--For purposes
of this subparagraph, a taxpayer's
identity shall not be treated as
taxpayer return information.
(C) Disclosure under ex parte orders.--
(i) In general.--Except as provided
in paragraph (6), any return or return
information with respect to any
specified taxable period or periods
shall, pursuant to and upon the grant
of an ex parte order by a Federal
district court judge or magistrate
judge under clause (ii), be open (but
only to the extent necessary as
provided in such order) to inspection
by, or disclosure to, officers and
employees of any Federal law
enforcement agency or Federal
intelligence agency who are personally
and directly engaged in any
investigation, response to, or analysis
of intelligence and counterintelligence
information concerning any terrorist
incident, threat, or activity. Return
or return information opened to
inspection or disclosure pursuant to
the preceding sentence shall be solely
for the use of such officers and
employees in the investigation,
response, or analysis, and in any
judicial, administrative, or grand jury
proceedings, pertaining to such
terrorist incident, threat, or
activity.
(ii) Application for order.--The
Attorney General, the Deputy Attorney
General, the Associate Attorney
General, any Assistant Attorney
General, or any United States attorney
may authorize an application to a
Federal district court judge or
magistrate judge for the order referred
to in clause (i). Upon such
application, such judge or magistrate
judge may grant such order if he
determines on the basis of the facts
submitted by the applicant that--
(I) there is reasonable cause
to believe, based upon
information believed to be
reliable, that the return or
return information may be
relevant to a matter relating
to such terrorist incident,
threat, or activity, and
(II) the return or return
information is sought
exclusively for use in a
Federal investigation,
analysis, or proceeding
concerning any terrorist
incident, threat, or activity.
(D) Special rule for ex parte disclosure by
the IRS.--
(i) In general.--Except as provided
in paragraph (6), the Secretary may
authorize an application to a Federal
district court judge or magistrate
judge for the order referred to in
subparagraph (C)(i). Upon such
application, such judge or magistrate
judge may grant such order if he
determines on the basis of the facts
submitted by the applicant that the
requirements of subparagraph (C)(ii)(I)
are met.
(ii) Limitation on use of
information.--Information disclosed
under clause (i)--
(I) may be disclosed only to
the extent necessary to apprise
the head of the appropriate
Federal law enforcement agency
responsible for investigating
or responding to a terrorist
incident, threat, or activity,
and
(II) shall be solely for use
in a Federal investigation,
analysis, or proceeding
concerning any terrorist
incident, threat, or activity.
The head of such Federal agency may
disclose such information to officers
and employees of such agency to the
extent necessary to investigate or
respond to such terrorist incident,
threat, or activity.
(8) Comptroller General.--
(A) Returns available for inspection.--Except
as provided in subparagraph (C), upon written
request by the Comptroller General of the
United States, returns and return information
shall be open to inspection by, or disclosure
to, officers and employees of the Government
Accountability Office for the purpose of, and
to the extent necessary in, making--
(i) an audit of the Internal Revenue
Service, the Bureau of Alcohol,
Tobacco, Firearms, and Explosives,
Department of Justice, or the Tax and
Trade Bureau, Department of the
Treasury, which may be required by
section 713 of title 31, United States
Code, or
(ii) any audit authorized by
subsection (p)(6),
except that no such officer or employee shall,
except to the extent authorized by subsection
(f) or (p)(6), disclose to any person, other
than another officer or employee of such office
whose official duties require such disclosure,
any return or return information described in
section 4424(a) in a form which can be
associated with, or otherwise identify,
directly or indirectly, a particular taxpayer,
nor shall such officer or employee disclose any
other return or return information, except as
otherwise expressly provided by law, to any
person other than such other officer or
employee of such office in a form which can be
associated with, or otherwise identify,
directly or indirectly, a particular taxpayer.
(B) Audits of other agencies.--
(i) In general.--Nothing in this
section shall prohibit any return or
return information obtained under this
title by any Federal agency (other than
an agency referred to in subparagraph
(A)) or by a Trustee as defined in the
District of Columbia Retirement
Protection Act of 1997, for use in any
program or activity from being open to
inspection by, or disclosure to,
officers and employees of the
Government Accountability Office if
such inspection or disclosure is--
(I) for purposes of, and to
the extent necessary in, making
an audit authorized by law of
such program or activity, and
(II) pursuant to a written
request by the Comptroller
General of the United States to
the head of such Federal
agency.
(ii) Information from Secretary.--If
the Comptroller General of the United
States determines that the returns or
return information available under
clause (i) are not sufficient for
purposes of making an audit of any
program or activity of a Federal agency
(other than an agency referred to in
subparagraph (A)), upon written request
by the Comptroller General to the
Secretary, returns and return
information (of the type authorized by
subsection (l) or (m) to be made
available to the Federal agency for use
in such program or activity) shall be
open to inspection by, or disclosure
to, officers and employees of the
Government Accountability Office for
the purpose of, and to the extent
necessary in, making such audit.
(iii) Requirement of notification
upon completion of audit.--Within 90
days after the completion of an audit
with respect to which returns or return
information were opened to inspection
or disclosed under clause (i) or (ii),
the Comptroller General of the United
States shall notify in writing the
Joint Committee on Taxation of such
completion. Such notice shall include--
(I) a description of the use
of the returns and return
information by the Federal
agency involved,
(II) such recommendations
with respect to the use of
returns and return information
by such Federal agency as the
Comptroller General deems
appropriate, and
(III) a statement on the
impact of any such
recommendations on
confidentiality of returns and
return information and the
administration of this title.
(iv) Certain restrictions made
applicable.--The restrictions contained
in subparagraph (A) on the disclosure
of any returns or return information
open to inspection or disclosed under
such subparagraph shall also apply to
returns and return information open to
inspection or disclosed under this
subparagraph.
(C) Disapproval by Joint Committee on
Taxation.--Returns and return information shall
not be open to inspection or disclosed under
subparagraph (A) or (B) with respect to an
audit--
(i) unless the Comptroller General of
the United States notifies in writing
the Joint Committee on Taxation of such
audit, and
(ii) if the Joint Committee on
Taxation disapproves such audit by a
vote of at least two-thirds of its
members within the 30-day period
beginning on the day the Joint
Committee on Taxation receives such
notice.
(j) Statistical Use.--
(1) Department of Commerce.--Upon request in writing
by the Secretary of Commerce, the Secretary shall
furnish--
(A) such returns, or return information
reflected thereon, to officers and employees of
the Bureau of the Census, and
(B) such return information reflected on
returns of corporations to officers and
employees of the Bureau of Economic Analysis,
as the Secretary may prescribe by regulation for the
purpose of, but only to the extent necessary in, the
structuring of censuses and national economic accounts
and conducting related statistical activities
authorized by law.
(2) Federal Trade Commission.--Upon request in
writing by the Chairman of the Federal Trade
Commission, the Secretary shall furnish such return
information reflected on any return of a corporation
with respect to the tax imposed by chapter 1 to
officers and employees of the Division of Financial
Statistics of the Bureau of Economics of such
commission as the Secretary may prescribe by regulation
for the purpose of, but only to the extent necessary
in, administration by such division of legally
authorized economic surveys of corporations.
(3) Department of Treasury.--Returns and return
information shall be open to inspection by or
disclosure to officers and employees of the Department
of the Treasury whose official duties require such
inspection or disclosure for the purpose of, but only
to the extent necessary in, preparing economic or
financial forecasts, projections, analyses, and
statistical studies and conducting related activities.
Such inspection or disclosure shall be permitted only
upon written request which sets forth the specific
reason or reasons why such inspection or disclosure is
necessary and which is signed by the head of the bureau
or office of the Department of the Treasury requesting
the inspection or disclosure.
(4) Anonymous form.--No person who receives a return
or return information under this subsection shall
disclose such return or return information to any
person other than the taxpayer to whom it relates
except in a form which cannot be associated with, or
otherwise identify, directly or indirectly, a
particular taxpayer.
(5) Department of Agriculture.--Upon request in
writing by the Secretary of Agriculture, the Secretary
shall furnish such returns, or return information
reflected thereon, as the Secretary may prescribe by
regulation to officers and employees of the Department
of Agriculture whose official duties require access to
such returns or information for the purpose of, but
only to the extent necessary in, structuring,
preparing, and conducting the census of agriculture
pursuant to the Census of Agriculture Act of 1997
(Public Law 105-113).
(6) Congressional Budget Office.--Upon written
request by the Director of the Congressional Budget
Office, the Secretary shall furnish to officers and
employees of the Congressional Budget Office return
information for the purpose of, but only to the extent
necessary for, long-term models of the social security
and medicare programs.
(k) Disclosure of Certain Returns and Return Information for
Tax Administration Purposes.--
(1) Disclosure of accepted offers-in-compromise.--
Return information shall be disclosed to members of the
general public to the extent necessary to permit
inspection of any accepted offer-in-compromise under
section 7122 relating to the liability for a tax
imposed by this title.
(2) Disclosure of amount of outstanding lien.--If a
notice of lien has been filed pursuant to section
6323(f), the amount of the outstanding obligation
secured by such lien may be disclosed to any person who
furnishes satisfactory written evidence that he has a
right in the property subject to such lien or intends
to obtain a right in such property.
(3) Disclosure of return information to correct
misstatements of fact.--The Secretary may, but only
following approval by the Joint Committee on Taxation,
disclose such return information or any other
information with respect to any specific taxpayer to
the extent necessary for tax administration purposes to
correct a misstatement of fact published or disclosed
with respect to such taxpayer's return or any
transaction of the taxpayer with the Internal Revenue
Service.
(4) Disclosure of competent authority under income
tax convention.--A return or return information may be
disclosed to a competent authority of a foreign
government which has an income tax or gift and estate
tax convention, or other convention or bilateral
agreement relating to the exchange of tax information,
with the United States but only to the extent provided
in, and subject to the terms and conditions of, such
convention or bilateral agreement.
(5) State agencies regulating tax return preparers.--
Taxpayer identity information with respect to any tax
return preparer, and information as to whether or not
any penalty has been assessed against such tax return
preparer under section 6694, 6695, or 7216, may be
furnished to any agency, body, or commission lawfully
charged under any State or local law with the
licensing, registration, or regulation of tax return
preparers. Such information may be furnished only upon
written request by the head of such agency, body, or
commission designating the officers or employees to
whom such information is to be furnished. Information
may be furnished and used under this paragraph only for
purposes of the licensing, registration, or regulation
of tax return preparers.
(6) Disclosure by certain officers and employees for
investigative purposes.--An internal revenue officer or
employee and an officer or employee of the Office of
Treasury Inspector General for Tax Administration may,
in connection with his official duties relating to any
audit, collection activity, or civil or criminal tax
investigation or any other offense under the internal
revenue laws, disclose return information to the extent
that such disclosure is necessary in obtaining
information, which is not otherwise reasonably
available, with respect to the correct determination of
tax, liability for tax, or the amount to be collected
or with respect to the enforcement of any other
provision of this title. Such disclosures shall be made
only in such situations and under such conditions as
the Secretary may prescribe by regulation.
(7) Disclosure of excise tax registration
information.--To the extent the Secretary determines
that disclosure is necessary to permit the effective
administration of subtitle D, the Secretary may
disclose--
(A) the name, address, and registration
number of each person who is registered under
any provision of subtitle D (and, in the case
of a registered terminal operator, the address
of each terminal operated by such operator),
and
(B) the registration status of any person.
(8) Levies on certain government payments.--
(A) Disclosure of return information in
levies on financial management service.--In
serving a notice of levy, or release of such
levy, with respect to any applicable government
payment, the Secretary may disclose to officers
and employees of the Financial Management
Service--
(i) return information, including
taxpayer identity information,
(ii) the amount of any unpaid
liability under this title (including
penalties and interest), and
(iii) the type of tax and tax period
to which such unpaid liability relates.
(B) Restriction on use of disclosed
information.--Return information disclosed
under subparagraph (A) may be used by officers
and employees of the Financial Management
Service only for the purpose of, and to the
extent necessary in, transferring levied funds
in satisfaction of the levy, maintaining
appropriate agency records in regard to such
levy or the release thereof, notifying the
taxpayer and the agency certifying such payment
that the levy has been honored, or in the
defense of any litigation ensuing from the
honor of such levy.
(C) Applicable government payment.--For
purposes of this paragraph, the term
``applicable government payment'' means--
(i) any Federal payment (other than a
payment for which eligibility is based
on the income or assets (or both) of a
payee) certified to the Financial
Management Service for disbursement,
and
(ii) any other payment which is
certified to the Financial Management
Service for disbursement and which the
Secretary designates by published
notice.
(9) Disclosure of information to administer section
6311.--The Secretary may disclose returns or return
information to financial institutions and others to the
extent the Secretary deems necessary for the
administration of section 6311. Disclosures of
information for purposes other than to accept payments
by checks or money orders shall be made only to the
extent authorized by written procedures promulgated by
the Secretary.
(10) Disclosure of certain returns and return
information to certain prison officials.--
(A) In general.--Under such procedures as the
Secretary may prescribe, the Secretary may
disclose to officers and employees of the
Federal Bureau of Prisons and of any State
agency charged with the responsibility for
administration of prisons any returns or return
information with respect to individuals
incarcerated in Federal or State prison systems
whom the Secretary has determined may have
filed or facilitated the filing of a false or
fraudulent return to the extent that the
Secretary determines that such disclosure is
necessary to permit effective Federal tax
administration.
(B) Disclosure to contractor-run prisons.--
Under such procedures as the Secretary may
prescribe, the disclosures authorized by
subparagraph (A) may be made to contractors
responsible for the operation of a Federal or
State prison on behalf of such Bureau or
agency.
(C) Restrictions on use of disclosed
information.--Any return or return information
received under this paragraph shall be used
only for the purposes of and to the extent
necessary in taking administrative action to
prevent the filing of false and fraudulent
returns, including administrative actions to
address possible violations of administrative
rules and regulations of the prison facility
and in administrative and judicial proceedings
arising from such administrative actions.
(D) Restrictions on redisclosure and
disclosure to legal representatives.--
Notwithstanding subsection (h)--
(i) Restrictions on redisclosure.--
Except as provided in clause (ii), any
officer, employee, or contractor of the
Federal Bureau of Prisons or of any
State agency charged with the
responsibility for administration of
prisons shall not disclose any
information obtained under this
paragraph to any person other than an
officer or employee or contractor of
such Bureau or agency personally and
directly engaged in the administration
of prison facilities on behalf of such
Bureau or agency.
(ii) Disclosure to legal
representatives.--The returns and
return information disclosed under this
paragraph may be disclosed to the duly
authorized legal representative of the
Federal Bureau of Prisons, State
agency, or contractor charged with the
responsibility for administration of
prisons, or of the incarcerated
individual accused of filing the false
or fraudulent return who is a party to
an action or proceeding described in
subparagraph (C), solely in preparation
for, or for use in, such action or
proceeding.
(11) Disclosure of return information to Department
of State for purposes of passport revocation under
section 7345.--
(A) In general.--The Secretary shall, upon
receiving a certification described in section
7345, disclose to the Secretary of State return
information with respect to a taxpayer who has
a seriously delinquent tax debt described in
such section. Such return information shall be
limited to--
(i) the taxpayer identity information
with respect to such taxpayer, and
(ii) the amount of such seriously
delinquent tax debt.
(B) Restriction on disclosure.--Return
information disclosed under subparagraph (A)
may be used by officers and employees of the
Department of State for the purposes of, and to
the extent necessary in, carrying out the
requirements of section 32101 of the FAST Act.
(12) Qualified tax collection contractors.--Persons
providing services pursuant to a qualified tax
collection contract under section 6306 may, if speaking
to a person who has identified himself or herself as
having the name of the taxpayer to which a tax
receivable (within the meaning of such section)
relates, identify themselves as contractors of the
Internal Revenue Service and disclose the business name
of the contractor, and the nature, subject, and reason
for the contact. Disclosures under this paragraph shall
be made only in such situations and under such
conditions as have been approved by the Secretary.
(l) Disclosure of Returns and Return Information for Purposes
Other Than Tax Administration.--
(1) Disclosure of certain returns and return
information to Social Security Administration and
Railroad Retirement Board.--The Secretary may, upon
written request, disclose returns and return
information with respect to--
(A) taxes imposed by chapters 2, 21, and 24,
to the Social Security Administration for
purposes of its administration of the Social
Security Act;
(B) a plan to which part I of subchapter D of
chapter 1 applies, to the Social Security
Administration for purposes of carrying out its
responsibility under section 1131 of the Social
Security Act, limited, however to return
information described in section 6057(d); and
(C) taxes imposed by chapter 22, to the
Railroad Retirement Board for purposes of its
administration of the Railroad Retirement Act.
(2) Disclosure of returns and return information to
the Department of Labor and Pension Benefit Guaranty
Corporation.--The Secretary may, upon written request,
furnish returns and return information to the proper
officers and employees of the Department of Labor and
the Pension Benefit Guaranty Corporation for purposes
of, but only to the extent necessary in, the
administration of titles I and IV of the Employee
Retirement Income Security Act of 1974.
(3) Disclosure that applicant for Federal loan has
tax delinquent account.--
(A) In general.--Upon written request, the
Secretary may disclose to the head of the
Federal agency administering any included
Federal loan program whether or not an
applicant for a loan under such program has a
tax delinquent account.
(B) Restriction on disclosure.--Any
disclosure under subparagraph (A) shall be made
only for the purpose of, and to the extent
necessary in, determining the creditworthiness
of the applicant for the loan in question.
(C) Included Federal loan program defined.--
For purposes of this paragraph, the term
``included Federal loan program'' means any
program under which the United States or a
Federal agency makes, guarantees, or insures
loans.
(4) Disclosure of returns and return information for
use in personnel or claimant representative matters.--
The Secretary may disclose returns and return
information--
(A) upon written request--
(i) to an employee or former employee
of the Department of the Treasury, or
to the duly authorized legal
representative of such employee or
former employee, who is or may be a
party to any administrative action or
proceeding affecting the personnel
rights of such employee or former
employee; or
(ii) to any person, or to the duly
authorized legal representative of such
person, whose rights are or may be
affected by an administrative action or
proceeding under section 330 of title
31, United States Code,
solely for use in the action or proceeding, or
in preparation for the action or proceeding,
but only to the extent that the Secretary
determines that such returns or return
information is or may be relevant and material
to the action or proceeding; or
(B) to officers and employees of the
Department of the Treasury for use in any
action or proceeding described in subparagraph
(A), or in preparation for such action or
proceeding, to the extent necessary to advance
or protect the interests of the United States.
(5) Social Security Administration.--Upon written
request by the Commissioner of Social Security, the
Secretary may disclose information returns filed
pursuant to part III of subchapter A of chapter 61 of
this subtitle for the purpose of--
(A) carrying out, in accordance with an
agreement entered into pursuant to section 232
of the Social Security Act, an effective return
processing program; or
(B) providing information regarding the
mortality status of individuals for
epidemiological and similar research in
accordance with section 1106(d) of the Social
Security Act.
(6) Disclosure of return information to Federal,
State, and local child support enforcement agencies.--
(A) Return information from Internal Revenue
Service.--The Secretary may, upon written
request, disclose to the appropriate Federal,
State, or local child support enforcement
agency--
(i) available return information from
the master files of the Internal
Revenue Service relating to the social
security account number (or numbers, if
the individual involved has more than
one such number), address, filing
status, amounts and nature of income,
and the number of dependents reported
on any return filed by, or with respect
to, any individual with respect to whom
child support obligations are sought to
be established or enforced pursuant to
the provisions of part D of title IV of
the Social Security Act and with
respect to any individual to whom such
support obligations are owing, and
(ii) available return information
reflected on any return filed by, or
with respect to, any individual
described in clause (i) relating to the
amount of such individual's gross
income (as defined in section 61) or
consisting of the names and addresses
of payors of such income and the names
of any dependents reported on such
return, but only if such return
information is not reasonably available
from any other source.
(B) Disclosure to certain agents.--The
following information disclosed to any child
support enforcement agency under subparagraph
(A) with respect to any individual with respect
to whom child support obligations are sought to
be established or enforced may be disclosed by
such agency to any agent of such agency which
is under contract with such agency to carry out
the purposes described in subparagraph (C):
(i) The address and social security
account number (or numbers) of such
individual.
(ii) The amount of any reduction
under section 6402(c) (relating to
offset of past-due support against
overpayments) in any overpayment
otherwise payable to such individual.
(C) Restriction on disclosure.--Information
may be disclosed under this paragraph only for
purposes of, and to the extent necessary in,
establishing and collecting child support
obligations from, and locating, individuals
owing such obligations.
(7) Disclosure of return information to Federal,
State, and local agencies administering certain
programs under the Social Security Act, the Food and
Nutrition Act of 2008 of 1977, or title 38, United
States Code, or certain housing assistance programs
(A) Return information from Social Security
Administration.--The Commissioner of Social
Security shall, upon written request, disclose
return information from returns with respect to
net earnings from self-employment (as defined
in section 1402), wages (as defined in section
3121(a) or 3401(a)), and payments of retirement
income, which have been disclosed to the Social
Security Administration as provided by
paragraph (1) or (5) of this subsection, to any
Federal, State, or local agency administering a
program listed in subparagraph (D).
(B) Return information from Internal Revenue
Service.--The Secretary shall, upon written
request, disclose current return information
from returns with respect to unearned income
from the Internal Revenue Service files to any
Federal, State, or local agency administering a
program listed in subparagraph (D).
(C) Restriction on disclosure.--The
Commissioner of Social Security and the
Secretary shall disclose return information
under subparagraphs (A) and (B) only for
purposes of, and to the extent necessary in,
determining eligibility for, or the correct
amount of, benefits under a program listed in
subparagraph (D).
(D) Programs to which rule applies.--The
programs to which this paragraph applies are:
(i) a State program funded under part
A of title IV of the Social Security
Act;
(ii) medical assistance provided
under a State plan approved under title
XIX of the Social Security Act or
subsidies provided under section 1860D-
14 of such Act;
(iii) supplemental security income
benefits provided under title XVI of
the Social Security Act, and federally
administered supplementary payments of
the type described in section 1616(a)
of such Act (including payments
pursuant to an agreement entered into
under section 212(a) of Public Law 93-
66);
(iv) any benefits provided under a
State plan approved under title I, X,
XIV, or XVI of the Social Security Act
(as those titles apply to Puerto Rico,
Guam, and the Virgin Islands);
(v) unemployment compensation
provided under a State law described in
section 3304 of this title;
(vi) assistance provided under the
Food and Nutrition Act of 2008;
(vii) State-administered
supplementary payments of the type
described in section 1616(a) of the
Social Security Act (including payments
pursuant to an agreement entered into
under section 212(a) of Public Law 93-
66);
(viii)(I) any needs-based pension
provided under chapter 15 of title 38,
United States Code, or under any other
law administered by the Secretary of
Veterans Affairs;
(II) parents' dependency and
indemnity compensation provided
under section 1315 of title 38,
United States Code;
(III) health-care services
furnished under sections
1710(a)(2)(G), 1710(a)(3), and
1710(b) of such title; and
(IV) compensation paid under
chapter 11 of title 38, United
States Code, at the 100 percent
rate based solely on
unemployability and without
regard to the fact that the
disability or disabilities are
not rated as 100 percent
disabling under the rating
schedule; and
(ix) any housing assistance program
administered by the Department of
Housing and Urban Development that
involves initial and periodic review of
an applicant's or participant's income,
except that return information may be
disclosed under this clause only on
written request by the Secretary of
Housing and Urban Development and only
for use by officers and employees of
the Department of Housing and Urban
Development with respect to applicants
for and participants in such programs.
Only return information from returns with
respect to net earnings from self-employment
and wages may be disclosed under this paragraph
for use with respect to any program described
in clause (viii)(IV).
(8) Disclosure of certain return information by
Social Security Administration to Federal, State, and
local child support enforcement agencies.--
(A) In general.--Upon written request, the
Commissioner of Social Security shall disclose
directly to officers and employees of a Federal
or State or local child support enforcement
agency return information from returns with
respect to social security account numbers, net
earnings from self-employment (as defined in
section 1402), wages (as defined in section
3121(a) or 3401(a)), and payments of retirement
income which have been disclosed to the Social
Security Administration as provided by
paragraph (1) or (5) of this subsection.
(B) Restriction on disclosure.--The
Commissioner of Social Security shall disclose
return information under subparagraph (A) only
for purposes of, and to the extent necessary
in, establishing and collecting child support
obligations from, and locating, individuals
owing such obligations. For purposes of the
preceding sentence, the term ``child support
obligations'' only includes obligations which
are being enforced pursuant to a plan described
in section 454 of the Social Security Act which
has been approved by the Secretary of Health
and Human Services under part D of title IV of
such Act.
(C) State or local child support enforcement
agency.--For purposes of this paragraph, the
term ``State or local child support enforcement
agency'' means any agency of a State or
political subdivision thereof operating
pursuant to a plan described in subparagraph
(B).
(9) Disclosure of alcohol fuel producers to
administrators of State alcohol laws.--Notwithstanding
any other provision of this section, the Secretary may
disclose--
(A) the name and address of any person who is
qualified to produce alcohol for fuel use under
section 5181, and
(B) the location of any premises to be used
by such person in producing alcohol for fuel,
to any State agency, body, or commission, or its legal
representative, which is charged under the laws of such
State with responsibility for administration of State
alcohol laws solely for use in the administration of
such laws.
(10) Disclosure of certain information to agencies
requesting a reduction under subsection (c), (d), (e),
or (f) of section 6402.--
(A) Return information from Internal Revenue
Service.--The Secretary may, upon receiving a
written request, disclose to officers and
employees of any agency seeking a reduction
under subsection (c), (d), (e), or (f) of
section 6402, to officers and employees of the
Department of Labor for purposes of
facilitating the exchange of data in connection
with a request made under subsection (f)(5) of
section 6402, and to officers and employees of
the Department of the Treasury in connection
with such reduction--
(i) taxpayer identity information
with respect to the taxpayer against
whom such a reduction was made or not
made and with respect to any other
person filing a joint return with such
taxpayer,
(ii) the fact that a reduction has
been made or has not been made under
such subsection with respect to such
taxpayer,
(iii) the amount of such reduction,
(iv) whether such taxpayer filed a
joint return, and
(v) the fact that a payment was made
(and the amount of the payment) to the
spouse of the taxpayer on the basis of
a joint return.
(B)(i) Restriction on use of disclosed
information
Any officers and employees of an agency
receiving return information under subparagraph
(A) shall use such information only for the
purposes of, and to the extent necessary in,
establishing appropriate agency records,
locating any person with respect to whom a
reduction under subsection (c), (d), (e), or
(f) of section 6402 is sought for purposes of
collecting the debt with respect to which the
reduction is sought, or in the defense of any
litigation or administrative procedure ensuing
from a reduction made under subsection (c),
(d), (e), or (f) of section 6402 and to
officers and employees of the Department of the
Treasury in connection with such reduction.
(ii) Notwithstanding clause (i),
return information disclosed to
officers and employees of the
Department of Labor may be accessed by
agents who maintain and provide
technological support to the Department
of Labor's Interstate Connection
Network (ICON) solely for the purpose
of providing such maintenance and
support.
(11) Disclosure of return information to carry out
Federal Employees' Retirement System.--
(A) In general.--The Commissioner of Social
Security shall, on written request, disclose to
the Office of Personnel Management return
information from returns with respect to net
earnings from self-employment (as defined in
section 1402), wages (as defined in section
3121(a) or 3401(a)), and payments of retirement
income, which have been disclosed to the Social
Security Administration as provided by
paragraph (1) or (5).
(B) Restriction on disclosure.--The
Commissioner of Social Security shall disclose
return information under subparagraph (A) only
for purposes of, and to the extent necessary
in, the administration of chapters 83 and 84 of
title 5, United States Code.
(12) Disclosure of certain taxpayer identity
information for verification of employment status of
medicare beneficiary and spouse of medicare
beneficiary.--
(A) Return information from Internal Revenue
Service.--The Secretary shall, upon written
request from the Commissioner of Social
Security, disclose to the Commissioner
available filing status and taxpayer identity
information from the individual master files of
the Internal Revenue Service relating to
whether any medicare beneficiary identified by
the Commissioner was a married individual (as
defined in section 7703) for any specified year
after 1986, and, if so, the name of the spouse
of such individual and such spouse's TIN.
(B) Return information from Social Security
Administration.--The Commissioner of Social
Security shall, upon written request from the
Administrator of the Centers for Medicare &
Medicaid Services, disclose to the
Administrator the following information:
(i) The name and TIN of each medicare
beneficiary who is identified as having
received wages (as defined in section
3401(a)), above an amount (if any)
specified by the Secretary of Health
and Human Services, from a qualified
employer in a previous year.
(ii) For each medicare beneficiary
who was identified as married under
subparagraph (A) and whose spouse is
identified as having received wages,
above an amount (if any) specified by
the Secretary of Health and Human
Services, from a qualified employer in
a previous year--
(I) the name and TIN of the
medicare beneficiary, and
(II) the name and TIN of the
spouse.
(iii) With respect to each such
qualified employer, the name, address,
and TIN of the employer and the number
of individuals with respect to whom
written statements were furnished under
section 6051 by the employer with
respect to such previous year.
(C) Disclosure by Centers for Medicare &
Medicaid Services.--With respect to the
information disclosed under subparagraph (B),
the Administrator of the Centers for Medicare &
Medicaid Services may disclose--
(i) to the qualified employer
referred to in such subparagraph the
name and TIN of each individual
identified under such subparagraph as
having received wages from the employer
(hereinafter in this subparagraph
referred to as the ``employee'') for
purposes of determining during what
period such employee or the employee's
spouse may be (or have been) covered
under a group health plan of the
employer and what benefits are or were
covered under the plan (including the
name, address, and identifying number
of the plan),
(ii) to any group health plan which
provides or provided coverage to such
an employee or spouse, the name of such
employee and the employee's spouse (if
the spouse is a medicare beneficiary)
and the name and address of the
employer, and, for the purpose of
presenting a claim to the plan--
(I) the TIN of such employee
if benefits were paid under
title XVIII of the Social
Security Act with respect to
the employee during a period in
which the plan was a primary
plan (as defined in section
1862(b)(2)(A) of the Social
Security Act), and
(II) the TIN of such spouse
if benefits were paid under
such title with respect to the
spouse during such period, and
(iii) to any agent of such
Administrator the information referred
to in subparagraph (B) for purposes of
carrying out clauses (i) and (ii) on
behalf of such Administrator.
(D) Special rules.--
(i) Restrictions on disclosure.--
Information may be disclosed under this
paragraph only for purposes of, and to
the extent necessary in, determining
the extent to which any medicare
beneficiary is covered under any group
health plan.
(ii) Timely response to requests.--
Any request made under subparagraph (A)
or (B) shall be complied with as soon
as possible but in no event later than
120 days after the date the request was
made.
(E) Definitions.--For purposes of this
paragraph--
(i) Medicare beneficiary.--The term
``medicare beneficiary'' means an
individual entitled to benefits under
part A, or enrolled under part B, of
title XVIII of the Social Security Act,
but does not include such an individual
enrolled in part A under section 1818.
(ii) Group health plan.--The term
``group health plan'' means any group
health plan (as defined in section
5000(b)(1)).
(iii) Qualified employer.--The term
``qualified employer'' means, for a
calendar year, an employer which has
furnished written statements under
section 6051 with respect to at least
20 individuals for wages paid in the
year.
(13) Disclosure of return information to carry out
income contingent repayment of student loans.--
(A) In general.--The Secretary may, upon
written request from the Secretary of
Education, disclose to officers and employees
of the Department of Education return
information with respect to a taxpayer who has
received an applicable student loan and whose
loan repayment amounts are based in whole or in
part on the taxpayer's income. Such return
information shall be limited to--
(i) taxpayer identity information
with respect to such taxpayer,
(ii) the filing status of such
taxpayer, and
(iii) the adjusted gross income of
such taxpayer.
(B) Restriction on use of disclosed
information.--Return information disclosed
under subparagraph (A) may be used by officers
and employees of the Department of Education
only for the purposes of, and to the extent
necessary in, establishing the appropriate
income contingent repayment amount for an
applicable student loan.
(C) Applicable student loan.--For purposes of
this paragraph, the term ``applicable student
loan'' means--
(i) any loan made under the program
authorized under part D of title IV of
the Higher Education Act of 1965, and
(ii) any loan made under part B or E
of title IV of the Higher Education Act
of 1965 which is in default and has
been assigned to the Department of
Education.
(D) Termination.--This paragraph shall not
apply to any request made after December 31,
2007.
(14) Disclosure of return information to United
States Customs Service.--The Secretary may, upon
written request from the Commissioner of the United
States Customs Service, disclose to officers and
employees of the Department of the Treasury such return
information with respect to taxes imposed by chapters 1
and 6 as the Secretary may prescribe by regulations,
solely for the purpose of, and only to the extent
necessary in--
(A) ascertaining the correctness of any entry
in audits as provided for in section 509 of the
Tariff Act of 1930 (19 U.S.C. 1509), or
(B) other actions to recover any loss of
revenue, or to collect duties, taxes, and fees,
determined to be due and owing pursuant to such
audits.
(15) Disclosure of returns filed under section
6050I.--The Secretary may, upon written request,
disclose to officers and employees of--
(A) any Federal agency,
(B) any agency of a State or local
government, or
(C) any agency of the government of a foreign
country, information contained on returns filed
under section 6050I. Any such disclosure shall
be made on the same basis, and subject to the
same conditions, as apply to disclosures of
information on reports filed under section 5313
of title 31, United States Code; except that no
disclosure under this paragraph shall be made
for purposes of the administration of any tax
law.
(16) Disclosure of return information for purposes of
administering the District of Columbia Retirement
Protection Act of 1997.--
(A) In general.--Upon written request
available return information (including such
information disclosed to the Social Security
Administration under paragraph (1) or (5) of
this subsection), relating to the amount of
wage income (as defined in section 3121(a) or
3401(a)), the name, address, and identifying
number assigned under section 6109, of payors
of wage income, taxpayer identity (as defined
in subsection 6103 (b)(6)), and the
occupational status reflected on any return
filed by, or with respect to, any individual
with respect to whom eligibility for, or the
correct amount of, benefits under the District
of Columbia Retirement Protection Act of 1997,
is sought to be determined, shall be disclosed
by the Commissioner of Social Security, or to
the extent not available from the Social
Security Administration, by the Secretary, to
any duly authorized officer or employee of the
Department of the Treasury, or a Trustee or any
designated officer or employee of a Trustee (as
defined in the District of Columbia Retirement
Protection Act of 1997), or any actuary engaged
by a Trustee under the terms of the District of
Columbia Retirement Protection Act of 1997,
whose official duties require such disclosure,
solely for the purpose of, and to the extent
necessary in, determining an individual's
eligibility for, or the correct amount of,
benefits under the District of Columbia
Retirement Protection Act of 1997.
(B) Disclosure for use in judicial or
administrative proceedings.--Return information
disclosed to any person under this paragraph
may be disclosed in a judicial or
administrative proceeding relating to the
determination of an individual's eligibility
for, or the correct amount of, benefits under
the District of Columbia Retirement Protection
Act of 1997.
(17) Disclosure to National Archives and Records
Administration.--The Secretary shall, upon written
request from the Archivist of the United States,
disclose or authorize the disclosure of returns and
return information to officers and employees of the
National Archives and Records Administration for
purposes of, and only to the extent necessary in, the
appraisal of records for destruction or retention. No
such officer or employee shall, except to the extent
authorized by subsection (f), (i)(8), or (p), disclose
any return or return information disclosed under the
preceding sentence to any person other than to the
Secretary, or to another officer or employee of the
National Archives and Records Administration whose
official duties require such disclosure for purposes of
such appraisal.
(18) Disclosure of return information for purposes of
carrying out a program for advance payment of credit
for health insurance costs of eligible individuals.--
The Secretary may disclose to providers of health
insurance for any certified individual (as defined in
section 7527(c)) return information with respect to
such certified individual only to the extent necessary
to carry out the program established by section 7527
(relating to advance payment of credit for health
insurance costs of eligible individuals).
(19) Disclosure of return information for purposes of
providing transitional assistance under medicare
discount card program.--
(A) In general.--The Secretary, upon written
request from the Secretary of Health and Human
Services pursuant to carrying out section
1860D-31 of the Social Security Act, shall
disclose to officers, employees, and
contractors of the Department of Health and
Human Services with respect to a taxpayer for
the applicable year--
(i)(I) whether the adjusted gross
income, as modified in accordance with
specifications of the Secretary of
Health and Human Services for purposes
of carrying out such section, of such
taxpayer and, if applicable, such
taxpayer's spouse, for the applicable
year, exceeds the amounts specified by
the Secretary of Health and Human
Services in order to apply the 100 and
135 percent of the poverty lines under
such section, (II) whether the return
was a joint return, and (III) the
applicable year, or
(ii) if applicable, the fact that
there is no return filed for such
taxpayer for the applicable year.
(B) Definition of applicable year.--For the
purposes of this subsection, the term
``applicable year'' means the most recent
taxable year for which information is available
in the Internal Revenue Service's taxpayer data
information systems, or, if there is no return
filed for such taxpayer for such year, the
prior taxable year.
(C) Restriction on use of disclosed
information.--Return information disclosed
under this paragraph may be used only for the
purposes of determining eligibility for and
administering transitional assistance under
section 1860D-31 of the Social Security Act.
(20) Disclosure of return information to carry out
Medicare part B premium subsidy adjustment and part D
base beneficiary premium increase.--
(A) In general.--The Secretary shall, upon
written request from the Commissioner of Social
Security, disclose to officers, employees, and
contractors of the Social Security
Administration return information of a taxpayer
whose premium (according to the records of the
Secretary) may be subject to adjustment under
section 1839(i) or increase under section
1860D-13(a)(7) of the Social Security Act. Such
return information shall be limited to--
(i) taxpayer identity information
with respect to such taxpayer,
(ii) the filing status of such
taxpayer,
(iii) the adjusted gross income of
such taxpayer,
(iv) the amounts excluded from such
taxpayer's gross income under sections
135 and 911 to the extent such
information is available,
(v) the interest received or accrued
during the taxable year which is exempt
from the tax imposed by chapter 1 to
the extent such information is
available,
(vi) the amounts excluded from such
taxpayer's gross income by sections 931
and 933 to the extent such information
is available,
(vii) such other information relating
to the liability of the taxpayer as is
prescribed by the Secretary by
regulation as might indicate in the
case of a taxpayer who is an individual
described in subsection (i)(4)(B)(iii)
of section 1839 of the Social Security
Act that the amount of the premium of
the taxpayer under such section may be
subject to adjustment under subsection
(i) of such section or increase under
section 1860D-13(a)(7) of such Act and
the amount of such adjustment, and
(viii) the taxable year with respect
to which the preceding information
relates.
(B) Restriction on use of disclosed
information.--
(i) In general.--Return information
disclosed under subparagraph (A) may be
used by officers, employees, and
contractors of the Social Security
Administration only for the purposes
of, and to the extent necessary in,
establishing the appropriate amount of
any premium adjustment under such
section 1839(i) or increase under such
section 1860D-13(a)(7) or for the
purpose of resolving taxpayer appeals
with respect to any such premium
adjustment or increase.
(ii) Disclosure to other agencies.--
Officers, employees, and contractors of
the Social Security Administration may
disclose--
(I) the taxpayer identity
information and the amount of
the premium subsidy adjustment
or premium increase with
respect to a taxpayer described
in subparagraph (A) to
officers, employees, and
contractors of the Centers for
Medicare and Medicaid Services,
to the extent that such
disclosure is necessary for the
collection of the premium
subsidy amount or the increased
premium amount,
(II) the taxpayer identity
information and the amount of
the premium subsidy adjustment
or the increased premium amount
with respect to a taxpayer
described in subparagraph (A)
to officers and employees of
the Office of Personnel
Management and the Railroad
Retirement Board, to the extent
that such disclosure is
necessary for the collection of
the premium subsidy amount or
the increased premium amount,
(III) return information with
respect to a taxpayer described
in subparagraph (A) to officers
and employees of the Department
of Health and Human Services to
the extent necessary to resolve
administrative appeals of such
premium subsidy adjustment or
increased premium, and
(IV) return information with
respect to a taxpayer described
in subparagraph (A) to officers
and employees of the Department
of Justice for use in judicial
proceedings to the extent
necessary to carry out the
purposes described in clause
(i).
(21) Disclosure of return information to carry out
eligibility requirements for certain programs.--
(A) In general.--The Secretary, upon written
request from the Secretary of Health and Human
Services, shall disclose to officers,
employees, and contractors of the Department of
Health and Human Services return information of
any taxpayer whose income is relevant in
determining [any premium tax credit under
section 36B or any cost-sharing reduction under
section 1402 of the Patient Protection and
Affordable Care Act or] any credit under
section 36C eligibility for participation in a
State medicaid program under title XIX of the
Social Security Act[, a State's children's
health insurance program under title XXI of the
Social Security Act, or a basic health program
under section 1331 of Patient Protection and
Affordable Care Act] or a State's children's
health insurance program under title XXI of the
Social Security Act. Such return information
shall be limited to--
(i) taxpayer identity information
with respect to such taxpayer,
(ii) the filing status of such
taxpayer,
(iii) the number of individuals for
whom a deduction is allowed under
section 151 with respect to the
taxpayer (including the taxpayer and
the taxpayer's spouse),
(iv) the modified adjusted gross
income [(as defined in section 36B)]
(as defined in section 36C(c)(2)(B)) of
such taxpayer and each of the other
individuals included under clause (iii)
who are required to file a return of
tax imposed by chapter 1 for the
taxable year,
(v) such other information as is
prescribed by the Secretary by
regulation as might indicate whether
the taxpayer is eligible for such
credit [or reduction] (and the amount
thereof), and
(vi) the taxable year with respect to
which the preceding information relates
or, if applicable, the fact that such
information is not available.
(B) Information to Exchange and State
agencies.--The Secretary of Health and Human
Services [may disclose to an Exchange] may
disclose--
(i) to an Exchange established under
the Patient Protection and Affordable
Care Act or its contractors, or to a
State agency administering a State
program described in subparagraph (A)
or its contractors, any inconsistency
between the information provided by the
Exchange or State agency to the
Secretary and the information provided
to the Secretary under subparagraph
(A)[.], and
(ii) in the case of any credit under
section 36C with respect to any health
insurance, the amount of such credit
(or the amount of any advance payment
of such credit) to the provider of such
insurance (or, as the Secretary
determines appropriate, the licensed
agent or broker with respect to such
insurance).
(C) Restriction on use of disclosed
information.--Return information disclosed
under subparagraph (A) or (B) may be used by
officers, employees, and contractors of the
Department of Health and Human Services, an
Exchange, or a State agency only for the
purposes of, and to the extent necessary in--
(i) establishing eligibility for
participation in the Exchange, and
verifying the appropriate [amount of,
any credit or reduction] amount of any
credit described in subparagraph (A),
(ii) determining eligibility for
participation in the State programs
described in subparagraph (A).
(22) Disclosure of return information to Department
of Health and Human Services for purposes of enhancing
Medicare program integrity.--
(A) In general.--The Secretary shall, upon
written request from the Secretary of Health
and Human Services, disclose to officers and
employees of the Department of Health and Human
Services return information with respect to a
taxpayer who has applied to enroll, or
reenroll, as a provider of services or supplier
under the Medicare program under title XVIII of
the Social Security Act. Such return
information shall be limited to--
(i) the taxpayer identity information
with respect to such taxpayer;
(ii) the amount of the delinquent tax
debt owed by that taxpayer; and
(iii) the taxable year to which the
delinquent tax debt pertains.
(B) Restriction on disclosure.--Return
information disclosed under subparagraph (A)
may be used by officers and employees of the
Department of Health and Human Services for the
purposes of, and to the extent necessary in,
establishing the taxpayer's eligibility for
enrollment or reenrollment in the Medicare
program, or in any administrative or judicial
proceeding relating to, or arising from, a
denial of such enrollment or reenrollment, or
in determining the level of enhanced oversight
to be applied with respect to such taxpayer
pursuant to section 1866(j)(3) of the Social
Security Act.
(C) Delinquent tax debt.--For purposes of
this paragraph, the term ``delinquent tax
debt'' means an outstanding debt under this
title for which a notice of lien has been filed
pursuant to section 6323, but the term does not
include a debt that is being paid in a timely
manner pursuant to an agreement under section
6159 or 7122, or a debt with respect to which a
collection due process hearing under section
6330 is requested, pending, or completed and no
payment is required.
(m) Disclosure of Taxpayer Identity Information.--
(1) Tax refunds.--The Secretary may disclose taxpayer
identity information to the press and other media for
purposes of notifying persons entitled to tax refunds
when the Secretary, after reasonable effort and lapse
of time, has been unable to locate such persons.
(2) Federal claims.--
(A) In general.--Except as provided in
subparagraph (B), the Secretary may, upon
written request, disclose the mailing address
of a taxpayer for use by officers, employees,
or agents of a Federal agency for purposes of
locating such taxpayer to collect or compromise
a Federal claim against the taxpayer in
accordance with sections 3711, 3717, and 3718
of title 31.
(B) Special rule for consumer reporting
agency.--In the case of an agent of a Federal
agency which is a consumer reporting agency
(within the meaning of section 603(f) of the
Fair Credit Reporting Act (15 U.S.C.
1681a(f))), the mailing address of a taxpayer
may be disclosed to such agent under
subparagraph (A) only for the purpose of
allowing such agent to prepare a commercial
credit report on the taxpayer for use by such
Federal agency in accordance with sections
3711, 3717, and 3718 of title 31.
(3) National Institute for Occupational Safety and
Health.--Upon written request, the Secretary may
disclose the mailing address of taxpayers to officers
and employees of the National Institute for
Occupational Safety and Health solely for the purpose
of locating individuals who are, or may have been,
exposed to occupational hazards in order to determine
the status of their health or to inform them of the
possible need for medical care and treatment.
(4) Individuals who owe an overpayment of Federal
Pell Grants or who have defaulted on student loans
administered by the Department of Education.--
(A) In general.--Upon written request by the
Secretary of Education, the Secretary may
disclose the mailing address of any taxpayer--
(i) who owes an overpayment of a
grant awarded to such taxpayer under
subpart 1 of part A of title IV of the
Higher Education Act of 1965, or
(ii) who has defaulted on a loan--
(I) made under part B, D, or
E of title IV of the Higher
Education Act of 1965, or
(II) made pursuant to section
3(a)(1) of the Migration and
Refugee Assistance Act of 1962
to a student at an institution
of higher education,
for use only by officers, employees, or agents
of the Department of Education for purposes of
locating such taxpayer for purposes of
collecting such overpayment or loan.
(B) Disclosure to educational institutions,
etc..--Any mailing address disclosed under
subparagraph (A)(i) may be disclosed by the
Secretary of Education to--
(i) any lender, or any State or
nonprofit guarantee agency, which is
participating under part B or D of
title IV of the Higher Education Act of
1965, or
(ii) any educational institution with
which the Secretary of Education has an
agreement under subpart 1 of part A, or
part D or E, of title IV of such Act,
for use only by officers, employees, or agents
of such lender, guarantee agency, or
institution whose duties relate to the
collection of student loans for purposes of
locating individuals who have defaulted on
student loans made under such loan programs for
purposes of collecting such loans.
(5) Individuals who have defaulted on student loans
administered by the Department of Health and Human
Services.--
(A) In general.--Upon written request by the
Secretary of Health and Human Services, the
Secretary may disclose the mailing address of
any taxpayer who has defaulted on a loan made
under part C of title VII of the Public Health
Service Act or under subpart II of part B of
title VIII of such Act, for use only by
officers, employees, or agents of the
Department of Health and Human Services for
purposes of locating such taxpayer for purposes
of collecting such loan.
(B) Disclosure to schools and eligible
lenders.--Any mailing address disclosed under
subparagraph (A) may be disclosed by the
Secretary of Health and Human Services to--
(i) any school with which the
Secretary of Health and Human Services
has an agreement under subpart II of
part C of title VII of the Public
Health Service Act or subpart II of
part B of title VIII of such Act, or
(ii) any eligible lender (within the
meaning of section 737(4) of such Act)
participating under subpart I of part C
of title VII of such Act,
for use only by officers, employees, or agents
of such school or eligible lender whose duties
relate to the collection of student loans for
purposes of locating individuals who have
defaulted on student loans made under such
subparts for the purposes of collecting such
loans.
(6) Blood Donor Locator Service.--
(A) In general.--Upon written request
pursuant to section 1141 of the Social Security
Act, the Secretary shall disclose the mailing
address of taxpayers to officers and employees
of the Blood Donor Locator Service in the
Department of Health and Human Services.
(B) Restriction on disclosure.--The Secretary
shall disclose return information under
subparagraph (A) only for purposes of, and to
the extent necessary in, assisting under the
Blood Donor Locator Service authorized persons
(as defined in section 1141(h)(1) of the Social
Security Act) in locating blood donors who, as
indicated by donated blood or products derived
therefrom or by the history of the subsequent
use of such blood or blood products, have or
may have the virus for acquired immune
deficiency syndrome, in order to inform such
donors of the possible need for medical care
and treatment.
(C) Safeguards.--The Secretary shall destroy
all related blood donor records (as defined in
section 1141(h)(2) of the Social Security Act)
in the possession of the Department of the
Treasury upon completion of their use in making
the disclosure required under subparagraph (A),
so as to make such records undisclosable.
(7) Social security account statement furnished by
Social Security Administration.--Upon written request
by the Commissioner of Social Security, the Secretary
may disclose the mailing address of any taxpayer who is
entitled to receive a social security account statement
pursuant to section 1143(c) of the Social Security Act,
for use only by officers, employees or agents of the
Social Security Administration for purposes of mailing
such statement to such taxpayer.
(n) Certain Other Persons.--Pursuant to regulations
prescribed by the Secretary, returns and return information may
be disclosed to any person, including any person described in
section 7513(a), to the extent necessary in connection with the
processing, storage, transmission, and reproduction of such
returns and return information, the programming, maintenance,
repair, testing, and procurement of equipment, and the
providing of other services, for purposes of tax
administration.
(o) Disclosure of Returns and Return Information With Respect
to Certain Taxes.--
(1) Taxes imposed by subtitle E.--
(A) In general.--Returns and return
information with respect to taxes imposed by
subtitle E (relating to taxes on alcohol,
tobacco, and firearms) shall be open to
inspection by or disclosure to officers and
employees of a Federal agency whose official
duties require such inspection or disclosure.
(B) Use in certain proceedings.--Returns and
return information disclosed to a Federal
agency under subparagraph (A) may be used in an
action or proceeding (or in preparation for
such action or proceeding) brought under
section 625 of the American Jobs Creation Act
of 2004 for the collection of any unpaid
assessment or penalty arising under such Act.
(2) Taxes imposed by chapter 35.--Returns and return
information with respect to taxes imposed by chapter 35
(relating to taxes on wagering) shall, notwithstanding
any other provision of this section, be open to
inspection by or disclosure only to such person or
persons and for such purpose or purposes as are
prescribed by section 4424.
(p) Procedure and Recordkeeping.--
(1) Manner, time, and place of inspections.--Requests
for the inspection or disclosure of a return or return
information and such inspection or disclosure shall be
made in such manner and at such time and place as shall
be prescribed by the Secretary.
(2) Procedure.--
(A) Reproduction of returns.--A reproduction
or certified reproduction of a return shall,
upon written request, be furnished to any
person to whom disclosure or inspection of such
return is authorized under this section. A
reasonable fee may be prescribed for furnishing
such reproduction or certified reproduction.
(B) Disclosure of return information.--Return
information disclosed to any person under the
provisions of this title may be provided in the
form of written documents, reproductions of
such documents, films or photoimpressions, or
electronically produced tapes, disks, or
records, or by any other mode or means which
the Secretary determines necessary or
appropriate. A reasonable fee may be prescribed
for furnishing such return information.
(C) Use of reproductions.--Any reproduction
of any return, document, or other matter made
in accordance with this paragraph shall have
the same legal status as the original, and any
such reproduction shall, if properly
authenticated, be admissible in evidence in any
judicial or administrative proceeding as if it
were the original, whether or not the original
is in existence.
(3) Records of inspection and disclosure.--
(A) System of recordkeeping.--Except as
otherwise provided by this paragraph, the
Secretary shall maintain a permanent system of
standardized records or accountings of all
requests for inspection or disclosure of
returns and return information (including the
reasons for and dates of such requests) and of
returns and return information inspected or
disclosed under this section and section
6104(c). Notwithstanding the provisions of
section 552a(c) of title 5, United States Code,
the Secretary shall not be required to maintain
a record or accounting of requests for
inspection or disclosure of returns and return
information, or of returns and return
information inspected or disclosed, under the
authority of subsections (c), (e), (f)(5),
(h)(1), (3)(A), or (4), (i)(4), or
(8)(A)(ii),(k)(1), (2),(6), (8), or (9),
(l)(1), (4)(B), (5), (7), (8), (9), (10), (11),
(12), (13), (14), (15), (16), (17), or (18),
(m), or (n). The records or accountings
required to be maintained under this paragraph
shall be available for examination by the Joint
Committee on Taxation or the Chief of Staff of
such joint committee. Such record or accounting
shall also be available for examination by such
person or persons as may be, but only to the
extent, authorized to make such examination
under section 552a(c)(3) of title 5, United
States Code.
(B) Report by the Secretary.--The Secretary
shall, within 90 days after the close of each
calendar year, furnish to the Joint Committee
on Taxation a report with respect to, or
summary of, the records or accountings
described in subparagraph (A) in such form and
containing such information as such joint
committee or the Chief of Staff of such joint
committee may designate. Such report or summary
shall not, however, include a record or
accounting of any request by the President
under subsection (g) for, or the disclosure in
response to such request of, any return or
return information with respect to any
individual who, at the time of such request,
was an officer or employee of the executive
branch of the Federal Government. Such report
or summary, or any part thereof, may be
disclosed by such joint committee to such
persons and for such purposes as the joint
committee may, by record vote of a majority of
the members of the joint committee, determine.
(C) Public report on disclosures.--The
Secretary shall, within 90 days after the close
of each calendar year, furnish to the Joint
Committee on Taxation for disclosure to the
public a report with respect to the records or
accountings described in subparagraph (A)
which--
(i) provides with respect to each
Federal agency, each agency, body, or
commission described in subsection (d),
(i)(3)(B)(i) or (7)(A)(ii), or (l)(6),
and the Government Accountability
Office the number of--
(I) requests for disclosure
of returns and return
information,
(II) instances in which
returns and return information
were disclosed pursuant to such
requests or otherwise,
(III) taxpayers whose
returns, or return information
with respect to whom, were
disclosed pursuant to such
requests, and
(ii) describes the general purposes
for which such requests were made,
(4) Safeguards.--Any Federal agency described in
subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or
(7), (j)(1), (2), or (5), (k)(8), (10), or (11),
(l)(1), (2), (3), (5), (10), (11), (13), (14), (17), or
(22) or (o)(1)(A), the Government Accountability
Office, the Congressional Budget Office, or any agency,
body, or commission described in subsection (d),
(i)(1)(C), (3)(B)(i), or 7(A)(ii), or (k)(10), (l)(6),
(7), (8), (9), (12), (15), or (16), any appropriate
State officer (as defined in section 6104(c)), or any
other person described in subsection (k)(10),
subsection (l)(10), (16), (18), (19), or (20), or any
entity described in subsection (l)(21), shall, as a
condition for receiving returns or return information--
(A) establish and maintain, to the
satisfaction of the Secretary, a permanent
system of standardized records with respect to
any request, the reason for such request, and
the date of such request made by or of it and
any disclosure of return or return information
made by or to it;
(B) establish and maintain, to the
satisfaction of the Secretary, a secure area or
place in which such returns or return
information shall be stored;
(C) restrict, to the satisfaction of the
Secretary, access to the returns or return
information only to persons whose duties or
responsibilities require access and to whom
disclosure may be made under the provisions of
this title;
(D) provide such other safeguards which the
Secretary determines (and which he prescribes
in regulations) to be necessary or appropriate
to protect the confidentiality of the returns
or return information;
(E) furnish a report to the Secretary, at
such time and containing such information as
the Secretary may prescribe, which describes
the procedures established and utilized by such
agency, body, or commission, the Government
Accountability Office, or the Congressional
Budget Office for ensuring the confidentiality
of returns and return information required by
this paragraph; and
(F) upon completion of use of such returns or
return information--
(i) in the case of an agency, body,
or commission described in subsection
(d), (i)(3)(B)(i), (k)(10), or (l)(6),
(7), (8), (9), or (16), any appropriate
State officer (as defined in section
6104(c)), or any other person described
in subsection (k)(10) or subsection
(l)(10), (16), (18), (19), or (20)
return to the Secretary such returns or
return information (along with any
copies made therefrom) or make such
returns or return information
undisclosable in any manner and furnish
a written report to the Secretary
describing such manner,
(ii) in the case of an agency
described in subsections (h)(2),
(h)(5), (i)(1), (2), (3), (5) or (7),
(j)(1), (2), or (5), (k)(8), (10), or
(11), (l)(1), (2), (3), (5), (10),
(11), (12), (13), (14), (15), (17), or
(22), or (o)(1)(A) or any entity
described in subsection (l)(21),,, the
Government Accountability Office, or
the Congressional Budget Office,
either--
(I) return to the Secretary
such returns or return
information (along with any
copies made therefrom),
(II) otherwise make such
returns or return information
undisclosable, or
(III) to the extent not so
returned or made undisclosable,
ensure that the conditions of
subparagraphs (A), (B), (C),
(D), and (E) of this paragraph
continue to be met with respect
to such returns or return
information, and
(iii) in the case of the Department
of Health and Human Services for
purposes of subsection (m)(6), destroy
all such return information upon
completion of its use in providing the
notification for which the information
was obtained, so as to make such
information undisclosable;
except that the conditions of subparagraphs (A), (B),
(C), (D), and (E) shall cease to apply with respect to
any return or return information if, and to the extent
that, such return or return information is disclosed in
the course of any judicial or administrative proceeding
and made a part of the public record thereof. If the
Secretary determines that any such agency, body, or
commission, including an agency, an appropriate State
officer (as defined in section 6104(c)), or any other
person described in subsection (k)(10) or subsection
(l)(10), (16), (18), (19), or (20) or any entity
described in subsection (l)(21),, or the Government
Accountability Office or the Congressional Budget
Office, has failed to, or does not, meet the
requirements of this paragraph, he may, after any
proceedings for review established under paragraph (7),
take such actions as are necessary to ensure such
requirements are met, including refusing to disclose
returns or return information to such agency, body, or
commission, including an agency, an appropriate State
officer (as defined in section 6104(c)), or any other
person described in subsection (k)(10) or subsection
(l)(10), (16), (18), (19), or (20) or any entity
described in subsection (l)(21),, or the Government
Accountability Office or the Congressional Budget
Office, until he determines that such requirements have
been or will be met. In the case of any agency which
receives any mailing address under paragraph (2), (4),
(6), or (7) of subsection (m) and which discloses any
such mailing address to any agent or which receives any
information under paragraph (6)(A), (10), (12)(B), or
(16) of subsection (l) and which discloses any such
information to any agent, or any person including an
agent described in subsection (l)(10) or (16), this
paragraph shall apply to such agency and each such
agent or other person (except that, in the case of an
agent, or any person including an agent described in
subsection (l)(10) or (16), any report to the Secretary
or other action with respect to the Secretary shall be
made or taken through such agency). For purposes of
applying this paragraph in any case to which subsection
(m)(6) applies, the term ``return information''
includes related blood donor records (as defined in
section 1141(h)(2) of the Social Security Act).
(5) Report on procedures and safeguards.--After the
close of each calendar year, the Secretary shall
furnish to each committee described in subsection
(f)(1) a report which describes the procedures and
safeguards established and utilized by such agencies,
bodies, or commissions, the Government Accountability
Office, and the Congressional Budget Office for
ensuring the confidentiality of returns and return
information as required by this subsection. Such report
shall also describe instances of deficiencies in, and
failure to establish or utilize, such procedures.
(6) Audit of procedures and safeguards.--
(A) Audit by Comptroller General.--The
Comptroller General may audit the procedures
and safeguards established by such agencies,
bodies, or commissions and the Congressional
Budget Office pursuant to this subsection to
determine whether such safeguards and
procedures meet the requirements of this
subsection and ensure the confidentiality of
returns and return information. The Comptroller
General shall notify the Secretary before any
such audit is conducted.
(B) Records of inspection and reports by the
Comptroller General.--The Comptroller General
shall--
(i) maintain a permanent system of
standardized records and accountings of
returns and return information
inspected by officers and employees of
the Government Accountability Office
under subsection (i)(8)(A)(ii) and
shall, within 90 days after the close
of each calendar year, furnish to the
Secretary a report with respect to, or
summary of, such records or accountings
in such form and containing such
information as the Secretary may
prescribe, and
(ii) furnish an annual report to each
committee described in subsection (f)
and to the Secretary setting forth his
findings with respect to any audit
conducted pursuant to subparagraph (A).
The Secretary may disclose to the Joint
Committee any report furnished to him under
clause (i).
(7) Administrative review.--The Secretary shall by
regulations prescribe procedures which provide for
administrative review of any determination under
paragraph (4) that any agency, body, or commission
described in subsection (d) has failed to meet the
requirements of such paragraph.
(8) State law requirements.--
(A) Safeguards.--Notwithstanding any other
provision of this section, no return or return
information shall be disclosed after December
31, 1978, to any officer or employee of any
State which requires a taxpayer to attach to,
or include in, any State tax return a copy of
any portion of his Federal return, or
information reflected on such Federal return,
unless such State adopts provisions of law
which protect the confidentiality of the copy
of the Federal return (or portion thereof)
attached to, or the Federal return information
reflected on, such State tax return.
(B) Disclosure of returns or return
information in State returns.--Nothing in
subparagraph (A) shall be construed to prohibit
the disclosure by an officer or employee of any
State of any copy of any portion of a Federal
return or any information on a Federal return
which is required to be attached or included in
a State return to another officer or employee
of such State (or political subdivision of such
State) if such disclosure is specifically
authorized by State law.
(q) Regulations.--The Secretary is authorized to prescribe
such other regulations as are necessary to carry out the
provisions of this section.
* * * * * * *
CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE
PENALTIES
* * * * * * *
Subchapter B--Assessable Penalties
* * * * * * *
PART I--GENERAL PROVISIONS
* * * * * * *
SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.
(a) Civil Penalty.--If a claim for refund or credit with
respect to income tax is made for an excessive amount, unless
it is shown that the claim for such excessive amount is due to
reasonable cause, the person making such claim shall be liable
for a penalty in an amount equal to 20 percent (25 percent in
the case of a claim for refund or credit relating to the health
insurance coverage credit under section 36C) of the excessive
amount.
(b) Excessive Amount.--For purposes of this section, the term
``excessive amount'' means in the case of any person the amount
by which the amount of the claim for refund or credit for any
taxable year exceeds the amount of such claim allowable under
this title for such taxable year.
(c) Noneconomic Substance Transactions Treated as Lacking
Reasonable Basis.--For purposes of this section, any excessive
amount which is attributable to any transaction described in
section 6662(b)(6) shall not be treated as due to reasonable
cause.
(d) Coordination With Other Penalties.--This section shall
not apply to any portion of the excessive amount of a claim for
refund or credit which is subject to a penalty imposed under
part II of subchapter A of chapter 68.
* * * * * * *
PART II--FAILURE TO COMPLY WITH CERTAIN INFORMATION REPORTING
REQUIREMENTS
* * * * * * *
SEC. 6724. WAIVER; DEFINITIONS AND SPECIAL RULES.
(a) Reasonable Cause Waiver.--No penalty shall be imposed
under this part with respect to any failure if it is shown that
such failure is due to reasonable cause and not to willful
neglect.
(b) Payment of Penalty.--Any penalty imposed by this part
shall be paid on notice and demand by the Secretary and in the
same manner as tax.
(c) Special Rule for Failure to Meet Magnetic Media
Requirements.--No penalty shall be imposed under section 6721
solely by reason of any failure to comply with the requirements
of the regulations prescribed under section 6011(e)(2), except
to the extent that such a failure occurs with respect to more
than 250 information returns (more than 100 information returns
in the case of a partnership having more than 100 partners) or
with respect to a return described in section 6011(e)(4).
(d) Definitions.--For purposes of this part--
(1) Information return.--The term ``information
return'' means--
(A) any statement of the amount of payments
to another person required by--
(i) section 6041(a) or (b) (relating
to certain information at source),
(ii) section 6042(a)(1) (relating to
payments of dividends),
(iii) section 6044(a)(1) (relating to
payments of patronage dividends),
(iv) section 6049(a) (relating to
payments of interest),
(v) section 6050A(a) (relating to
reporting requirements of certain
fishing boat operators),
(vi) section 6050N(a) (relating to
payments of royalties),
(vii) section 6051(d) (relating to
information returns with respect to
income tax withheld),
(viii) section 6050R (relating to
returns relating to certain purchases
of fish), or
(ix) section 110(d) (relating to
qualified lessee construction
allowances for short-term leases),
(B) any return required by--
(i) section 6041A(a) or (b) (relating
to returns of direct sellers),
(ii) section 6043A(a) (relating to
returns relating to taxable mergers and
acquisitions),
(iii) section 6045(a) or (d)
(relating to returns of brokers),
(iv) section 6045B(a) (relating to
returns relating to actions affecting
basis of specified securities),
(v) section 6050H(a) or (h)(1)
(relating to mortgage interest received
in trade or business from individuals),
(vi) section 6050I(a) or (g)(1)
(relating to cash received in trade or
business, etc.),
(vii) section 6050J(a) (relating to
foreclosures and abandonments of
security),
(viii) section 6050K(a) (relating to
exchanges of certain partnership
interests),
(ix) section 6050L(a) (relating to
returns relating to certain
dispositions of donated property),
(x) section 6050P (relating to
returns relating to the cancellation of
indebtedness by certain financial
entities),
(xi) section 6050Q (relating to
certain long-term care benefits),
(xii) section 6050S (relating to
returns relating to payments for
qualified tuition and related
expenses),
(xiii) section 6050T (relating to
returns relating to credit for health
insurance costs of eligible
individuals),
(xiv) section 6052(a) (relating to
reporting payment of wages in the form
of group-life insurance),
(xv) section 6050V (relating to
returns relating to applicable
insurance contracts in which certain
exempt organizations hold interests),
(xvi) section 6053(c)(1) (relating to
reporting with respect to certain
tips),
(xvii) subsection (b) or (e) of
section 1060 (relating to reporting
requirements of transferors and
transferees in certain asset
acquisitions),
(xviii) section 4101(d) (relating to
information reporting with respect to
fuels taxes),
(xix) subparagraph (C) of section
338(h)(10) (relating to information
required to be furnished to the
Secretary in case of elective
recognition of gain or loss),
(xx) section 264(f)(5)(A)(iv)
(relating to reporting with respect to
certain life insurance and annuity
contracts), or
(xxi) section 6050U (relating to
charges or payments for qualified long-
term care insurance contracts under
combined arrangements), and
(xxii) section 6039(a) (relating to
returns required with respect to
certain options),
(xxiii) section 6050W (relating to
returns to payments made in settlement
of payment card transactions),
(xxiv) section 6055 (relating to
returns relating to information
regarding health insurance coverage),
[or]
(xxv) section 6056 (relating to
returns relating to certain employers
required to report on health insurance
coverage), or
(xxvi) section 6050X (relating to
returns relating to health insurance
coverage credit),
(C) any statement of the amount of payments
to another person required to be made to the
Secretary under--
(i) section 408(i) (relating to
reports with respect to individual
retirement accounts or annuities), or
(ii) section 6047(d) (relating to
reports by employers, plan
administrators, etc.), and
(D) any statement required to be filed with
the Secretary under section 6035.
Such term also includes any form, statement, or
schedule required to be filed with the
Secretary under chapter 4 or with respect to
any amount from which tax was required to be
deducted and withheld under chapter 3 (or from
which tax would be required to be so deducted
and withheld but for an exemption under this
title or any treaty obligation of the United
States).
(2) Payee statement.--The term ``payee statement''
means any statement required to be furnished under--
(A) section 6031(b) or (c), 6034A, or 6037(b)
(relating to statements furnished by certain
pass-thru entities),
(B) section 6039(b) (relating to information
required in connection with certain options),
(C) section 6041(d) (relating to information
at source),
(D) section 6041A(e) (relating to returns
regarding payments of remuneration for services
and direct sales),
(E) section 6042(c) (relating to returns
regarding payments of dividends and corporate
earnings and profits),
(F) subsections (b) and (d) of section 6043A
(relating to returns relating to taxable
mergers and acquisitions).
(G) section 6044(e) (relating to returns
regarding payments of patronage dividends),
(H) section 6045(b) or (d) (relating to
returns of brokers),
(I) section 6045A (relating to information
required in connection with transfers of
covered securities to brokers),
(J) subsections (c) and (e) of section 6045B
(relating to returns relating to actions
affecting basis of specified securities),
(K) section 6049(c) (relating to returns
regarding payments of interest),
(L) section 6050A(b) (relating to reporting
requirements of certain fishing boat
operators),
(M) section 6050H(d) or (h)(2) relating to
returns relating to mortgage interest received
in trade or business from individuals),
(N) section 6050I(e) or paragraph (4) or (5)
of section 6050I(g) (relating to cash received
in trade or business, etc.),
(O) section 6050J(e) (relating to returns
relating to foreclosures and abandonments of
security),
(P) section 6050K(b) (relating to returns
relating to exchanges of certain partnership
interests),
(Q) section 6050L(c) (relating to returns
relating to certain dispositions of donated
property),
(R) section 6050N(b) (relating to returns
regarding payments of royalties),
(S) section 6050P(d) (relating to returns
relating to the cancellation of indebtedness by
certain financial entities),
(T) section 6050Q (relating to certain long-
term care benefits),
(U) section 6050R(c) (relating to returns
relating to certain purchases of fish),
(V) section 6051 (relating to receipts for
employees),
(W) section 6052(b) (relating to returns
regarding payment of wages in the form of
group-term life insurance),
(X) section 6053(b) or (c) (relating to
reports of tips),
(Y) section 6048(b)(1)(B) (relating to
foreign trust reporting requirements),
(Z) section 408(i) (relating to reports with
respect to individual retirement plans) to any
person other than the Secretary with respect to
the amount of payments made to such person,
(AA) section 6047(d) (relating to reports by
plan administrators) to any person other than
the Secretary with respect to the amount of
payments made to such person,
(BB) section 6050S(d) (relating to returns
relating to qualified tuition and related
expenses),
(CC) section 264(f)(5)(A)(iv) (relating to
reporting with respect to certain life
insurance and annuity contracts),
(DD) section 6050T (relating to returns
relating to credit for health insurance costs
of eligible individuals)
(EE) section 6050U (relating to charges or
payments for qualified long-term care insurance
contracts under combined arrangements),
(FF) section 6050W(f) (relating to returns
relating to payments made in settlement of
payment card transactions),
(GG) section 6055(c) (relating to statements
relating to information regarding health
insurance coverage),
(HH) section 6056(c) (relating to statements
relating to certain employers required to
report on health insurance coverage), [or]
(II) section 6035 (other than a statement
described in paragraph (1)(D))[.],
(JJ) section 6050X (relating to returns
relating to health insurance coverage credit),
or
(KK) section 7529(c)(3) (relating to
documentation regarding other specified
coverage).
Such term also includes any form, statement, or
schedule required to be furnished to the recipient of
any amount from which tax was required to be deducted
and withheld under chapter 3 or 4 (or from which tax
would be required to be so deducted and withheld but
for an exemption under this title or any treaty
obligation of the United States).
(3) Specified information reporting requirement.--The
term ``specified information reporting requirement''
means--
(A) the notice required by section
6050K(c)(1) (relating to requirement that
transferor notify partnership of exchange),
(B) any requirement contained in the
regulations prescribed under section 6109 that
a person--
(i) include his TIN on any return,
statement, or other document (other
than an information return or payee
statement),
(ii) furnish his TIN to another
person, or
(iii) include on any return,
statement, or other document (other
than an information return or payee
statement) made with respect to another
person the TIN of such person,
(C) any requirement contained in the
regulations prescribed under section 215 that a
person--
(i) furnish his TIN to another
person, or
(ii) include on his return the TIN of
another person, and
(D) any requirement under section 6109(h)
that--
(i) a person include on his return
the name, address, and TIN of another
person, or
(ii) a person furnish his TIN to
another person.
(4) Required filing date.--The term ``required filing
date'' means the date prescribed for filing an
information return with the Secretary (determined with
regard to any extension of time for filing).
(e) Special Rule for Certain Partnership Returns.--If any
partnership return under section 6031(a) is required under
section 6011(e) to be filed on magnetic media or in other
machine-readable form, for purposes of this part, each schedule
required to be included with such return with respect to each
partner shall be treated as a separate information return.
(f) Special Rule for Returns of Educational Institutions
Related to Higher Education Tuition and Related Expenses.--No
penalty shall be imposed under section 6721 or 6722 solely by
reason of failing to provide the TIN of an individual on a
return or statement required by section 6050S(a)(1) if the
eligible educational institution required to make such return
contemporaneously makes a true and accurate certification under
penalty of perjury (and in such form and manner as may be
prescribed by the Secretary) that it has complied with
standards promulgated by the Secretary for obtaining such
individual's TIN.
* * * * * * *
CHAPTER 77--MISCELLANEOUS PROVISIONS
Sec. 7501. Liability for taxes withheld or collected.
* * * * * * *
Sec. 7529. Advance payment of health insurance coverage credit.
Sec. 7530. Excess health insurance coverage credit payable to health
savings account.
* * * * * * *
SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE COVERAGE CREDIT.
(a) General Rule.--Not later than January 1, 2020, the
Secretary, in consultation with the Secretary of Health and
Human Services, the Secretary of Homeland Security, and the
Commissioner of Social Security, shall establish a program
(hereafter in this section referred to as the ``advance payment
program'') for making payments to providers of eligible health
insurance on behalf of taxpayers eligible for the credit under
section 36C.
(b) Limitation.--The aggregate payments made under this
section with respect to any taxpayer, determined as of any time
during any calendar year, shall not exceed the monthly credit
amounts determined with respect to such taxpayer under section
36C for months during such calendar year which have ended as of
such time.
(c) Administration.--
(1) In general.--The advance payment program shall,
to the greatest extent practicable, use the methods and
procedures used to administer the programs created
under sections 1411 and 1412 of the Patient Protection
and Affordable Care Act (determined without regard to
section 1412(f) of such Act) and each entity that is
authorized to take any actions under the programs
created under such sections (as so determined) shall,
at the request of the Secretary, take such actions to
the extent necessary to carry out this section.
(2) Application to off-exchange coverage.--Except as
otherwise provided by the Secretary, for purposes of
applying this subsection in the case of eligible health
insurance which is not enrolled in through an Exchange
established under title I of the Patient Protection and
Affordable Care Act, the sections referred to in
paragraph (1) shall be applied by treating references
in such sections to an Exchange as references to the
provider of such eligible health insurance (or, as the
Secretary determines appropriate, to the licensed agent
or broker with respect to such insurance), except that
the Secretary of Health and Human Services shall carry
out the responsibilities of the Exchange under section
1411(e)(4) of the Patient Protection and Affordable
Care Act (determined without regard to section 1412(f)
of such Act) in the case of such insurance.
(3) Documentation regarding other specified
coverage.--
(A) In general.--The advance payment program
shall provide that any individual applying to
have payments made on their behalf under such
program shall, if such individual (or any
qualifying family member of such individual
taken into account in determining the amount of
the credit allowable under section 36C) is
employed, submit a written statement from each
employer of such individual or such qualifying
family member stating whether such individual
or qualifying family member (as the case may
be) is eligible for other specified coverage in
connection with such employment.
(B) Issuance of statements.--An employer
shall, at the request of any employee, provide
the statement under subparagraph (A) at such
time, and in such form and manner, as the
Secretary may provide.
(d) Definitions.--For purposes of this section, terms used in
this section which are also used in section 36C shall have the
same meaning as when used in section 36C.
SEC. 7530. EXCESS HEALTH INSURANCE COVERAGE CREDIT PAYABLE TO HEALTH
SAVINGS ACCOUNT.
(a) In General.--At the request of an eligible taxpayer, the
Secretary shall make a payment to the trustee of the designated
health savings account with respect to such taxpayer in an
amount equal to the sum of the excesses (if any) described in
subsection (c)(2) with respect to months in the taxable year.
(b) Designated Health Savings Account.--The term ``designated
health savings account'' means a health savings account of an
individual described in subsection (c)(3) which is identified
by the eligible taxpayer for purposes of this section.
(c) Eligible Taxpayer.--The term ``eligible taxpayer'' means,
with respect to any taxable year, any taxpayer if--
(1) such taxpayer is allowed a credit under section
36C for such taxable year,
(2) the amount described in subparagraph (A) of
section 36C(b)(1) exceeds the amount described in
subparagraph (B) of such section with respect to such
taxpayer applied with respect to any month during such
taxable year, and
(3) the taxpayer or one or more of the taxpayer's
qualifying family members (as defined in section
36C(e)) were eligible individuals (as defined in
section 223(c)(1)) for one or more months during such
taxable year.
(d) Contributions Treated as Rollovers, Etc.--
(1) In general.--Any amount paid the Secretary to a
health savings account under this section shall be
treated for purposes of this title in the same manner
as a rollover contribution described in section
223(f)(5).
(2) Coordination with limitation on rollovers.--Any
amount described in paragraph (1) shall not be taken
into account in applying section 223(f)(5)(B) with
respect to any other amount and the limitation of
section 223(f)(5)(B) shall not apply with respect to
the application of paragraph (1).
(e) Form and Manner of Request.--The request referred to in
subsection (a) shall be made at such time and in such form and
manner as the Secretary may provide. To the extent that the
Secretary determines feasible, such request may identify more
than one designated health savings account (and the amount to
be paid to each such account) provided that the aggregate of
such payments with respect to any taxpayer for any taxable year
do not exceed the excess described in subsection (c)(2).
(f) Taxpayers With Seriously Delinquent Tax Debt.--In the
case of an individual who has a seriously delinquent tax debt
(as defined in section 7345(b)) which has not been fully
satisfied--
(1) if such individual is the eligible taxpayer (or,
in the case of a joint return, either spouse), the
Secretary shall not make any payment under this section
with respect to such taxpayer, and
(2) if such individual is the account beneficiary (as
defined in section 223(d)(3)) of any health savings
account, the Secretary shall not make any payment under
this section to such health savings account.
(g) Advance Payment.--To the extent that the Secretary
determines feasible, payment under this section may be made in
advance on a monthly basis under rules similar to the rules of
sections 7529 and 36C(i)(5)(B).
* * * * * * *
----------
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. 1412. ADVANCE DETERMINATION AND PAYMENT OF PREMIUM TAX CREDITS AND
COST-SHARING REDUCTIONS.
(a) In General.--The Secretary, in consultation with the
Secretary of the Treasury, shall establish a program under
which--
(1) upon request of an Exchange, advance
determinations are made under section 1411 with respect
to the income eligibility of individuals enrolling in a
qualified health plan in the individual market through
the Exchange for the premium tax credit allowable under
section 36B of the Internal Revenue Code of 1986 and
the cost-sharing reductions under section 1402;
(2) the Secretary notifies--
(A) the Exchange and the Secretary of the
Treasury of the advance determinations; and
(B) the Secretary of the Treasury of the name
and employer identification number of each
employer with respect to whom 1 or more
employee of the employer were determined to be
eligible for the premium tax credit under
section 36B of the Internal Revenue Code of
1986 and the cost-sharing reductions under
section 1402 because--
(i) the employer did not provide
minimum essential coverage; or
(ii) the employer provided such
minimum essential coverage but it was
determined under section 36B(c)(2)(C)
of such Code to either be unaffordable
to the employee or not provide the
required minimum actuarial value; and
(3) the Secretary of the Treasury makes advance
payments of such credit or reductions to the issuers of
the qualified health plans in order to reduce the
premiums payable by individuals eligible for such
credit.
(b) Advance Determinations.--
(1) In general.--The Secretary shall provide under
the program established under subsection (a) that
advance determination of eligibility with respect to
any individual shall be made--
(A) during the annual open enrollment period
applicable to the individual (or such other
enrollment period as may be specified by the
Secretary); and
(B) on the basis of the individual's
household income for the most recent taxable
year for which the Secretary, after
consultation with the Secretary of the
Treasury, determines information is available.
(2) Changes in circumstances.--The Secretary shall
provide procedures for making advance determinations on
the basis of information other than that described in
paragraph (1)(B) in cases where information included
with an application form demonstrates substantial
changes in income, changes in family size or other
household circumstances, change in filing status, the
filing of an application for unemployment benefits, or
other significant changes affecting eligibility,
including--
(A) allowing an individual claiming a
decrease of 20 percent or more in income, or
filing an application for unemployment
benefits, to have eligibility for the credit
determined on the basis of household income for
a later period or on the basis of the
individual's estimate of such income for the
taxable year; and
(B) the determination of household income in
cases where the taxpayer was not required to
file a return of tax imposed by this chapter
for the second preceding taxable year.
(c) Payment of Premium Tax Credits and Cost-Sharing
Reductions.--
(1) In general.--The Secretary shall notify the
Secretary of the Treasury and the Exchange through
which the individual is enrolling of the advance
determination under section 1411.
(2) Premium tax credit.--
(A) In general.--The Secretary of the
Treasury shall make the advance payment under
this section of any premium tax credit allowed
under section 36B of the Internal Revenue Code
of 1986 to the issuer of a qualified health
plan on a monthly basis (or such other periodic
basis as the Secretary may provide).
(B) Issuer responsibilities.--An issuer of a
qualified health plan receiving an advance
payment with respect to an individual enrolled
in the plan shall--
(i) reduce the premium charged the
insured for any period by the amount of
the advance payment for the period;
(ii) notify the Exchange and the
Secretary of such reduction;
(iii) include with each billing
statement the amount by which the
premium for the plan has been reduced
by reason of the advance payment; and
(iv) in the case of any nonpayment of
premiums by the insured--
(I) notify the Secretary of
such nonpayment; and
(II) allow a 3-month grace
period for nonpayment of
premiums before discontinuing
coverage.
(3) Cost-sharing reductions.--The Secretary shall
also notify the Secretary of the Treasury and the
Exchange under paragraph (1) if an advance payment of
the cost-sharing reductions under section 1402 is to be
made to the issuer of any qualified health plan with
respect to any individual enrolled in the plan. The
Secretary of the Treasury shall make such advance
payment at such time and in such amount as the
Secretary specifies in the notice.
(d) No Federal Payments for Individuals Not Lawfully
Present.--Nothing in this subtitle or the amendments made by
this subtitle allows Federal payments, credits, or cost-sharing
reductions for individuals who are not lawfully present in the
United States.
(e) State Flexibility.--Nothing in this subtitle or the
amendments made by this subtitle shall be construed to prohibit
a State from making payments to or on behalf of an individual
for coverage under a qualified health plan offered through an
Exchange that are in addition to any credits or cost-sharing
reductions allowable to the individual under this subtitle and
such amendments.
(f) Exclusion of Off-Exchange Coverage.--Advance payments
under this section, and advance determinations under section
1411, with respect to any credit allowed under section 36B
shall not be made with respect to any health plan which is not
enrolled in through an Exchange.
(g) Termination With Respect to Premium Tax Credit.--
Effective January 1, 2020, no provision of this section or
section 1411 shall apply to the credit allowed under section
36B of the Internal Revenue Code of 1986 (or to the advance
payment of, or determination of eligibility for, such credit or
payment).
* * * * * * *
TITLE IX--REVENUE PROVISIONS
Subtitle A--Revenue Offset Provisions
* * * * * * *
SEC. 9008. IMPOSITION OF ANNUAL FEE ON BRANDED PRESCRIPTION
PHARMACEUTICAL MANUFACTURERS AND IMPORTERS.
(a) Imposition of Fee.--
(1) In general.--Each covered entity engaged in the
business of manufacturing or importing branded
prescription drugs shall pay to the Secretary of the
Treasury not later than the annual payment date of each
calendar year beginning after 2010 a fee in an amount
determined under subsection (b).
(2) Annual payment date.--For purposes of this
section, the term ``annual payment date'' means with
respect to any calendar year the date determined by the
Secretary, but in no event later than September 30 of
such calendar year.
(b) Determination of Fee Amount.--
(1) In general.--With respect to each covered entity,
the fee under this section for any calendar year shall
be equal to an amount that bears the same ratio to the
applicable amount as--
(A) the covered entity's branded prescription
drug sales taken into account during the
preceding calendar year, bear to
(B) the aggregate branded prescription drug
sales of all covered entities taken into
account during such preceding calendar year.
(2) Sales taken into account.--For purposes of
paragraph (1), the branded prescription drug sales
taken into account during any calendar year with
respect to any covered entity shall be determined in
accordance with the following table:
Not more than $5,000,000............. 0 percent
More than $5,000,000 but not more 10 percent
than $125,000,000.
More than $125,000,000 but not more 40 percent
than $225,000,000.
More than $225,000,000 but not more 75 percent
than $400,000,000.
More than $400,000,000............... 100 percent.
(3) Secretarial determination.--The Secretary of the
Treasury shall calculate the amount of each covered
entity's fee for any calendar year under paragraph (1).
In calculating such amount, the Secretary of the
Treasury shall determine such covered entity's branded
prescription drug sales on the basis of reports
submitted under subsection (g) and through the use of
any other source of information available to the
Secretary of the Treasury.
(4) Applicable amount.--For purposes of paragraph
(1), the applicable amount shall be determined in
accordance with the following table:
Calendar year Applicable amount
2011................................. $2,500,000,000
2012................................. $2,800,000,000
2013................................. $2,800,000,000
2014................................. $3,000,000,000
2015................................. $3,000,000,000
2016................................. $3,000,000,000
2017................................. $4,000,000,000
2018................................. $4,100,000,000
2019 and thereafter.................. $2,800,000,000.
(c) Transfer of Fees to Medicare Part B Trust Fund.--There is
hereby appropriated to the Federal Supplementary Medical
Insurance Trust Fund established under section 1841 of the
Social Security Act an amount equal to the fees received by the
Secretary of the Treasury under subsection (a).
(d) Covered Entity.--
(1) In general.--For purposes of this section, the
term ``covered entity'' means any manufacturer or
importer with gross receipts from branded prescription
drug sales.
(2) Controlled groups.--
(A) In general.--For purposes of this
subsection, all persons treated as a single
employer under subsection (a) or (b) of section
52 of the Internal Revenue Code of 1986 or
subsection (m) or (o) of section 414 of such
Code shall be treated as a single covered
entity.
(B) Inclusion of foreign corporations.--For
purposes of subparagraph (A), in applying
subsections (a) and (b) of section 52 of such
Code to this section, section 1563 of such Code
shall be applied without regard to subsection
(b)(2)(C) thereof.
(3) Joint and several liability.--If more than one
person is liable for payment of the fee under
subsection (a) with respect to a single covered entity
by reason of the application of paragraph (2), all such
persons shall be jointly and severally liable for
payment of such fee.
(e) Branded Prescription Drug Sales.--For purposes of this
section--
(1) In general.--The term ``branded prescription drug
sales'' means sales of branded prescription drugs to
any specified government program or pursuant to
coverage under any such program.
(2) Branded prescription drugs.--
(A) In general.--The term ``branded
prescription drug'' means--
(i) any prescription drug the
application for which was submitted
under section 505(b) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C.
355(b)), or
(ii) any biological product the
license for which was submitted under
section 351(a) of the Public Health
Service Act (42 U.S.C. 262(a)).
(B) Prescription drug.--For purposes of
subparagraph (A)(i), the term ``prescription
drug'' means any drug which is subject to
section 503(b) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 353(b)).
(3) Exclusion of orphan drug sales.--The term
``branded prescription drug sales'' shall not include
sales of any drug or biological product with respect to
which a credit was allowed for any taxable year under
section 45C of the Internal Revenue Code of 1986. The
preceding sentence shall not apply with respect to any
such drug or biological product after the date on which
such drug or biological product is approved by the Food
and Drug Administration for marketing for any
indication other than the treatment of the rare disease
or condition with respect to which such credit was
allowed.
(4) Specified government program.--The term
``specified government program'' means--
(A) the Medicare Part D program under part D
of title XVIII of the Social Security Act,
(B) the Medicare Part B program under part B
of title XVIII of the Social Security Act,
(C) the Medicaid program under title XIX of
the Social Security Act,
(D) any program under which branded
prescription drugs are procured by the
Department of Veterans Affairs,
(E) any program under which branded
prescription drugs are procured by the
Department of Defense, or
(F) the TRICARE retail pharmacy program under
section 1074g of title 10, United States Code.
(f) Tax Treatment of Fees.--The fees imposed by this
section--
(1) for purposes of subtitle F of the Internal
Revenue Code of 1986, shall be treated as excise taxes
with respect to which only civil actions for refund
under procedures of such subtitle shall apply, and
(2) for purposes of section 275 of such Code, shall
be considered to be a tax described in section
275(a)(6).
(g) Reporting Requirement.--Not later than the date
determined by the Secretary of the Treasury following the end
of any calendar year, the Secretary of Health and Human
Services, the Secretary of Veterans Affairs, and the Secretary
of Defense shall report to the Secretary of the Treasury, in
such manner as the Secretary of the Treasury prescribes, the
total branded prescription drug sales for each covered entity
with respect to each specified government program under such
Secretary's jurisdiction using the following methodology:
(1) Medicare Part D program.--The Secretary of Health
and Human Services shall report, for each covered
entity and for each branded prescription drug of the
covered entity covered by the Medicare Part D program,
the product of--
(A) the per-unit ingredient cost, as reported
to the Secretary of Health and Human Services
by prescription drug plans and Medicare
Advantage prescription drug plans, minus any
per-unit rebate, discount, or other price
concession provided by the covered entity, as
reported to the Secretary of Health and Human
Services by the prescription drug plans and
Medicare Advantage prescription drug plans, and
(B) the number of units of the branded
prescription drug paid for under the Medicare
Part D program.
(2) Medicare Part B program.--The Secretary of Health
and Human Services shall report, for each covered
entity and for each branded prescription drug of the
covered entity covered by the Medicare Part B program
under section 1862(a) of the Social Security Act, the
product of--
(A) the per-unit average sales price (as
defined in section 1847A(c) of the Social
Security Act) or the per-unit Part B payment
rate for a separately paid branded prescription
drug without a reported average sales price,
and
(B) the number of units of the branded
prescription drug paid for under the Medicare
Part B program.
The Centers for Medicare and Medicaid Services shall
establish a process for determining the units and the
allocated price for purposes of this section for those
branded prescription drugs that are not separately
payable or for which National Drug Codes are not
reported.
(3) Medicaid program.--The Secretary of Health and
Human Services shall report, for each covered entity
and for each branded prescription drug of the covered
entity covered under the Medicaid program, the product
of--
(A) the per-unit ingredient cost paid to
pharmacies by States for the branded
prescription drug dispensed to Medicaid
beneficiaries, minus any per-unit rebate paid
by the covered entity under section 1927 of the
Social Security Act and any State supplemental
rebate, and
(B) the number of units of the branded
prescription drug paid for under the Medicaid
program.
(4) Department of Veterans Affairs programs.--The
Secretary of Veterans Affairs shall report, for each
covered entity and for each branded prescription drug
of the covered entity the total amount paid for each
such branded prescription drug procured by the
Department of Veterans Affairs for its beneficiaries.
(5) Department of Defense programs and TRICARE.--The
Secretary of Defense shall report, for each covered
entity and for each branded prescription drug of the
covered entity, the sum of--
(A) the total amount paid for each such
branded prescription drug procured by the
Department of Defense for its beneficiaries,
and
(B) for each such branded prescription drug
dispensed under the TRICARE retail pharmacy
program, the product of--
(i) the per-unit ingredient cost,
minus any per-unit rebate paid by the
covered entity, and
(ii) the number of units of the
branded prescription drug dispensed
under such program.
(h) Secretary.--For purposes of this section, the term
``Secretary'' includes the Secretary's delegate.
(i) Guidance.--The Secretary of the Treasury shall publish
guidance necessary to carry out the purposes of this section.
(j) Effective Date.--This section shall apply to calendar
years beginning after December 31, 2010.
(k) Conforming Amendment.--Section 1841(a) of the Social
Security Act is amended by inserting ``or section 9008(c) of
the Patient Protection and Affordable Care Act of 2009'' after
``this part''.
(l) Termination.--No fee shall be imposed under subsection
(a)(1) with respect to any calendar year beginning after
December 31, 2017.
SEC. 9010. IMPOSITION OF ANNUAL FEE ON HEALTH INSURANCE PROVIDERS.
(a) Imposition of Fee.--
(1) In general.--Each covered entity engaged in the
business of providing health insurance shall pay to the
Secretary not later than the annual payment date of
each calendar year beginning after 2013 a fee in an
amount determined under subsection (b).
(2) Annual payment date.--For purposes of this
section, the term ``annual payment date'' means with
respect to any calendar year the date determined by the
Secretary, but in no event later than September 30 of
such calendar year.
(b) Determination of Fee Amount.--
(1) In general.--With respect to each covered entity,
the fee under this section for any calendar year shall
be equal to an amount that bears the same ratio to the
applicable amount as--
(A) the covered entity's net premiums written
with respect to health insurance for any United
States health risk that are taken into account
during the preceding calendar year, bears to
(B) the aggregate net premiums written with
respect to such health insurance of all covered
entities that are taken into account during
such preceding calendar year.
(2) Amounts taken into account.--For purposes of
paragraph (1)--
(A) In general.--The net premiums written
with respect to health insurance for any United
States health risk that are taken into account
during any calendar year with respect to any
covered entity shall be determined in
accordance with the following table:
Not more than $25,000,000............ 0 percent
More than $25,000,000 but not more 50 percent
than $50,000,000.
More than $50,000,000................ 100 percent.
(B) Partial exclusion for certain exempt
activities.--After the application of
subparagraph (A), only 50 percent of the
remaining net premiums written with respect to
health insurance for any United States health
risk that are attributable to the activities
(other than activities of an unrelated trade or
business as defined in section 513 of the
Internal Revenue Code of 1986) of any covered
entity qualifying under paragraph (3), (4),
(26), or (29) of section 501(c) of such Code
and exempt from tax under section 501(a) of
such Code shall be taken into account.
(3) Secretarial determination.--The Secretary shall
calculate the amount of each covered entity's fee for
any calendar year under paragraph (1). In calculating
such amount, the Secretary shall determine such covered
entity's net premiums written with respect to any
United States health risk on the basis of reports
submitted by the covered entity under subsection (g)
and through the use of any other source of information
available to the Secretary.
(c) Covered Entity.--
(1) In general.--For purposes of this section, the
term ``covered entity'' means any entity which provides
health insurance for any United States health risk
during the calendar year in which the fee under this
section is due.
(2) Exclusion.--Such term does not include--
(A) any employer to the extent that such
employer self-insures its employees' health
risks,
(B) any governmental entity,
(C) any entity--
(i) which is incorporated as a
nonprofit corporation under a State
law,
(ii) no part of the net earnings of
which inures to the benefit of any
private shareholder or individual, no
substantial part of the activities of
which is carrying on propaganda, or
otherwise attempting, to influence
legislation (except as otherwise
provided in section 501(h) of the
Internal Revenue Code of 1986), and
which does not participate in, or
intervene in (including the publishing
or distributing of statements), any
political campaign on behalf of (or in
opposition to) any candidate for public
office, and
(iii) more than 80 percent of the
gross revenues of which is received
from government programs that target
low-income, elderly, or disabled
populations under titles XVIII, XIX,
and XXI of the Social Security Act, and
(D) any entity which is described in section
501(c)(9) of such Code and which is established
by an entity (other than by an employer or
employers) for purposes of providing health
care benefits.
(3) Controlled groups.--
(A) In general.--For purposes of this
subsection, all persons treated as a single
employer under subsection (a) or (b) of section
52 of the Internal Revenue Code of 1986 or
subsection (m) or (o) of section 414 of such
Code shall be treated as a single covered
entity (or employer for purposes of paragraph
(2)).
(B) Inclusion of foreign corporations.--For
purposes of subparagraph (A), in applying
subsections (a) and (b) of section 52 of such
Code to this section, section 1563 of such Code
shall be applied without regard to subsection
(b)(2)(C) thereof.
If any entity described in subparagraph (C) or (D) of
paragraph (2) is treated as a covered entity by reason
of the application of the preceding sentence, the net
premiums written with respect to health insurance for
any United States health risk of such entity shall not
be taken into account for purposes of this section.
(4) Joint and several liability.--If more than one
person is liable for payment of the fee under
subsection (a) with respect to a single covered entity
by reason of the application of paragraph (3), all such
persons shall be jointly and severally liable for
payment of such fee.
(d) United States Health Risk.--For purposes of this section,
the term ``United States health risk'' means the health risk of
any individual who is--
(1) a United States citizen,
(2) a resident of the United States (within the
meaning of section 7701(b)(1)(A) of the Internal
Revenue Code of 1986), or
(3) located in the United States, with respect to the
period such individual is so located.
(e) Applicable Amount.--For purposes of subsection (b)(1)--
(1) Years before 2019.--In the case of calendar years
beginning before 2019, the applicable amount shall be
determined in accordance with the following table:
Calendar year Applicable amount
2014................................. $8,000,000,000
2015................................. $11,300,000,000
2016................................. $11,300,000,000
2017................................. $13,900,000,000
2018................................. $14,300,000,000.
(2) Years after 2018.--In the case of any calendar
year beginning after 2018, the applicable amount shall
be the applicable amount for the preceding calendar
year increased by the rate of premium growth (within
the meaning of section 36B(b)(3)(A)(ii) of the Internal
Revenue Code of 1986) for such preceding calendar year.
(f) Tax Treatment of Fees.--The fees imposed by this
section--
(1) for purposes of subtitle F of the Internal
Revenue Code of 1986, shall be treated as excise taxes
with respect to which only civil actions for refund
under procedures of such subtitle shall apply, and
(2) for purposes of section 275 of such Code shall be
considered to be a tax described in section 275(a)(6).
(g) Reporting Requirement.--
(1) In general.--Not later than the date determined
by the Secretary following the end of any calendar
year, each covered entity shall report to the
Secretary, in such manner as the Secretary prescribes,
the covered entity's net premiums written with respect
to health insurance for any United States health risk
for such calendar year.
(2) Penalty for failure to report.--
(A) In general.--In the case of any failure
to make a report containing the information
required by paragraph (1) 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 by the covered
entity failing to file such report, an amount
equal to--
(i) $10,000, plus
(ii) the lesser of--
(I) an amount equal to
$1,000, multiplied by the
number of days during which
such failure continues, or
(II) the amount of the fee
imposed by this section for
which such report was required.
(B) Treatment of penalty.--The penalty
imposed under subparagraph (A)--
(i) shall be treated as a penalty for
purposes of subtitle F of the Internal
Revenue Code of 1986,
(ii) shall be paid on notice and
demand by the Secretary and in the same
manner as tax under such Code, and
(iii) with respect to which only
civil actions for refund under
procedures of such subtitle F shall
apply.
(3) Accuracy-related penalty.--
(A) In general.--In the case of any
understatement of a covered entity's net
premiums written with respect to health
insurance for any United States health risk for
any calendar year, there shall be paid by the
covered entity making such understatement, an
amount equal to the excess of--
(i) the amount of the covered
entity's fee under this section for the
calendar year the Secretary determines
should have been paid in the absence of
any such understatement, over
(ii) the amount of such fee the
Secretary determined based on such
understatement.
(B) Understatement.--For purposes of this
paragraph, an understatement of a covered
entity's net premiums written with respect to
health insurance for any United States health
risk for any calendar year is the difference
between the amount of such net premiums written
as reported on the return filed by the covered
entity under paragraph (1) and the amount of
such net premiums written that should have been
reported on such return.
(C) Treatment of penalty.--The penalty
imposed under subparagraph (A) shall be subject
to the provisions of subtitle F of the Internal
Revenue Code of 1986 that apply to assessable
penalties imposed under chapter 68 of such
Code.
(4) Treatment of information.--Section 6103 of the
Internal Revenue Code of 1986 shall not apply to any
information reported under this subsection.
(h) Additional Definitions.--For purposes of this section--
(1) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury or the Secretary's delegate.
(2) United States.--The term ``United States'' means
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, and the possessions of the
United States.
(3) Health insurance.--The term ``health insurance''
shall not include--
(A) any insurance coverage described in
paragraph (1)(A) or (3) of section 9832(c) of
the Internal Revenue Code of 1986,
(B) any insurance for long-term care, or
(C) any medicare supplemental health
insurance (as defined in section 1882(g)(1) of
the Social Security Act).
(i) Guidance.--The Secretary shall publish guidance necessary
to carry out the purposes of this section and shall prescribe
such regulations as are necessary or appropriate to prevent
avoidance of the purposes of this section, including
inappropriate actions taken to qualify as an exempt entity
under subsection (c)(2).
(j) Effective Date.--This section shall apply to calendar
years--
(1) beginning after December 31, 2013, and ending
before January 1, 2017, and
(2) beginning after December 31, 2017.
(k) Termination.--No fee shall be imposed under subsection
(a)(1) with respect to any calendar year beginning after
December 31, 2017.
* * * * * * *
----------
TITLE 31, UNITED STATES CODE
* * * * * * *
SUBTITLE II--THE BUDGET PROCESS
* * * * * * *
CHAPTER 13--APPROPRIATIONS
* * * * * * *
SUBCHAPTER II--TRUST FUNDS AND REFUNDS
* * * * * * *
Sec. 1324. Refund of internal revenue collections
(a) Necessary amounts are appropriated to the Secretary of
the Treasury for refunding internal revenue collections as
provided by law, including payment of--
(1) claims for prior fiscal years; and
(2) accounts arising under--
(A) ``Allowance or drawback (Internal
Revenue)'';
(B) ``Redemption of stamps (Internal
Revenue)'';
(C) ``Refunding legacy taxes, Act of March
30, 1928'';
(D) ``Repayment of taxes on distilled spirits
destroyed by casualty''; and
(E) ``Refunds and payments of processing and
related taxes''.
(b) Disbursements may be made from the appropriation made by
this section only for--
(1) refunds to the limit of liability of an
individual tax account; and
(2) refunds due from credit provisions of the
Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.)
enacted before January 1, 1978, or enacted by the
Taxpayer Relief Act of 1997, or from section 25A, 35,
36, 36A, 36B, 36C, 168(k)(4)(F), 53(e), 54B(h), [or
6431] 6431, or 7530 of such Code, or due under section
3081(b)(2) of the Housing Assistance Tax Act of 2008.
* * * * * * *
VII. DISSENTING VIEWS
DISSENTING VIEWS ON RECOMMENDATION TO REPEAL THE NET INVESTMENT INCOME
TAX, COMMITTEE PRINT 4
1. Donald Trump promised that ``we're going to have
insurance for everybody . . . [but it will be] much less
expensive and much better.'' This bill reveals those promises
for what they always were: empty campaign rhetoric.''--
Families USA\1\
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\1\http://familieusa.org/blog/2017/03/healthy-and-wealthy-benefit-
under-house-republican-affordable-care-act-repeal-plan
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2. ``We cannot support the AHCA as drafted because of the
expected decline in health insurance coverage and the potential
harm it would cause to vulnerable patient populations.''--
American Medical Association\2\
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\2\https://www.ama.-assn.org.sites/default/files/media-browser/
public/washington/ama-letter-on-ahca.pdf
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3. ``Repeal-and-replace is a gigantic transfer of wealth
from the lowest-income Americans to the highest-income
Americans.''--Edward D. Kleinbard, former chief of staff for
the Joint Committee on Taxation and professor, University of
Southern California School of Law.\3\
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\3\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
care-act-repeal.html?_r=1.
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The five reconciliation legislative recommendations
considered by the Committee on Ways and Means (the
``Committee'') and referred to the Committee on Budget
(collectively, the Ways and Means reconciliation package or the
``reconciliation package'') was a far-reaching attempt to
undermine our health systems from Medicare to employer
sponsored health insurance in order to give tax cuts to the
wealthiest and corporations. After almost 18 hours of debate,
the Committee mark-up ended with a party-line vote on the
reconciliation package, which is likely to take health
insurance away from millions of Americans. This reconciliation
package, coupled with what was passed out of the Energy and
Commerce Committee, would harm access to health care for
middle-class Americans and undermine Medicare's long-term
viability while cutting taxes for corporations and the
wealthiest Americans.
The Committee moved forward irresponsibly, without any
official accounting about the estimated effect of the
reconciliation package on health insurance coverage, out-of-
pocket costs, or premium increases. While the Joint Committee
on Taxation (JCT) estimated that the reconciliation package
includes nearly $600 billion worth of tax breaks, as of the
mark-up, the Congressional Budget Office (CBO) was unable to
provide estimates about the package's effect on American
families. Additionally the JCT score was incomplete as of the
mark-up and did not provide an official accounting of all of
the provisions considered by the Committee. Both the Ways and
Means and Energy and Commerce Committees moved forward to pass
recommendations out of each Committee without any sense from
CBO of coverage losses due to the severe cuts to Medicaid, the
repeal of the individual and employer-shared responsibility
provisions of current law, or the changes in the tax credits
available to help purchase health insurance on the individual
market.
CBO provided the Committee an estimate of the effects after
the reconciliation package was reported to the Committee on
Budget from the Ways and Means and Energy and Commerce
Committees. This estimate showed that 24 million Americans
would lose coverage, with 14 million Americans losing coverage
in the first year alone.
The Committee's reconciliation package provided generous
tax cuts to the wealthiest, while reducing health insurance
assistance for middle-class Americans. The tax breaks
considered by the Committee are focused on the wealthy
individuals and corporations, instead of middle-class
Americans. About $275 billion in tax breaks would benefit high-
income earners; about 62% of the tax breaks would go to
millionaires in 2020. Businesses and corporations are to
receive nearly $192 billion in tax cuts. These and other tax
breaks add up to nearly $600 billion in lost revenue.
Democrats objected strenuously to the Republican approach
and instead believe the Committee should focus on policies that
matter to middle-class Americans under the jurisdiction of this
Committee, including financing long-term infrastructure,
reforming the tax system to address income inequality, and
further building on President Obama's record of job creation.
Democrats believe that the reconciliation package will
destabilize the health insurance market, which represents 18
percent of our gross domestic product.
The reconciliation package continues Republican efforts to
undermine and destabilize the health insurance market. It
undermines current law and the stability of both the individual
and group health insurance markets by gutting individual and
employer-shared responsibility provisions. The reconciliation
package would reduce the uptake of the premium tax credits and
the Medicaid expansion established in the Affordable Care Act
(ACA), which have made health care affordable for millions of
individuals. Reduced uptake of the Medicaid expansion and the
tax credits disproportionately impacts low- and middle-income
Americans and places them at risk for health insecurity and
unexpected medical expenses. Based on independent estimates,
roughly 24 million Americans would lose their insurance
coverage because of this reconciliation package when taken
together with the reconciliation recommendations passed by the
Energy and Commerce Committee.\4\ Further, this reconciliation
package reduces the life of the Medicare Trust Fund by three
years by reducing $170 billion from the Medicare Trust Fund,
which puts Medicare at risk for 57 million seniors and
individuals with disabilities.
---------------------------------------------------------------------------
\4\https://www.brookings.edu/blog/up-front/2017/03/09/expect-the-
cbo-to-estimate-large-coverage-losses-from-the-gop-health-care-plan/
---------------------------------------------------------------------------
Individual and employer-shared responsibility provisions
are key to maintaining the robust and healthy risk pools that
allow the ACA health insurance reforms to improve consumer
protections while controlling health care costs. This is
because well-functioning insurance markets rely on
participation of both healthy and sick individuals to spread
risk across the pool. The reconciliation package effectively
would repeal the individual and employer-shared responsibility
penalty, leading to premium increases of an estimated 20
percent in the individual market alone. In spite of President
Trump and Congressional Republicans' efforts to sabotage the
ACA, millions of Americans have enrolled in the health
insurance Marketplaces, many using the available financial
assistance, and millions more have enrolled in expanded
Medicaid programs.
Despite promises made by President Trump, the
reconciliation package would not cover more people or offer
more affordable coverage with comparable benefits. Instead,
this package leads to an estimated coverage loss of 24 million
people while gutting benefits and consumer protections as a
mechanism for affordability. When coupled with the legislation
passed out of the Energy and Commerce Committee, the
reconciliation package would return to a time when the market
once again discriminates against those with pre-existing
conditions and leaves those that might need medical care in the
future without meaningful coverage. The reconciliation package
provides for tax credits less generous than current law with no
assistance with out-of-pocket expenses. Instead, the
reconciliation package enshrines high deductible health plans
that would increase out-of-pocket expenses. However, these
plans do not address the underlying issues of access to quality
services and the cost of care.
Since January of 2009, the Republicans voted to repeal or
undermine the ACA more than 65 times. Democrats offered a
number of amendments in Committee to point out serious flaws
with the reconciliation package. For example, at the beginning
of the mark up, Democrats asked Republicans to postpone mark up
until CBO could provide a comprehensive report on costs,
coverage losses, and premium effects of the reconciliation
package.
In that regard, Congressman Lloyd Doggett (D-TX) offered a
motion to postpone the markup for one week to allow time for
review of the bill and the CBO estimate that was not available
prior to or during the mark up. For over four decades, CBO has
been recognized as the official referee of costs and effects of
legislation passed in the House and Senate. Congress relies on
CBO's non-partisan estimates to evaluate legislative proposals.
Democrats were concerned that Republicans deliberately moved
forward with the reconciliation package without a CBO score in
an effort to conceal the harmful effects of the reconciliation
package on nearly all Americans.
The contrast of this rushed process versus the lengthy and
transparent process of enacting the ACA is striking. In 2009,
House Committees posted a draft of the ACA legislation for
review and comment a month before the mark-up process began,
holding multiple hearings and providing the public with two
preliminary CBO estimates on July 8th and July 14th. Democrats
maintain that there is no reason to rush to mark-up this
reconciliation package without a CBO score, or without a
hearing to consider the implications of the package.
Congressman Doggett's amendment was tabled on a party line
vote.
The Committee print repeals the current tax on net
investment income. The ACA imposed a 3.8% tax on net investment
income at a time when capital gains rates were near historical
lows. Repeal of this tax, as well as the Medicare tax on high
income earners (described below), would drain $157.6 billion
from the Treasury. The JCT found that by 2020, the repeal of
the two tax provisions would save about $15.9 billion a year
for those with incomes of $1 million or more. By 2026, the
final year of the analysis, they would combine to save that
group a little more than $20 billion a year.\5\ With the 3.8
percent tax imposed by the ACA, the top capital gains rate
stands at 23.8 percent for the wealthiest Americans, which is a
lower rate than it was for most of the previous four
decades.\6\
---------------------------------------------------------------------------
\5\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
care-act-repeal.html?_r=1
\6\https://www.nytimes.com/2017/03/10/business/tax-cuts-affordable-
care-act-repeal.html?_r=1
---------------------------------------------------------------------------
The Republican bill gives sixty percent of the tax cuts in
this bill to millionaires, and each of the top 400 taxpayers
would receive a $7 million tax break.\7\ In contrast, the
Republicans are slashing the social safety net, cutting $370
billion from Medicaid, and increasing taxes to the middle-class
families by rolling back the financial assistance to buy health
insurance and cover out-of-pocket costs.
---------------------------------------------------------------------------
\7\http://www.cbpp.org/research/federal-tax/aca-repeal-would-
lavish-medicare-tax-cuts-on-400-highest-income-households
---------------------------------------------------------------------------
No doubt this provision benefits the richest Americans.
President Trump's cabinet members and nominees have a combined
net worth of $13 billion.\8\ They likely would be significant
beneficiaries of the tax giveaways under this bill. Those in
the top 0.1 percent would each receive an average tax cut of
about $197,000 under the Republican plan.\9\ Those at the
lowest income levels would get nothing--and lose health
coverage.
---------------------------------------------------------------------------
\8\https://www.bostonglobe.com/metro/2016/12/20/trump-cabinet-
picks-far-are-worth-combined/XvAJmHCgkHhOI3ISxgiKvRM/story.html
\9\http://www.taxploicycenter.org/taxvox/repealing-affordable-care-
act-would-cut-taxes-high-income-households-raise-taxes-many-others
---------------------------------------------------------------------------
Congressman Davis (D-IL) offered an amendment to require
any taxpayer benefiting from the net investment income tax
repeal for high-income earners to have a clean drug test each
year prior to receiving this tax benefit, given that
Republicans in the House recently voted (H.J. Res.42) to allow
states to require drug testing for Americans who apply to
receive unemployment benefits. Not surprisingly, this amendment
was defeated along party lines.
Richard E. Neal,
Ranking Member.
COMMITTEE PRINT
Budget Reconciliation Legislative Recommendations Relating to Repeal of
Net Investment Income Tax
Subtitle __--Repeal of Net Investment Income Tax
SEC. _1. REPEAL OF NET INVESTMENT INCOME TAX.
(a) In General.--Subtitle A of the Internal Revenue Code of
1986 is amended by striking chapter 2A.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
Amendment to Section_15: Refundable Tax Credit for Health Insurance
Coverage Offered by Rep. Linda T. Sanchez
Sense of Congress that the Tanning Tax should not be
repealed.
AMENDMENTS CONSIDERED BY THE COMMITTEE ON WAYS AND MEANS
Amendment
Offered by Ms. Sanchez of California
[Relating to Repeal of Tanning Tax]
Page 1, strike lines 3 through 8 and insert the following:
SEC. _1. SENSE OF CONGRESS REGARDING REPEAL OF TANNING TAX.
It is the sense of Congress that chapter 49 of the Internal
Revenue Code of 1986 should not be repealed.
----------
Amendment to AINS to the Budget Reconciliation Legislative
Recommendation Relating to Repeal of Certain Consumer Taxes Offered by
Rep. Blumenauer
The amendment would strike the repeal of the pharmaceutical
company fee and transfer the revenues to the Federal
Supplemental Medical Insurance trust fund, in order to help
finance Medicare Part B and Part D.
----------
Amendment to Recommendations relating to repeal of certain consumer
taxes
Offered by Mr. Blumenauer of Oregon
Strike section _1 and insert the following:
SEC. _1. APPLICATION OF CERTAIN REVENUES TOWARDS MEDICARE PART B TRUST
FUND.
The Secretary of the Treasury shall provide for the transfer,
annually to the credit of the Federal Supplementary Medical
Insurance Trust Fund, established under section 1841 of the
Social Security Act (42 U.S.C. 1395t), of an amount equivalent
to the net annual revenues resulting from the application of
section 9008 of the Patient Protection and Affordable Care Act
(26 U.S.C. 4001 note prec.).
----------
Amendment to the Amendment in the Nature of A Substitute to the Budget
Reconciliation Legislative Recommendation Relating to Repeal of the Net
Investment Income Tax by Rep. Davis of Illinois
The amendment would require the taxpayer benefiting from
the investment tax benefit to have a clean drug test annually
prior to receipt.
----------
Amendment
Offered by Mr. Danny K. Davis of Illinois
Repeal of Net Investment Income Tax
Add at the end the following new subsection:
(c) Application.--The amendment made by this section shall
not apply to any taxpayer for a taxable year unless the
taxpayer (and the spouse of the taxpayer in the case of a joint
return) have a clean drug test during the 1-year period ending
on the date of the filing of the return of tax for the taxable
year.
----------
Amendment to H.R. XXXX Offered by Ranking Member Richard Neal (MA)
The amendment would repeal Medicare tax increase.
----------
Amendment
Offered by M_. ______
Strike section __14 (relating to repeal of Medicare tax
increase).
----------
If consumers like the ACA they can keep it: Allows
consumers the choice between the ACA's tax credits, or the
American Health Care Act tax credits.
----------
Amendment
Offered by Mr. Blumenauer
At the end of the subtitle, add the following new section:
SEC. ___. ALLOWING CONSUMER CHOICE OF TAX CREDITS.
An individual may make an election under this section to
apply section 36B of the Internal Revenue Code of 1986. If an
individual so elects, the Secretary of the Treasury shall
evaluate such individual's tax liability--
(1) as if such section 36B were in effect; and
(2) without regard to section 36C of such Code.
----------
Amendment to [Amendment in the Nature of a Substitute to the Committee
Print Relating to Repeal and Replace of Health-Related Tax Policy]
Offered by Rep. DelBene
The amendment would fully repeal the excise tax on high-
cost employee health plans (``Cadillac tax'').
Amendment
Offered by Ms. DelBene, for herself and Ms. Sanchez
S
Page 15, lines 9 through 10, strike ``, and before January 1,
2025''.
----------
Sewell Amendment #3 (Protections for Farmers)
This amendment would ensure that the American Health Care
Act does not result in an increase in medical costs or taxes
for socially or geographically disadvantaged farmers or farmers
with disabilities.
----------
Amendment
Offered by Ms. Sewell of Alabama
Relating to Repeal and Replace of Health-Related Tax Policy Draft
Add at the end the following:
SEC. _19. INCREASE IN MEDICAL COSTS OR TAXES FOR SOCIALLY OR
GEOGRAPHICALLY DISADVANTAGED FARMERS OR FARMERS
WITH DISABILITIES.
Nothing in this subtitle (including any amendment made by
this subtitle) shall be construed to increase medical costs or
taxes for socially or geographically disadvantaged farmers or
farmers with disabilities.
----------
Amendment to H.R.__, The American Health Care Act Offered by Rep. Chu
The amendment strikes the abortion restrictions in the
bill.
Amendment to
Offered by Ms. Judy Chu of California with Ms. DelBene and Ms. Sanchez
[Repeal and Replace Health-Related Tax Policy]
Page 2, line 2, strike ``, and'' and all that follows through
line 12 and insert a period.
Page 4, strike line 1 and all that follows through page 5,
line 9.
Page 11, strike line 18 and all that follows through page 13,
line 14.
Page 13, strike lines 19 through 23.
Page 24, line 25, insert ``and'' after the comma.
Page 25, strike lines 1 through 5 and redesignate the
succeeding subparagraph accordingly.
Page 33, strike line 13 and all that follows through page 34,
line 13.
----------
Amendment to the Amendment in the Nature of a Substitute to the Budget
Reconciliation Legislative Recommendations Relating to Repeal and
Replace of Certain Health-Related Tax Policy Provisions by Rep. Davis
of Illinois
The amendment would require that the credit apply only to
health plans that include services from community providers,
including rural providers, community health centers, and
children's hospitals.
----------
Amendment to
Offered by Mr. Davis of Illinois
[Relating to Repeal and Replace of Health-Related Tax Policy]
In section 36C of the Internal Revenue Code of 1986, as
inserted by section _15, at the end of subsection (f)(1), add
the following flush matter:
``Such term does not include any health insurance
coverage unless the coverage provides benefits for
items and services furnished by or through essential
community providers, including rural providers,
community health centers, and children's hospitals, in
a manner consistent with the criteria established under
section 1311(c)(1)(C) of the Patient Protection and
Affordable Care Act (42 U.S.C. 18031(c)(1)(C)), as in
effect on January 1, 2017.''.
----------
Amendment to [Amendment in the Nature of a Substitute to the Committee
Print Relating to Repeal and Replace of Health-Related Tax Policy]
Offered by Rep. DelBene
The amendment would strike the underlying bill's repeal of
the Small Business Tax Credit and insert reforms that make the
tax credit accessible to more small businesses, available for
three consecutive years (currently two), and easier to claim by
eliminating burdensome requirements.
----------
Amendment to Recommendations Relating to Repeal and Replace
Offered by Ms. DelBene of Washington, for herself, Mr. Kind, Mr.
Higgins and Ms. Chu
Strike section _04 and insert the following:
SEC. _04. EXPANSION AND MODIFICATION OF CREDIT FOR EMPLOYEE HEALTH
INSURANCE EXPENSES OF SMALL EMPLOYERS.
(a) Expansion of Definition of Eligible Small Employer.--
Subparagraph (A) of section 45R(d)(1) of the Internal Revenue
Code of 1986 is amended by striking ``25'' and inserting
``50''.
(b) Amendment To Phaseout Determination.--Subsection (c) of
section 45R of the Internal Revenue Code of 1986 is amended to
read as follows:
``(c) Phaseout of Credit Amount Based on Number of Employees
and Average Wages.--The amount of the credit determined under
subsection (b) (without regard to this subsection) shall be
adjusted (but not below zero) by multiplying such amount by the
product of--
``(1) the lesser of--
``(A) a fraction the numerator of which is
the excess (if any) of 50 over the total number
of full-time equivalent employees of the
employer and the denominator of which is 30,
and
``(B) 1, and
``(2) the lesser of--
``(A) a fraction--
``(i) the numerator of which is the
excess (if any) of--
``(I) the dollar amount in
effect under subsection
(d)(3)(B) for the taxable year,
multiplied by 3, over
``(II) the average annual
wages of the employer for such
taxable year, and
``(ii) the denominator of which is
the dollar amount so in effect under
subsection (d)(3)(B), multiplied by 2,
and
``(B) 1.''.
(c) Extension of Credit Period.--Paragraph (2) of section
45R(e) of the Internal Revenue Code of 1986 is amended by
striking ``2-consecutive-taxable year period'' and all that
follows and inserting ``3-consecutive-taxable year period
beginning with the first taxable year beginning after 2014 in
which--
``(A) the employer (or any predecessor)
offers one or more qualified health plans to
its employees through an Exchange, and
``(B) the employer (or any predecessor)
claims the credit under this section.''.
(d) Average Annual Wage Limitation.--Subparagraph (B) of
section 45R(d)(3) of the Internal Revenue Code of 1986 is
amended to read as follows:
``(B) Dollar amount.--For purposes of
paragraph (1)(B) and subsection (c)(2), the
dollar amount in effect under this paragraph is
the amount equal to 110 percent of the poverty
line (within the meaning of section 36B(d)(3))
for a family of 4.''.
(e) Elimination of Uniform Percentage Contribution
Requirement.--Paragraph (4) of section 45R(d) of the Internal
Revenue Code of 1986 is amended by striking ``a uniform
percentage (not less than 50 percent)'' and inserting ``at
least 50 percent''.
(f) Elimination of Cap Relating to Average Local Premiums.--
Subsection (b) of section 45R of the Internal Revenue Code of
1986 is amended by striking ``the lesser of'' and all that
follows and inserting ``the aggregate amount of nonelective
contributions the employer made on behalf of its employees
during the taxable year under the arrangement described in
subsection (d)(4) for premiums for qualified health plans
offered by the employer to its employees through an
Exchange.''.
(g) Conforming Amendment Relating to Annual Wage
Limitation.--Subparagraph (B) of section 45R(d)(1) of the
Internal Revenue Code of 1986 is amended by striking ``twice''
and inserting ``three times''.
(h) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred in taxable years
beginning after December 31, 2016.
----------
Amendment to Section __15: Refundable Tax Credit for Health Insurance
Coverage Offered by Rep. Linda Sanchez
Health plans cannot charge discriminate on the basis of
gender.
----------
Amendment
Offered by Ms. Sanchez
[Relating to Repeal and Replace of Health-Related Tax Policy]
In section 36C of the Internal Revenue Code of 1986, as
inserted by section _15, at the end of subsection (f)(1), add
the following flush matter:
``Such term does not include any health insurance
coverage for which women are charged more than men.''.
----------
Amendment to H.R. ___
Offered by Rep. John Lewis (GA)
This amendment would strike the entire section and replace
it with a set of principles for any health reform legislation.
----------
Amendment
Offered by Mr. Lewis of Georgia
Strike section _01 and all that follows and insert the
following:
SEC. _01. PRINCIPLES FOR HEALTH REFORM.
It is the sense of Congress that--
(1) affordable preventive health care is the right of
every American and not a privilege of the wealthy,
(2) significant health care legislation should be
developed through an open, transparent, and inclusive
process, and
(3) any replacement of the Affordable Care Act should
not put undue financial or health burdens on
individuals and families who are elderly, middle and
working class, low-income, or have chronic health
conditions.
----------
Amendment by Chairman Kevin Brady (TX-08) To Amend the Chairman's
Amendment in the Nature of a Substitute to the Committee Print Relating
to Repeal and Replace of Health-Related Tax Policy
This amendment would prohibit short-term limited duration
insurance from being eligible coverage for purposes of the
credit established under 36C.
----------
Amendment to the Amendment in the Nature of a Substitute to the
Committee Print Relating to Repeal and Replace of Health-Related Tax
Policy
Offered by Mr. Brady of Texas
In section 36C(f)(1) of the Internal Revenue Code of 1986, as
proposed to be inserted by section _15--
(1) strike ``and'' at the end of subparagraph (D),
(2) redesignate subparagraph (E) as subparagraph (F),
and
(3) insert after subparagraph (D) the following:
``(E) such coverage does not consist of
short-term limited duration insurance (as
defined by the Secretary), and''.
VOTES OF THE COMMITTEE ON THE BUDGET
----------
Clause 3(b) of House Rule XIII requires each committee
report to accompany any bill or resolution of a public
character to include the total number of votes cast for and
against each roll call vote, on a motion to report and any
amendments offered to the measure or matter, together with the
names of those voting for and against.
Listed below are the actions taken in the Committee on the
Budget of the House of Representatives on the American Health
Care Act of 2017.
On March 16, 2017, the Committee met in open session, a
quorum being present.
Mr. Rokita asked unanimous consent that the Chair be
authorized, consistent with clause 4 of House Rule XVI, to
declare a recess at any time during the Committee meeting.
There was no objection to the unanimous consent request.
The Committee adopted and ordered reported the American
Health Care Act of 2017.
The Committee on the Budget took the following votes:
Mr. Rokita made a motion that the Committee report the bill
with the recommendation that the bill do pass.
The motion was agreed to by a roll call vote of 19 ayes to
17 noes.
ROLLCALL VOTE NO. 1
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
Mr. Rokita made a motion that on the measure reported the
staff be authorized to make any necessary technical and
conforming corrections prior to filing the bill, such as
inserting the short title of the bill, that the motion to
reconsider be laid on the table, and that, pursuant to clause 1
of rule XXII, the Chair be authorized to offer motions to go to
conference on the reported bill or any companion measure from
the Senate.
The motion was agreed to without objection.
Motions on the Rule for Consideration of the
American Health Care Act of 2017
A Motion Offered by Mr. Boyle and Mr. Jeffries
1. Mr. Boyle and Mr. Jeffries moved that the Committee on
the Budget direct its Chairman to request that the rule
providing for consideration of the American Health Care Act
make in order an amendment that would ensure the number of
individuals without health insurance does not increase and that
health care costs for individuals do not rise.
The motion was not agreed to by a roll call vote of 14 ayes
and 20 noes.
ROLLCALL VOTE NO. 2
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Mr. Higgins and Mr. Khanna
2. Mr. Higgins and Mr. Khanna moved that the Committee on
the Budget direct its Chairman to request that the rule
providing for consideration of the American Health Care Act
make in order an amendment that strikes provisions in the bill
relating to reductions in coverage or benefits, increased
costs, and tax cuts.
The motion was not agreed to by a roll call vote of 14 ayes
and 22 noes.
ROLLCALL VOTE NO. 3
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Ms. Jayapal and Ms. Jackson Lee
3. Ms. Jayapal and Ms. Jackson Lee moved that the Committee
on the Budget direct its Chairman to request that the rule
providing for consideration of the American Health Care Act
make in order an amendment that strikes language in the bill
relating to ending Medicaid expansion, the Medicaid per capita
cap, and the bill's tax cuts.
The motion was not agreed to by a roll call vote of 14 ayes
and 22 noes.
ROLLCALL VOTE NO. 4
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Mr. Moulton and Mr. Yarmuth
4. Mr. Moulton and Mr. Yarmuth moved that the Committee on
the Budget direct its Chairman to request that the rule
providing for consideration of the American Health Care Act
make in order an amendment that strikes all provisions in the
bill that lead to increased costs and reductions in coverage
numbers in addition to tax cuts provided by the bill.
The motion was not agreed to by a roll call vote of 13 ayes
and 21 noes.
ROLLCALL VOTE NO. 5
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) BOYLE
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Ms. Lee and Ms. Schakowsky
5. Ms. Lee and Ms. Schakowsky moved that the Committee on
the Budget direct its Chairman to request that the rule
providing for consideration of the American Health Care Act
make in order an amendment that would strike all provisions in
the bill prohibiting mandatory funding for Planned Parenthood
clinics for one year.
The motion was not agreed to by a roll call vote of 14 ayes
and 21 noes.
ROLLCALL VOTE NO. 6
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Ms. DelBene and Ms. Wasserman Schultz
6. Ms. DelBene and Ms. Wasserman Schultz moved that the
Committee on the Budget direct its Chairman to request that the
rule providing for consideration of the American Health Care
Act make in order an amendment that strikes language
accelerating the insolvency of the Medicare Hospital Insurance
Trust Fund by three years by repealing the additional Medicare
tax on high-income earners.
The motion was not agreed to by a roll call vote of 13 ayes
and 21 noes.
ROLLCALL VOTE NO. 7
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) BOYLE
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Ms. Lujan Grisham and Mr. Carbajal
7. Ms. Lujan Grisham and Mr. Carbajal moved that the
Committee on the Budget direct its Chairman to request that the
rule providing for consideration of the American Health Care
Act make in order an amendment that would prevent the bill from
taking effect until the Secretary of Health and Human Services
determines that the bill would not decrease coverage, increase
costs, or undermine parity of mental health and substance abuse
services.
The motion was not agreed to by a roll call vote of 14 ayes
and 22 noes.
ROLLCALL VOTE NO. 8
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES X
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Mr. Rokita
8. Mr. Rokita moved that the Committee on the Budget direct
its Chairman to express the support of the Committee prior to
the consideration of the rule for the American Health Care Act
for state flexibility in the design of their Medicaid programs.
The motion was agreed to by a roll call vote of 21 ayes and
12 noes.
ROLLCALL VOTE NO. 9
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) BOYLE
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Mr. Gaetz
9. Mr. Gaetz moved that the Committee on the Budget direct
its Chairman to express the support of the Committee prior to
the consideration of the rule for the American Health Care Act
for policies that do not incentivize new Medicaid enrollment.
The motion was agreed to by a roll call vote of 22 ayes and
13 noes.
ROLLCALL VOTE NO. 10
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Mr. Palmer
10. Mr. Palmer moved that the Committee on the Budget
direct its Chairman to express the support of the Committee
prior to the consideration of the rule for the American Health
Care Act for encouraging able-bodied, working-age adults
without dependents to meet a work requirement while enrolled in
Medicaid.
The motion was agreed to by a roll call vote of 21 ayes and
13 noes.
ROLLCALL VOTE NO. 11
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
A Motion Offered by Mr. McClintock
11. Mr. McClintock moved that the Committee on the Budget
direct its Chairman to express the support of the Committee
prior to the consideration of the rule for the American Health
Care Act for policies that ensure the personal tax credits are
afforded to the population they are intended to serve.
The motion was agreed to by a roll call vote of 27 ayes and
8 noes.
ROLLCALL VOTE NO. 12
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
BLACK X YARMUTH X
(TN) (KY)
(Chairma (Ranking
n) )
------------------------------------------------------------------------
ROKITA X LEE (CA) X
(IN)
(Vice
Chairman
)
------------------------------------------------------------------------
DIAZ-BALA X LUJAN X
RT (FL) GRISHAM
(NM)
------------------------------------------------------------------------
COLE (OK) X MOULTON X
(MA)
------------------------------------------------------------------------
McCLINTOC X JEFFRIES
K (CA) (NY)
------------------------------------------------------------------------
WOODALL X HIGGINS X
(GA) (NY)
------------------------------------------------------------------------
SANFORD X DelBENE X
(SC) (WA)
------------------------------------------------------------------------
WOMACK X WASSERMAN X
(AR) SCHULTZ
(FL)
------------------------------------------------------------------------
BRAT (VA) X BOYLE X
(PA)
------------------------------------------------------------------------
GROTHMAN X KHANNA X
(WI) (CA)
------------------------------------------------------------------------
PALMER X JAYAPAL X
(AL) (WA)
(Vice
Ranking)
------------------------------------------------------------------------
WESTERMAN X CARBAJAL X
(AR) (CA)
------------------------------------------------------------------------
RENACCI X JACKSON X
(OH) LEE (TX)
------------------------------------------------------------------------
JOHNSON X SCHAKOWSK X
(OH) Y (IL)
------------------------------------------------------------------------
SMITH X .........
(MO)
------------------------------------------------------------------------
LEWIS X .........
(MN)
------------------------------------------------------------------------
BERGMAN X .........
(MI)
------------------------------------------------------------------------
FASO (NY) X .........
------------------------------------------------------------------------
SMUCKER X .........
(PA)
------------------------------------------------------------------------
GAETZ X .........
(FL)
------------------------------------------------------------------------
ARRINGTON X .........
(TX)
------------------------------------------------------------------------
FERGUSON X
(GA)
------------------------------------------------------------------------
HOUSE REPORT REQUIREMENTS
----------
Committee Oversight Findings
Clause 3(c)(1) of rule XIII of the Rules of the House of
Representatives requires the report of a committee on a measure
to contain oversight findings and recommendations required
pursuant to Clause (2)(b)(1) of rule X. The Committee on the
Budget has examined its activities over the past session and
has determined that there are no specific oversight findings on
the text of the reported bill.
Committee Cost Estimate
For purposes of Clauses 3(c)(2) and (3) of rule XIII of the
Rules of the House of Representatives and Section 308(a)(1) of
the Congressional Budget and Impoundment Control Act of 1974
(relating to estimates of new budget authority, new spending
authority, new credit authority, or increased or decreased
revenues or tax expenditures), the committee report
incorporates the cost estimate prepared by the Director of the
Congressional Budget Office pursuant to Sections 402 and 423 of
the Congressional Budget and Impoundment Control Act of 1974.
The required matter is included in the report language for each
title of the legislative recommendations submitted by the
appropriate authorizing committees and reported to the House by
the Committee on the Budget.
Performance Goals and Objectives
Clause 3(c)(4) of rule XIII of the Rules of the House of
Representatives requires the report of a committee on a measure
to include a statement of general performance goals and
objectives, including outcome-related goals and objectives, for
which the measure authorizes funding. This bill is reported
pursuant to Section 2002 of S. Con. Res. 3, the Concurrent
Resolution on the Budget for Fiscal Year 2017. The goals and
objectives of this bill are to reduce the deficit by at least
$2 billion over the 10-year period and clear the way for
patient-centered health care reform that meets the principles
set forth in the introduction of this report.
Constitutional Authority Statement
Clause 7(c)(1) of rule XII of the Rules of the House of
Representatives requires each report of a committee on a public
bill or public joint resolution contain a statement citing the
specific powers granted to Congress in the Constitution to
enact the law proposed by the bill or joint resolution. The
Committee on the Budget finds the Constitutional authority for
this legislation in Article I of the Constitution, Sections 5
and 8.
Changes in Existing Law Made by the Bill, as Reported
Clause 3(e) of rule XIII of the Rules of the House of
Representatives requires each report of a committee on a bill
or joint resolution contain the text of statutes that are
proposed to be repealed and a comparative print of that part of
the bill proposed to be amended whenever the bill repeals or
amends any statute. The required matter is included in the
report language for each title of the legislative
recommendations submitted by the appropriate authorizing
committees and reported to the House by the Committee on the
Budget.
Federal Mandates Statement
Section 423 of the Congressional Budget and Impoundment
Control Act of 1974 requires a statement of whether the
provisions of the reported bill include unfunded mandates. The
Congressional Budget Office has determined that the bill
contains no intergovernmental or private sector mandates within
the narrow definition of the Unfunded Mandates Reform Act of
1995. Any statements regarding unfunded mandates for the
legislative recommendations submitted by each of the
authorizing committees are included under the appropriate
titles.
Advisory on Earmarks
In compliance with Clause 9 of rule XXI of the Rules of the
House of Representatives, the bill does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in Clause 9(e), 9(f), or 9(g) of rule XXI
of the Rules of the House of Representatives.
Duplication of Federal Programs
In compliance with Clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the reconciliation bill
reported by the Committee on the Budget does not establish or
reauthorize: (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 Section 6104 of Title 31, United States Code.
Disclosure of Directed Rulemakings
Section 3(i) of H. Res. 5 requires committee reports on any
bill or joint resolution to include a statement estimating the
number of directed rulemakings required by the measure. This
bill does not require any directed rulemakings.
VIEWS OF COMMITTEE MEMBERS
----------
Clause 2(c) of rule XIII of the Rules of the House of
Representatives requires each report by a committee on a public
matter to include any additional, minority, supplemental, or
dissenting views submitted pursuant to Clause 2(l) of rule XI
by one or more members of the committee. In addition, this
report includes views from members of committees submitting
reconciliation recommendations pursuant to Section 2002 of S.
Con. Res. 3 under the appropriate titles or subtitles, as the
case may be, of this report. The minority views of members of
the Committee on the Budget are as follows:
SIGNATORIES
John Yarmuth
Barbara Lee
Michelle Lujan Grisham
Seth Moulton
Hakeem Jeffries
Brian Higgins
Suzan DelBene
Debbie Wasserman Schultz
Brendan Boyle
Ro Khanna
Pramila Jayapal
Salud Carbajal
Sheila Jackson Lee
Janice Schakowsky
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Health Care Act of
2017''.
SEC. 2. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--ENERGY AND COMMERCE
Subtitle A--Patient Access to Public Health Programs
Sec. 101. The Prevention and Public Health Fund.
Sec. 102. Community health center program.
Sec. 103. Federal payments to States.
Subtitle B--Medicaid Program Enhancement
Sec. 111. Repeal of Medicaid provisions.
Sec. 112. Repeal of Medicaid expansion.
Sec. 113. Elimination of DSH cuts.
Sec. 114. Reducing State Medicaid costs.
Sec. 115. Safety net funding for non-expansion States.
Sec. 116. Providing incentives for increased frequency of eligibility
redeterminations.
Subtitle C--Per Capita Allotment for Medical Assistance
Sec. 121. Per capita allotment for medical assistance.
Subtitle D--Patient Relief and Health Insurance Market Stability
Sec. 131. Repeal of cost-sharing subsidy.
Sec. 132. Patient and State Stability Fund.
Sec. 133. Continuous health insurance coverage incentive.
Sec. 134. Increasing coverage options.
Sec. 135. Change in permissible age variation in health insurance
premium rates.
TITLE II--COMMITTEE ON WAYS AND MEANS
Subtitle A--Repeal and Replace of Health-Related Tax Policy
Sec. 201. Recapture excess advance payments of premium tax credits.
Sec. 202. Additional modifications to premium tax credit.
Sec. 203. Premium tax credit.
Sec. 204. Small business tax credit.
Sec. 205. Individual mandate.
Sec. 206. Employer mandate.
Sec. 207. Repeal of the tax on employee health insurance premiums and
health plan benefits.
Sec. 208. Repeal of tax on over-the-counter medications.
Sec. 209. Repeal of increase of tax on health savings accounts.
Sec. 210. Repeal of limitations on contributions to flexible spending
accounts.
Sec. 211. Repeal of medical device excise tax.
Sec. 212. Repeal of elimination of deduction for expenses allocable to
medicare part D subsidy.
Sec. 213. Repeal of increase in income threshold for determining medical
care deduction.
Sec. 214. Repeal of Medicare tax increase.
Sec. 215. Refundable tax credit for health insurance coverage.
Sec. 216. Maximum contribution limit to health savings account increased
to amount of deductible and out-of-pocket limitation.
Sec. 217. Allow both spouses to make catch-up contributions to the same
health savings account.
Sec. 218. Special rule for certain medical expenses incurred before
establishment of health savings account.
Subtitle B--Repeal of Certain Consumer Taxes
Sec. 221. Repeal of tax on prescription medications.
Sec. 222. Repeal of health insurance tax.
Subtitle C--Repeal of Tanning Tax
Sec. 231. Repeal of tanning tax.
Subtitle D--Remuneration From Certain Insurers
Sec. 241. Remuneration from certain insurers.
Subtitle E--Repeal of Net Investment Income Tax
Sec. 251. Repeal of net investment income tax.
TITLE I--ENERGY AND COMMERCE
Subtitle A--Patient Access to Public Health Programs
SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND.
(a) In General.--Subsection (b) of section 4002 of the
Patient Protection and Affordable Care Act (42 U.S.C. 300u-11),
as amended by section 5009 of the 21st Century Cures Act, is
amended--
(1) in paragraph (2), by adding ``and'' at the end;
(2) in paragraph (3)--
(A) by striking ``each of fiscal years 2018
and 2019'' and inserting ``fiscal year 2018'';
and
(B) by striking the semicolon at the end and
inserting a period; and
(3) by striking paragraphs (4) through (8).
(b) Rescission of Unobligated Funds.--Of the funds made
available by such section 4002, the unobligated balance at the
end of fiscal year 2018 is rescinded.
SEC. 102. COMMUNITY HEALTH CENTER PROGRAM.
Effective as if included in the enactment of the Medicare
Access and CHIP Reauthorization Act of 2015 (Public Law 114-10,
129 Stat. 87), paragraph (1) of section 221(a) of such Act is
amended by inserting ``, and an additional $422,000,000 for
fiscal year 2017'' after ``2017''.
SEC. 103. FEDERAL PAYMENTS TO STATES.
(a) In General.--Notwithstanding section 504(a), 1902(a)(23),
1903(a), 2002, 2005(a)(4), 2102(a)(7), or 2105(a)(1) of the
Social Security Act (42 U.S.C. 704(a), 1396a(a)(23), 1396b(a),
1397a, 1397d(a)(4), 1397bb(a)(7), 1397ee(a)(1)), or the terms
of any Medicaid waiver in effect on the date of enactment of
this Act that is approved under section 1115 or 1915 of the
Social Security Act (42 U.S.C. 1315, 1396n), for the 1-year
period beginning on the date of the enactment of this Act, no
Federal funds provided from a program referred to in this
subsection that is considered direct spending for any year may
be made available to a State for payments to a prohibited
entity, whether made directly to the prohibited entity or
through a managed care organization under contract with the
State.
(b) Definitions.--In this section:
(1) Prohibited entity.--The term ``prohibited
entity'' means an entity, including its affiliates,
subsidiaries, successors, and clinics--
(A) that, as of the date of enactment of this
Act--
(i) is an organization described in
section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from
tax under section 501(a) of such Code;
(ii) is an essential community
provider described in section 156.235
of title 45, Code of Federal
Regulations (as in effect on the date
of enactment of this Act), that is
primarily engaged in family planning
services, reproductive health, and
related medical care; and
(iii) provides for abortions, other
than an abortion--
(I) if the pregnancy is the
result of an act of rape or
incest; or
(II) in the case where a
woman suffers from a physical
disorder, physical injury, or
physical illness that would, as
certified by a physician, place
the woman in danger of death
unless an abortion is
performed, including a life-
endangering physical condition
caused by or arising from the
pregnancy itself; and
(B) for which the total amount of Federal and
State expenditures under the Medicaid program
under title XIX of the Social Security Act in
fiscal year 2014 made directly to the entity
and to any affiliates, subsidiaries,
successors, or clinics of the entity, or made
to the entity and to any affiliates,
subsidiaries, successors, or clinics of the
entity as part of a nationwide health care
provider network, exceeded $350,000,000.
(2) Direct spending.--The term ``direct spending''
has the meaning given that term under section 250(c) of
the Balanced Budget and Emergency Deficit Control Act
of 1985 (2 U.S.C. 900(c)).
Subtitle B--Medicaid Program Enhancement
SEC. 111. REPEAL OF MEDICAID PROVISIONS.
The Social Security Act is amended--
(1) in section 1902 (42 U.S.C. 1396a)--
(A) in subsection (a)(47)(B), by inserting
``and provided that any such election shall
cease to be effective on January 1, 2020, and
no such election shall be made after that
date'' before the semicolon at the end; and
(B) in subsection (l)(2)(C), by inserting
``and ending December 31, 2019,'' after
``January 1, 2014,'';
(2) in section 1915(k)(2) (42 U.S.C. 1396n(k)(2)), by
striking ``during the period described in paragraph
(1)'' and inserting ``on or after the date referred to
in paragraph (1) and before January 1, 2020''; and
(3) in section 1920(e) (42 U.S.C. 1396r-1(e)), by
striking ``under clause (i)(VIII), clause (i)(IX), or
clause (ii)(XX) of subsection (a)(10)(A)'' and
inserting ``under clause (i)(VIII) or clause (ii)(XX)
of section 1902(a)(10)(A) before January 1, 2020,
section 1902(a)(10)(A)(i)(IX),''.
SEC. 112. REPEAL OF MEDICAID EXPANSION.
(a) In General.--Section 1902(a)(10)(A) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(A)) is amended--
(1) in clause (i)(VIII), by inserting ``at the option
of a State,'' after ``January 1, 2014,''; and
(2) in clause (ii)(XX), by inserting ``and ending
December 31, 2019,'' after ``2014,''.
(b) Termination of EFMAP for New ACA Expansion Enrollees.--
Section 1905 of the Social Security Act (42 U.S.C. 1396d) is
amended--
(1) in subsection (y)(1), in the matter preceding
subparagraph (A), by striking ``with respect to'' and
all that follows through ``shall be'' and inserting
``with respect to amounts expended before January 1,
2020, by such State for medical assistance for newly
eligible individuals described in subclause (VIII) of
section 1902(a)(10)(A)(i) who are enrolled under the
State plan (or a waiver of the plan) before such date
and with respect to amounts expended after such date by
such State for medical assistance for individuals
described in such subclause who were enrolled under
such plan (or waiver of such plan) as of December 31,
2019, and who do not have a break in eligibility for
medical assistance under such State plan (or waiver)
for more than one month after such date, shall be'';
and
(2) in subsection (z)(2)--
(A) in subparagraph (A), by striking
``medical assistance for individuals'' and all
that follows through ``shall be'' and inserting
``amounts expended before January 1, 2020, by
such State for medical assistance for
individuals described in section
1902(a)(10)(A)(i)(VIII) who are nonpregnant
childless adults with respect to whom the State
may require enrollment in benchmark coverage
under section 1937 and who are enrolled under
the State plan (or a waiver of the plan) before
such date and with respect to amounts expended
after such date by such State for medical
assistance for individuals described in such
section, who are nonpregnant childless adults
with respect to whom the State may require
enrollment in benchmark coverage under section
1937, who were enrolled under such plan (or
waiver of such plan) as of December 31, 2019,
and who do not have a break in eligibility for
medical assistance under such State plan (or
waiver) for more than one month after such
date, shall be''; and
(B) in subparagraph (B)(ii)--
(i) in subclause (III), by adding
``and'' at the end; and
(ii) by striking subclauses (IV),
(V), and (VI) and inserting the
following new subclause:
``(IV) 2017 and each subsequent year is 80
percent.''.
(c) Sunset of Essential Health Benefits Requirement.--Section
1937(b)(5) of the Social Security Act (42 U.S.C. 1396u-7(b)(5))
is amended by adding at the end the following: ``This paragraph
shall not apply after December 31, 2019.''.
SEC. 113. ELIMINATION OF DSH CUTS.
Section 1923(f) of the Social Security Act (42 U.S.C. 1396r-
4(f)) is amended--
(1) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I), by striking
``2025'' and inserting
``2019''; and
(ii) in clause (ii)--
(I) in subclause (I), by
adding ``and'' at the end;
(II) in subclause (II), by
striking the semicolon at the
end and inserting a period; and
(III) by striking subclauses
(III) through (VIII); and
(B) by adding at the end the following new
subparagraph:
``(C) Exemption from exemption for non-
expansion states.--
``(i) In general.--In the case of a
State that is a non-expansion State for
a fiscal year, subparagraph (A)(i)
shall not apply to the DSH allotment
for such State and fiscal year.
``(ii) No change in reduction for
expansion states.--In the case of a
State that is an expansion State for a
fiscal year, the DSH allotment for such
State and fiscal year shall be
determined as if clause (i) did not
apply.
``(iii) Non-expansion and expansion
state defined.--
``(I) The term `expansion
State' means with respect to a
fiscal year, a State that, as
of July 1 of the preceding
fiscal year, provides for
eligibility under clause
(i)(VIII) or (ii)(XX) of
section 1902(a)(10)(A) for
medical assistance under this
title (or a waiver of the State
plan approved under section
1115).
``(II) The term `non-
expansion State' means, with
respect to a fiscal year, a
State that is not an expansion
State.''; and
(2) in paragraph (8), by striking ``fiscal year
2025'' and inserting ``fiscal year 2019''.
SEC. 114. REDUCING STATE MEDICAID COSTS.
(a) Letting States Disenroll High Dollar Lottery Winners.--
(1) In general.--Section 1902 of the Social Security
Act (42 U.S.C. 1396a) is amended--
(A) in subsection (a)(17), by striking
``(e)(14), (e)(14)'' and inserting ``(e)(14),
(e)(15)''; and
(B) in subsection (e)--
(i) in paragraph (14) (relating to
modified adjusted gross income), by
adding at the end the following new
subparagraph:
``(J) Treatment of certain lottery winnings
and income received as a lump sum.--
``(i) In general.--In the case of an
individual who is the recipient of
qualified lottery winnings (pursuant to
lotteries occurring on or after January
1, 2020) or qualified lump sum income
(received on or after such date) and
whose eligibility for medical
assistance is determined based on the
application of modified adjusted gross
income under subparagraph (A), a State
shall, in determining such eligibility,
include such winnings or income (as
applicable) as income received--
``(I) in the month in which
such winnings or income (as
applicable) is received if the
amount of such winnings or
income is less than $80,000;
``(II) over a period of 2
months if the amount of such
winnings or income (as
applicable) is greater than or
equal to $80,000 but less than
$90,000;
``(III) over a period of 3
months if the amount of such
winnings or income (as
applicable) is greater than or
equal to $90,000 but less than
$100,000; and
``(IV) over a period of 3
months plus 1 additional month
for each increment of $10,000
of such winnings or income (as
applicable) received, not to
exceed a period of 120 months
(for winnings or income of
$1,260,000 or more), if the
amount of such winnings or
income is greater than or equal
to $100,000.
``(ii) Counting in equal
installments.--For purposes of
subclauses (II), (III), and (IV) of
clause (i), winnings or income to which
such subclause applies shall be counted
in equal monthly installments over the
period of months specified under such
subclause.
``(iii) Hardship exemption.--An
individual whose income, by application
of clause (i), exceeds the applicable
eligibility threshold established by
the State, may continue to be eligible
for medical assistance to the extent
that the State determines, under
procedures established by the State
under the State plan (or in the case of
a waiver of the plan under section
1115, incorporated in such waiver), or
as otherwise established by such State
in accordance with such standards as
may be specified by the Secretary, that
the denial of eligibility of the
individual would cause an undue medical
or financial hardship as determined on
the basis of criteria established by
the Secretary.
``(iv) Notifications and assistance
required in case of loss of
eligibility.--A State shall, with
respect to an individual who loses
eligibility for medical assistance
under the State plan (or a waiver of
such plan) by reason of clause (i),
before the date on which the individual
loses such eligibility, inform the
individual of the date on which the
individual would no longer be
considered ineligible by reason of such
clause to receive medical assistance
under the State plan or under any
waiver of such plan and the date on
which the individual would be eligible
to reapply to receive such medical
assistance.
``(v) Qualified lottery winnings
defined.--In this subparagraph, the
term `qualified lottery winnings' means
winnings from a sweepstakes, lottery,
or pool described in paragraph (3) of
section 4402 of the Internal Revenue
Code of 1986 or a lottery operated by a
multistate or multijurisdictional
lottery association, including amounts
awarded as a lump sum payment.
``(vi) Qualified lump sum income
defined.--In this subparagraph, the
term `qualified lump sum income' means
income that is received as a lump sum
from one of the following sources:
``(I) Monetary winnings from
gambling (as defined by the
Secretary and including
monetary winnings from gambling
activities described in section
1955(b)(4) of title 18, United
States Code).
``(II) Income received as
liquid assets from the estate
(as defined in section
1917(b)(4)) of a deceased
individual.''; and
(ii) by striking ``(14) Exclusion''
and inserting ``(15) Exclusion''.
(2) Rules of construction.--
(A) Interception of lottery winnings
allowed.--Nothing in the amendment made by
paragraph (1)(B)(i) shall be construed as
preventing a State from intercepting the State
lottery winnings awarded to an individual in
the State to recover amounts paid by the State
under the State Medicaid plan under title XIX
of the Social Security Act for medical
assistance furnished to the individual.
(B) Applicability limited to eligibility of
recipient of lottery winnings or lump sum
income.--Nothing in the amendment made by
paragraph (1)(B)(i) shall be construed, with
respect to a determination of household income
for purposes of a determination of eligibility
for medical assistance under the State plan
under title XIX of the Social Security Act (42
U.S.C. 1396 et seq.) (or a waiver of such plan)
made by applying modified adjusted gross income
under subparagraph (A) of section 1902(e)(14)
of such Act (42 U.S.C. 1396a(e)(14)), as
limiting the eligibility for such medical
assistance of any individual that is a member
of the household other than the individual (or
the individual's spouse) who received qualified
lottery winnings or qualified lump-sum income
(as defined in subparagraph (J) of such section
1902(e)(14), as added by paragraph (1)(B)(i) of
this subsection).
(b) Repeal of Retroactive Eligibility.--
(1) In general.--
(A) State plan requirements.--Section
1902(a)(34) of the Social Security Act (42
U.S.C. 1396a(a)(34)) is amended by striking
``in or after the third month before the month
in which he made application'' and inserting
``in or after the month in which the individual
made application''.
(B) Definition of medical assistance.--
Section 1905(a) of the Social Security Act (42
U.S.C. 1396d(a)) is amended by striking ``in or
after the third month before the month in which
the recipient makes application for
assistance'' and inserting ``in or after the
month in which the recipient makes application
for assistance''.
(2) Effective date.--The amendments made by paragraph
(1) shall apply to medical assistance with respect to
individuals whose eligibility for such assistance is
based on an application for such assistance made (or
deemed to be made) on or after October 1, 2017.
(c) Ensuring States Are Not Forced to Pay for Individuals
Ineligible for the Program.--
(1) In general.--Section 1137(f) of the Social
Security Act (42 U.S.C. 1320b-7(f)) is amended--
(A) by striking ``Subsections (a)(1) and
(d)'' and inserting ``(1) Subsections (a)(1)
and (d)''; and
(B) by adding at the end the following new
paragraph:
``(2)(A) Subparagraphs (A) and (B)(ii) of subsection (d)(4)
shall not apply in the case of an initial determination made on
or after the date that is 6 months after the date of the
enactment of this paragraph with respect to the eligibility of
an alien described in subparagraph (B) for benefits under the
program listed in subsection (b)(2).
``(B) An alien described in this subparagraph is an
individual declaring to be a citizen or national of the United
States with respect to whom a State, in accordance with section
1902(a)(46)(B), requires--
``(i) pursuant to 1902(ee), the submission of a
social security number; or
``(ii) pursuant to 1903(x), the presentation of
satisfactory documentary evidence of citizenship or
nationality.''.
(2) No payments for medical assistance provided
before presentation of evidence.--Section 1903(i)(22)
of the Social Security Act (42 U.S.C. 1396b(i)(22)) is
amended--
(A) by striking ``with respect to amounts
expended'' and inserting ``(A) with respect to
amounts expended'';
(B) by inserting ``and'' at the end; and
(C) by adding at the end the following new
subparagraph:
``(B) in the case of a State that elects to provide a
reasonable period to present satisfactory documentary
evidence of such citizenship or nationality pursuant to
paragraph (2)(C) of section 1902(ee) or paragraph (4)
of subsection (x) of this section, for amounts expended
for medical assistance for such an individual (other
than an individual described in paragraph (2) of such
subsection (x)) during such period;''.
(3) Conforming amendments.--Section 1137(d)(4) of the
Social Security Act (42 U.S.C. 1320b-7(d)(4)) is
amended--
(A) in subparagraph (A), in the matter
preceding clause (i), by inserting ``subject to
subsection (f)(2),'' before ``the State''; and
(B) in subparagraph (B)(ii), by inserting
``subject to subsection (f)(2),'' before
``pending such verification''.
(d) Updating Allowable Home Equity Limits in Medicaid.--
(1) In general.--Section 1917(f)(1) of the Social
Security Act (42 U.S.C. 1396p(f)(1)) is amended--
(A) in subparagraph (A), by striking
``subparagraphs (B) and (C)'' and inserting
``subparagraph (B)'';
(B) by striking subparagraph (B);
(C) by redesignating subparagraph (C) as
subparagraph (B); and
(D) in subparagraph (B), as so redesignated,
by striking ``dollar amounts specified in this
paragraph'' and inserting ``dollar amount
specified in subparagraph (A)''.
(2) Effective date.--
(A) In general.--The amendments made by
paragraph (1) shall apply with respect to
eligibility determinations made after the date
that is 180 days after the date of the
enactment of this section.
(B) Exception for state legislation.--In the
case of a State plan under title XIX of the
Social Security Act that the Secretary of
Health and Human Services determines requires
State legislation in order for the respective
plan to meet any requirement imposed by
amendments made by this subsection, the
respective plan shall not be regarded as
failing to comply with the requirements of such
title solely on the basis of its failure to
meet such an additional requirement before the
first day of the first calendar quarter
beginning after the close of the first regular
session of the State legislature that begins
after the date of the enactment of this Act.
For purposes of the previous sentence, in the
case of a State that has a 2-year legislative
session, each year of the session shall be
considered to be a separate regular session of
the State legislature.
SEC. 115. SAFETY NET FUNDING FOR NON-EXPANSION STATES.
Title XIX of the Social Security Act is amended by inserting
after section 1923 (42 U.S.C. 1396r-4) the following new
section:
``ADJUSTMENT IN PAYMENT FOR SERVICES OF SAFETY NET PROVIDERS IN NON-
EXPANSION STATES
``Sec. 1923A. (a) In General.--Subject to the limitations of
this section, for each year during the period beginning with
2018 and ending with 2021, each State that is one of the 50
States or the District of Columbia and that, as of July 1 of
the preceding year, did not provide for eligibility under
clause (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for
medical assistance under this title (or a waiver of the State
plan approved under section 1115) (each such State or District
referred to in this section for the year as a `non-expansion
State') may adjust the payment amounts otherwise provided under
the State plan under this title (or a waiver of such plan) to
health care providers that provide health care services to
individuals enrolled under this title (in this section referred
to as `eligible providers').
``(b) Increase in Applicable FMAP.--Notwithstanding section
1905(b), the Federal medical assistance percentage applicable
with respect to expenditures attributable to a payment
adjustment under subsection (a) for which payment is permitted
under subsection (c) shall be equal to--
``(1) 100 percent for calendar quarters in calendar
years 2018, 2019, 2020, and 2021; and
``(2) 95 percent for calendar quarters in calendar
year 2022.
``(c) Limitations; Disqualification of States.--
``(1) Annual allotment limitation.--Payment under
section 1903(a) shall not be made to a State with
respect to any payment adjustment made under this
section for all calendar quarters in a year in excess
of the $2,000,000,000 multiplied by the ratio of--
``(A) the population of the State with income
below 138 percent of the poverty line in 2015
(as determined based the table entitled `Health
Insurance Coverage Status and Type by Ratio of
Income to Poverty Level in the Past 12 Months
by Age' for the universe of the civilian
noninstitutionalized population for whom
poverty status is determined based on the 2015
American Community Survey 1-Year Estimates, as
published by the Bureau of the Census), to
``(B) the sum of the populations under
subparagraph (A) for all non-expansion States.
``(2) Limitation on payment adjustment amount for
individual providers.--The amount of a payment
adjustment under subsection (a) for an eligible
provider may not exceed the provider's costs incurred
in furnishing health care services (as determined by
the Secretary and net of payments under this title,
other than under this section, and by uninsured
patients) to individuals who either are eligible for
medical assistance under the State plan (or under a
waiver of such plan) or have no health insurance or
health plan coverage for such services.
``(d) Disqualification in Case of State Coverage Expansion.--
If a State is a non-expansion for a year and provides
eligibility for medical assistance described in subsection (a)
during the year, the State shall no longer be treated as a non-
expansion State under this section for any subsequent years.''.
SEC. 116. PROVIDING INCENTIVES FOR INCREASED FREQUENCY OF ELIGIBILITY
REDETERMINATIONS.
(a) In General.--Section 1902(e)(14) of the Social Security
Act (42 U.S.C. 1396a(e)(14)) (relating to modified adjusted
gross income), as amended by section 114(a)(1), is further
amended by adding at the end the following:
``(K) Frequency of eligibility
redeterminations.--Beginning on October 1,
2017, and notwithstanding subparagraph (H), in
the case of an individual whose eligibility for
medical assistance under the State plan under
this title (or a waiver of such plan) is
determined based on the application of modified
adjusted gross income under subparagraph (A)
and who is so eligible on the basis of clause
(i)(VIII) or clause (ii)(XX) of subsection
(a)(10)(A), a State shall redetermine such
individual's eligibility for such medical
assistance no less frequently than once every 6
months.''.
(b) Civil Monetary Penalty.--Section 1128A(a) of the Social
Security Act (42 U.S.C. 1320a-7a(a)) is amended, in the matter
following paragraph (10), by striking ``(or, in cases under
paragraph (3)'' and inserting the following: ``(or, in cases
under paragraph (1) in which an individual was knowingly
enrolled on or after October 1, 2017, pursuant to section
1902(a)(10)(A)(i)(VIII) for medical assistance under the State
plan under title XIX whose income does not meet the income
threshold specified in such section or in which a claim was
presented on or after October 1, 2017, as a claim for an item
or service furnished to an individual described in such section
but whose enrollment under such State plan is not made on the
basis of such individual's meeting the income threshold
specified in such section, $20,000 for each such individual or
claim; in cases under paragraph (3)''.
(c) Increased Administrative Matching Percentage.--For each
calendar quarter during the period beginning on October 1,
2017, and ending on December 31, 2019, the Federal matching
percentage otherwise applicable under section 1903(a) of the
Social Security Act (42 U.S.C. 1396b(a)) with respect to State
expenditures during such quarter that are attributable to
meeting the requirement of section 1902(e)(14) (relating to
determinations of eligibility using modified adjusted gross
income) of such Act shall be increased by 5 percentage points
with respect to State expenditures attributable to activities
carried out by the State (and approved by the Secretary) to
increase the frequency of eligibility redeterminations required
by subparagraph (K) of such section (relating to eligibility
redeterminations made on a 6-month basis) (as added by
subsection (a)).
Subtitle C--Per Capita Allotment for Medical Assistance
SEC. 121. PER CAPITA ALLOTMENT FOR MEDICAL ASSISTANCE.
Title XIX of the Social Security Act is amended--
(1) in section 1903 (42 U.S.C. 1396b)--
(A) in subsection (a), in the matter before
paragraph (1), by inserting ``and section
1903A(a)'' after ``except as otherwise provided
in this section''; and
(B) in subsection (d)(1), by striking ``to
which'' and inserting ``to which, subject to
section 1903A(a),''; and
(2) by inserting after such section 1903 the
following new section:
``SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR MEDICAL ASSISTANCE.
``(a) Application of Per Capita Cap on Payments for Medical
Assistance Expenditures.--
``(1) In general.--If a State has excess aggregate
medical assistance expenditures (as defined in
paragraph (2)) for a fiscal year (beginning with fiscal
year 2020), the amount of payment to the State under
section 1903(a)(1) for each quarter in the following
fiscal year shall be reduced by \1/4\ of the excess
aggregate medical assistance payments (as defined in
paragraph (3)) for that previous fiscal year. In this
section, the term `State' means only the 50 States and
the District of Columbia.
``(2) Excess aggregate medical assistance
expenditures.--In this subsection, the term `excess
aggregate medical assistance expenditures' means, for a
State for a fiscal year, the amount (if any) by which--
``(A) the amount of the adjusted total
medical assistance expenditures (as defined in
subsection (b)(1)) for the State and fiscal
year; exceeds
``(B) the amount of the target total medical
assistance expenditures (as defined in
subsection (c)) for the State and fiscal year.
``(3) Excess aggregate medical assistance payments.--
In this subsection, the term `excess aggregate medical
assistance payments' means, for a State for a fiscal
year, the product of--
``(A) the excess aggregate medical assistance
expenditures (as defined in paragraph (2)) for
the State for the fiscal year; and
``(B) the Federal average medical assistance
matching percentage (as defined in paragraph
(4)) for the State for the fiscal year.
``(4) Federal average medical assistance matching
percentage.--In this subsection, the term `Federal
average medical assistance matching percentage' means,
for a State for a fiscal year, the ratio (expressed as
a percentage) of--
``(A) the amount of the Federal payments that
would be made to the State under section
1903(a)(1) for medical assistance expenditures
for calendar quarters in the fiscal year if
paragraph (1) did not apply; to
``(B) the amount of the medical assistance
expenditures for the State and fiscal year.
``(b) Adjusted Total Medical Assistance Expenditures.--
Subject to subsection (g), the following shall apply:
``(1) In general.--In this section, the term
`adjusted total medical assistance expenditures' means,
for a State--
``(A) for fiscal year 2016, the product of--
``(i) the amount of the medical
assistance expenditures (as defined in
paragraph (2)) for the State and fiscal
year, reduced by the amount of any
excluded expenditures (as defined in
paragraph (3)) for the State and fiscal
year otherwise included in such medical
assistance expenditures; and
``(ii) the 1903A FY16 population
percentage (as defined in paragraph
(4)) for the State; or
``(B) for fiscal year 2019 or a subsequent
fiscal year, the amount of the medical
assistance expenditures (as defined in
paragraph (2)) for the State and fiscal year
that is attributable to 1903A enrollees,
reduced by the amount of any excluded
expenditures (as defined in paragraph (3)) for
the State and fiscal year otherwise included in
such medical assistance expenditures.
``(2) Medical assistance expenditures.--In this
section, the term `medical assistance expenditures'
means, for a State and fiscal year, the medical
assistance payments as reported by medical service
category on the Form CMS-64 quarterly expense report
(or successor to such a report form, and including
enrollment data and subsequent adjustments to any such
report, in this section referred to collectively as a
`CMS-64 report') that directly result from providing
medical assistance under the State plan (including
under a waiver of the plan) for which payment is (or
may otherwise be) made pursuant to section 1903(a)(1).
``(3) Excluded expenditures.--In this section, the
term `excluded expenditures' means, for a State and
fiscal year, expenditures under the State plan (or
under a waiver of such plan) that are attributable to
any of the following:
``(A) DSH.--Payment adjustments made for
disproportionate share hospitals under section
1923.
``(B) Medicare cost-sharing.--Payments made
for medicare cost-sharing (as defined in
section 1905(p)(3)).
``(C) Safety net provider payment adjustments
in non-expansion states.--Payment adjustments
under subsection (a) of section 1923A for which
payment is permitted under subsection (c) of
such section.
``(4) 1903A fy 16 population percentage.--In this
subsection, the term `1903A FY16 population percentage'
means, for a State, the Secretary's calculation of the
percentage of the actual medical assistance
expenditures, as reported by the State on the CMS-64
reports for calendar quarters in fiscal year 2016, that
are attributable to 1903A enrollees (as defined in
subsection (e)(1)).
``(c) Target Total Medical Assistance Expenditures.--
``(1) Calculation.--In this section, the term `target
total medical assistance expenditures' means, for a
State for a fiscal year, the sum of the products, for
each of the 1903A enrollee categories (as defined in
subsection (e)(2)), of--
``(A) the target per capita medical
assistance expenditures (as defined in
paragraph (2)) for the enrollee category,
State, and fiscal year; and
``(B) the number of 1903A enrollees for such
enrollee category, State, and fiscal year, as
determined under subsection (e)(4).
``(2) Target per capita medical assistance
expenditures.--In this subsection, the term `target per
capita medical assistance expenditures' means, for a
1903A enrollee category, State, and a fiscal year, an
amount equal to--
``(A) the provisional FY19 target per capita
amount for such enrollee category (as
calculated under subsection (d)(5)) for the
State; increased by
``(B) the percentage increase in the medical
care component of the consumer price index for
all urban consumers (U.S. city average) from
September of 2019 to September of the fiscal
year involved.
``(d) Calculation of FY19 Provisional Target Amount for Each
1903A Enrollee Category.--Subject to subsection (g), the
following shall apply:
``(1) Calculation of base amounts for fiscal year
2016.--For each State the Secretary shall calculate
(and provide notice to the State not later than April
1, 2018, of) the following:
``(A) The amount of the adjusted total
medical assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2016.
``(B) The number of 1903A enrollees for the
State in fiscal year 2016 (as determined under
subsection (e)(4)).
``(C) The average per capita medical
assistance expenditures for the State for
fiscal year 2016 equal to--
``(i) the amount calculated under
subparagraph (A); divided by
``(ii) the number calculated under
subparagraph (B).
``(2) Fiscal year 2019 average per capita amount
based on inflating the fiscal year 2016 amount to
fiscal year 2019 by cpi-medical.--The Secretary shall
calculate a fiscal year 2019 average per capita amount
for each State equal to--
``(A) the average per capita medical
assistance expenditures for the State for
fiscal year 2016 (calculated under paragraph
(1)(C)); increased by
``(B) the percentage increase in the medical
care component of the consumer price index for
all urban consumers (U.S. city average) from
September, 2016 to September, 2019.
``(3) Aggregate and average expenditures per capita
for fiscal year 2019.--The Secretary shall calculate
for each State the following:
``(A) The amount of the adjusted total
medical assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2019.
``(B) The number of 1903A enrollees for the
State in fiscal year 2019 (as determined under
subsection (e)(4)).
``(4) Per capita expenditures for fiscal year 2019
for each 1903a enrollee category.--The Secretary shall
calculate (and provide notice to each State not later
than January 1, 2020, of) the following:
``(A)(i) For each 1903A enrollee category,
the amount of the adjusted total medical
assistance expenditures (as defined in
subsection (b)(1)) for the State for fiscal
year 2019 for individuals in the enrollee
category, calculated by excluding from medical
assistance expenditures those expenditures
attributable to expenditures described in
clause (iii) or non-DSH supplemental
expenditures (as defined in clause (ii)).
``(ii) In this paragraph, the term `non-DSH
supplemental expenditure' means a payment to a
provider under the State plan (or under a
waiver of the plan) that--
``(I) is not made under section 1923;
``(II) is not made with respect to a
specific item or service for an
individual;
``(III) is in addition to any
payments made to the provider under the
plan (or waiver) for any such item or
service; and
``(IV) complies with the limits for
additional payments to providers under
the plan (or waiver) imposed pursuant
to section 1902(a)(30)(A), including
the regulations specifying upper
payment limits under the State plan in
part 447 of title 42, Code of Federal
Regulations (or any successor
regulations).
``(iii) An expenditure described in this
clause is an expenditure that meets the
criteria specified in subclauses (I), (II), and
(III) of clause (ii) and is authorized under
section 1115 for the purposes of funding a
delivery system reform pool, uncompensated care
pool, a designated state health program, or any
other similar expenditure (as defined by the
Secretary).
``(B) For each 1903A enrollee category, the
number of 1903A enrollees for the State in
fiscal year 2019 in the enrollee category (as
determined under subsection (e)(4)).
``(C) For fiscal year 2016, the State's non-
DSH supplemental payment percentage is equal to
the ratio (expressed as a percentage) of--
``(i) the total amount of non-DSH
supplemental expenditures (as defined
in subparagraph (A)(ii)) for the State
for fiscal year 2016; to
``(ii) the amount described in
subsection (b)(1)(A) for the State for
fiscal year 2016.
``(D) For each 1903A enrollee category an
average medical assistance expenditures per
capita for the State for fiscal year 2019 for
the enrollee category equal to--
``(i) the amount calculated under
subparagraph (A) for the State,
increased by the non-DSH supplemental
payment percentage for the State (as
calculated under subparagraph (C));
divided by
``(ii) the number calculated under
subparagraph (B) for the State for the
enrollee category.
``(5) Provisional fy19 per capita target amount for
each 1903a enrollee category.--Subject to subsection
(f)(2), the Secretary shall calculate for each State a
provisional FY19 per capita target amount for each
1903A enrollee category equal to the average medical
assistance expenditures per capita for the State for
fiscal year 2019 (as calculated under paragraph (4)(D))
for such enrollee category multiplied by the ratio of--
``(A) the product of--
``(i) the fiscal year 2019 average
per capita amount for the State, as
calculated under paragraph (2); and
``(ii) the number of 1903A enrollees
for the State in fiscal year 2019, as
calculated under paragraph (3)(B); to
``(B) the amount of the adjusted total
medical assistance expenditures for the State
for fiscal year 2019, as calculated under
paragraph (3)(A).
``(e) 1903A Enrollee; 1903A Enrollee Category.--Subject to
subsection (g), for purposes of this section, the following
shall apply:
``(1) 1903A enrollee.--The term `1903A enrollee'
means, with respect to a State and a month, any
Medicaid enrollee (as defined in paragraph (3)) for the
month, other than such an enrollee who for such month
is in any of the following categories of excluded
individuals:
``(A) CHIP.--An individual who is provided,
under this title in the manner described in
section 2101(a)(2), child health assistance
under title XXI.
``(B) IHS.--An individual who receives any
medical assistance under this title for
services for which payment is made under the
third sentence of section 1905(b).
``(C) Breast and cervical cancer services
eligible individual.--An individual who is
entitled to medical assistance under this title
only pursuant to section
1902(a)(10)(A)(ii)(XVIII).
``(D) Partial-benefit enrollees.--An
individual who--
``(i) is an alien who is entitled to
medical assistance under this title
only pursuant to section 1903(v)(2);
``(ii) is entitled to medical
assistance under this title only
pursuant to subclause (XII) or (XXI) of
section 1902(a)(10)(A)(ii) (or pursuant
to a waiver that provides only
comparable benefits);
``(iii) is a dual eligible individual
(as defined in section 1915(h)(2)(B))
and is entitled to medical assistance
under this title (or under a waiver)
only for some or all of medicare cost-
sharing (as defined in section
1905(p)(3)); or
``(iv) is entitled to medical
assistance under this title and for
whom the State is providing a payment
or subsidy to an employer for coverage
of the individual under a group health
plan pursuant to section 1906 or
section 1906A (or pursuant to a waiver
that provides only comparable
benefits).
``(2) 1903A enrollee category.--The term `1903A
enrollee category' means each of the following:
``(A) Elderly.--A category of 1903A enrollees
who are 65 years of age or older.
``(B) Blind and disabled.--A category of
1903A enrollees (not described in the previous
subparagraph) who are eligible for medical
assistance under this title on the basis of
being blind or disabled.
``(C) Children.--A category of 1903A
enrollees (not described in a previous
subparagraph) who are children under 19 years
of age.
``(D) Expansion enrollees.--A category of
1903A enrollees (not described in a previous
subparagraph) for whom the amounts expended for
medical assistance are subject to an increase
or change in the Federal medical assistance
percentage under subsection (y) or (z)(2),
respectively, of section 1905.
``(E) Other nonelderly, nondisabled, non-
expansion adults.--A category of 1903A
enrollees who are not described in any previous
subparagraph.
``(3) Medicaid enrollee.--The term `Medicaid
enrollee' means, with respect to a State for a month,
an individual who is eligible for medical assistance
for items or services under this title and enrolled
under the State plan (or a waiver of such plan) under
this title for the month.
``(4) Determination of number of 1903a enrollees.--
The number of 1903A enrollees for a State and fiscal
year, and, if applicable, for a 1903A enrollee
category, is the average monthly number of Medicaid
enrollees for such State and fiscal year (and, if
applicable, in such category) that are reported through
the CMS-64 report under (and subject to audit under)
subsection (h).
``(f) Special Payment Rules.--
``(1) Application in case of research and
demonstration projects and other waivers.--In the case
of a State with a waiver of the State plan approved
under section 1115, section 1915, or another provision
of this title, this section shall apply to medical
assistance expenditures and medical assistance payments
under the waiver, in the same manner as if such
expenditures and payments had been made under a State
plan under this title and the limitations on
expenditures under this section shall supersede any
other payment limitations or provisions (including
limitations based on a per capita limitation) otherwise
applicable under such a waiver.
``(2) Treatment of states expanding coverage after
fiscal year 2016.--In the case of a State that did not
provide for medical assistance for the 1903A enrollee
category described in subsection (e)(2)(D) during
fiscal year 2016 but which provides for such assistance
for such category in a subsequent year, the provisional
FY19 per capita target amount for such enrollee
category under subsection (d)(5) shall be equal to the
provisional FY19 per capita target amount for the 1903A
enrollee category described in subsection (e)(2)(E).
``(3) In case of state failure to report necessary
data.--If a State for any quarter in a fiscal year
(beginning with fiscal year 2019) fails to
satisfactorily submit data on expenditures and
enrollees in accordance with subsection (h)(1), for
such fiscal year and any succeeding fiscal year for
which such data are not satisfactorily submitted--
``(A) the Secretary shall calculate and apply
subsections (a) through (e) with respect to the
State as if all 1903A enrollee categories for
which such expenditure and enrollee data were
not satisfactorily submitted were a single
1903A enrollee category; and
``(B) the growth factor otherwise applied
under subsection (c)(2)(B) shall be decreased
by 1 percentage point.
``(g) Recalculation of Certain Amounts for Data Errors.--The
amounts and percentage calculated under paragraphs (1) and
(4)(C) of subsection (d) for a State for fiscal year 2016, and
the amounts of the adjusted total medical assistance
expenditures calculated under subsection (b) and the number of
Medicaid enrollees and 1903A enrollees determined under
subsection (e)(4) for a State for fiscal year 2016, fiscal year
2019, and any subsequent fiscal year, may be adjusted by the
Secretary based upon an appeal (filed by the State in such a
form, manner, and time, and containing such information
relating to data errors that support such appeal, as the
Secretary specifies) that the Secretary determines to be valid,
except that any adjustment by the Secretary under this
subsection for a State may not result in an increase of the
target total medical assistance expenditures exceeding 2
percent.
``(h) Required Reporting and Auditing of CMS-64 Data;
Transitional Increase in Federal Matching Percentage for
Certain Administrative Expenses.--
``(1) Reporting.--In addition to the data required on
form Group VIII on the CMS-64 report form as of January
1, 2017, in each CMS-64 report required to be submitted
(for each quarter beginning on or after October 1,
2018), the State shall include data on medical
assistance expenditures within such categories of
services and categories of enrollees (including each
1903A enrollee category and each category of excluded
individuals under subsection (e)(1)) and the numbers of
enrollees within each of such enrollee categories, as
the Secretary determines are necessary (including
timely guidance published as soon as possible after the
date of the enactment of this section) in order to
implement this section and to enable States to comply
with the requirement of this paragraph on a timely
basis.
``(2) Auditing.--The Secretary shall conduct for each
State an audit of the number of individuals and
expenditures reported through the CMS-64 report for
fiscal year 2016, fiscal year 2019, and each subsequent
fiscal year, which audit may be conducted on a
representative sample (as determined by the Secretary).
``(3) Temporary increase in federal matching
percentage to support improved data reporting systems
for fiscal years 2018 and 2019.--For amounts expended
during calendar quarters beginning on or after October
1, 2017, and before October 1, 2019--
``(A) the Federal matching percentage applied
under section 1903(a)(3)(A)(i) shall be
increased by 10 percentage points to 100
percent;
``(B) the Federal matching percentage applied
under section 1903(a)(3)(B) shall be increased
by 25 percentage points to 100 percent; and
``(C) the Federal matching percentage applied
under section 1903(a)(7) shall be increased by
10 percentage points to 60 percent but only
with respect to amounts expended that are
attributable to a State's additional
administrative expenditures to implement the
data requirements of paragraph (1).''.
Subtitle D--Patient Relief and Health Insurance Market Stability
SEC. 131. REPEAL OF COST-SHARING SUBSIDY.
(a) In General.--Section 1402 of the Patient Protection and
Affordable Care Act is repealed.
(b) Effective Date.--The repeal made by subsection (a) shall
apply to cost-sharing reductions (and payments to issuers for
such reductions) for plan years beginning after December 31,
2019.
SEC. 132. PATIENT AND STATE STABILITY FUND.
The Social Security Act (42 U.S.C. 301 et seq.) is amended by
adding at the end the following new title:
``TITLE XXII--PATIENT AND STATE STABILITY FUND
``SEC. 2201. ESTABLISHMENT OF PROGRAM.
``There is hereby established the `Patient and State
Stability Fund' to be administered by the Secretary of Health
and Human Services, acting through the Administrator of the
Centers for Medicare & Medicaid Services (in this section
referred to as the `Administrator'), to provide funding, in
accordance with this title, to the 50 States and the District
of Columbia (each referred to in this section as a `State')
during the period, subject to section 2204(c), beginning on
January 1, 2018, and ending on December 31, 2026, for the
purposes described in section 2202.
``SEC. 2202. USE OF FUNDS.
``A State may use the funds allocated to the State under this
title for any of the following purposes:
``(1) Helping, through the provision of financial
assistance, high-risk individuals who do not have
access to health insurance coverage offered through an
employer enroll in health insurance coverage in the
individual market in the State, as such market is
defined by the State (whether through the establishment
of a new mechanism or maintenance of an existing
mechanism for such purpose).
``(2) Providing incentives to appropriate entities to
enter into arrangements with the State to help
stabilize premiums for health insurance coverage in the
individual market, as such markets are defined by the
State.
``(3) Reducing the cost for providing health
insurance coverage in the individual market and small
group market, as such markets are defined by the State,
to individuals who have, or are projected to have, a
high rate of utilization of health services (as
measured by cost).
``(4) Promoting participation in the individual
market and small group market in the State and
increasing health insurance options available through
such market.
``(5) Promoting access to preventive services; dental
care services (whether preventive or medically
necessary); vision care services (whether preventive or
medically necessary); prevention, treatment, or
recovery support services for individuals with mental
or substance use disorders; or any combination of such
services.
``(6) Providing payments, directly or indirectly, to
health care providers for the provision of such health
care services as are specified by the Administrator.
``(7) Providing assistance to reduce out-of-pocket
costs, such as copayments, coinsurance, premiums, and
deductibles, of individuals enrolled in health
insurance coverage in the State.
``SEC. 2203. STATE ELIGIBILITY AND APPROVAL; DEFAULT SAFEGUARD.
``(a) Encouraging State Options for Allocations.--
``(1) In general.--To be eligible for an allocation
of funds under this title for a year during the period
described in section 2201 for use for one or more
purposes described in section 2202, a State shall
submit to the Administrator an application at such time
(but, in the case of allocations for 2018, not later
than 45 days after the date of the enactment of this
title and, in the case of allocations for a subsequent
year, not later than March 31 of the previous year) and
in such form and manner as specified by the
Administrator and containing--
``(A) a description of how the funds will be
used for such purposes;
``(B) a certification that the State will
make, from non-Federal funds, expenditures for
such purposes in an amount that is not less
than the State percentage required for the year
under section 2204(e)(1); and
``(C) such other information as the
Administrator may require.
``(2) Automatic approval.--An application so
submitted is approved unless the Administrator notifies
the State submitting the application, not later than 60
days after the date of the submission of such
application, that the application has been denied for
not being in compliance with any requirement of this
title and of the reason for such denial.
``(3) One-time application.--If an application of a
State is approved for a year, with respect to a purpose
described in section 2202, such application shall be
treated as approved, with respect to such purpose, for
each subsequent year through 2026.
``(4) Treatment as a state health care program.--Any
program receiving funds from an allocation for a State
under this title, including pursuant to subsection (b),
shall be considered to be a `State health care program'
for purposes of sections 1128, 1128A, and 1128B.
``(b) Default Federal Safeguard.--
``(1) In general.--
``(A) 2018.--For allocations made under this
title for 2018, in the case of a State that
does not submit an application under subsection
(a) by the 45-day submission date applicable to
such year under subsection (a)(1) and in the
case of a State that does submit such an
application by such date that is not approved,
subject to section 2204(e), the Administrator,
in consultation with the State insurance
commissioner, shall use the allocation that
would otherwise be provided to the State under
this title for such year, in accordance with
paragraph (2), for such State.
``(B) 2019 through 2026.--In the case of a
State that does not have in effect an approved
application under this section for 2019 or a
subsequent year beginning during the period
described in section 2201, subject to section
2204(e), the Administrator, in consultation
with the State insurance commissioner, shall
use the allocation that would otherwise be
provided to the State under this title for such
year, in accordance with paragraph (2), for
such State.
``(2) Required use for market stabilization payments
to issuers.--Subject to section 2204(a), an allocation
for a State made pursuant to paragraph (1) for a year
shall be used to carry out the purpose described in
section 2202(2) in such State by providing payments to
appropriate entities described in such section with
respect to claims that exceed $50,000 (or, with respect
to allocations made under this title for 2020 or a
subsequent year during the period specified in section
2201, such dollar amount specified by the
Administrator), but do not exceed $350,000 (or, with
respect to allocations made under this title for 2020
or a subsequent year during such period, such dollar
amount specified by the Administrator), in an amount
equal to 75 percent (or, with respect to allocations
made under this title for 2020 or a subsequent year
during such period, such percentage specified by the
Administrator) of the amount of such claims.
``SEC. 2204. ALLOCATIONS.
``(a) Appropriation.--For the purpose of providing
allocations for States (including pursuant to section 2203(b))
under this title there is appropriated, out of any money in the
Treasury not otherwise appropriated--
``(1) for 2018, $15,000,000,000;
``(2) for 2019, $15,000,000,000;
``(3) for 2020, $10,000,000,000;
``(4) for 2021, $10,000,000,000;
``(5) for 2022, $10,000,000,000;
``(6) for 2023, $10,000,000,000;
``(7) for 2024, $10,000,000,000;
``(8) for 2025, $10,000,000,000; and
``(9) for 2026, $10,000,000,000.
``(b) Allocations.--
``(1) Payment.--
``(A) In general.--From amounts appropriated
under subsection (a) for a year, the
Administrator shall, with respect to a State
and not later than the date specified under
subparagraph (B) for such year, allocate,
subject to subsection (e), for such State
(including pursuant to section 2203(b)) the
amount determined for such State and year under
paragraph (2).
``(B) Specified date.--For purposes of
subparagraph (A), the date specified in this
subparagraph is--
``(i) for 2018, the date that is 45
days after the date of the enactment of
this title; and
``(ii) for 2019 and subsequent years,
January 1 of the respective year.
``(2) Allocation amount determinations.--
``(A) For 2018 and 2019.--
``(i) In general.--For purposes of
paragraph (1), the amount determined
under this paragraph for 2018 and 2019
for a State is an amount equal to the
sum of--
``(I) the relative incurred
claims amount described in
clause (ii) for such State and
year; and
``(II) the relative uninsured
and issuer participation amount
described in clause (iv) for
such State and year.
``(ii) Relative incurred claims
amount.--For purposes of clause (i),
the relative incurred claims amount
described in this clause for a State
for 2018 and 2019 is the product of--
``(I) 85 percent of the
amount appropriated under
subsection (a) for the year;
and
``(II) the relative State
incurred claims proportion
described in clause (iii) for
such State and year.
``(iii) Relative state incurred
claims proportion.--The relative State
incurred claims proportion described in
this clause for a State and year is the
amount equal to the ratio of--
``(I) the adjusted incurred
claims by the State, as
reported through the medical
loss ratio annual reporting
under section 2718 of the
Public Health Service Act for
the third previous year; to
``(II) the sum of such
adjusted incurred claims for
all States, as so reported, for
such third previous year.
``(iv) Relative uninsured and issuer
participation amount.--For purposes of
clause (i), the relative uninsured and
issuer participation amount described
in this clause for a State for 2018 and
2019 is the product of--
``(I) 15 percent of the
amount appropriated under
subsection (a) for the year;
and
``(II) the relative State
uninsured and issuer
participation proportion
described in clause (v) for
such State and year.
``(v) Relative state uninsured and
issuer participation proportion.--The
relative State uninsured and issuer
participation proportion described in
this clause for a State and year is--
``(I) in the case of a State
not described in clause (vi)
for such year, 0; and
``(II) in the case of a State
described in clause (vi) for
such year, the amount equal to
the ratio of--
``(aa) the number of
individuals residing in
such State who for the
third preceding year
were not enrolled in a
health plan or
otherwise did not have
health insurance
coverage (including
through a Federal or
State health program)
and whose income is
below 100 percent of
the poverty line
applicable to a family
of the size involved;
to
``(bb) the sum of the
number of such
individuals for all
States described in
clause (vi) for the
third preceding year.
``(vi) States described.--For
purposes of clause (v), a State is
described in this clause, with respect
to 2018 and 2019, if the State
satisfies either of the following
criterion:
``(I) The number of
individuals residing in such
State and described in clause
(v)(II)(aa) was higher in 2015
than 2013.
``(II) The State have fewer
than three health insurance
issuers offering qualified
health plans through the
Exchange for 2017.
``(B) For 2020 through 2026.--For purposes of
paragraph (1), the amount determined under this
paragraph for a year (beginning with 2020)
during the period described in section 2201 for
a State is an amount determined in accordance
with an allocation methodology specified by the
Administrator which--
``(i) takes into consideration the
adjusted incurred claims of such State,
the number of residents of such State
who for the previous year were not
enrolled in a health plan or otherwise
did not have health insurance coverage
(including through a Federal or State
health program) and whose income is
below 100 percent of the poverty line
applicable to a family of the size
involved, and the number of health
insurance issuers participating in the
insurance market in such State for such
year;
``(ii) is established after
consultation with health care
consumers, health insurance issuers,
State insurance commissioners, and
other stakeholders and after taking
into consideration additional cost and
risk factors that may inhibit health
care consumer and health insurance
issuer participation; and
``(iii) reflects the goals of
improving the health insurance risk
pool, promoting a more competitive
health insurance market, and increasing
choice for health care consumers.
``(c) Annual Distribution of Previous Year's Remaining
Funds.-- In carrying out subsection (b), the Administrator
shall, with respect to a year (beginning with 2020 and ending
with 2027), not later than March 31 of such year--
``(1) determine the amount of funds, if any, from the
amounts appropriated under subsection (a) for the
previous year but not allocated for such previous year;
and
``(2) if the Administrator determines that any funds
were not so allocated for such previous year, allocate
such remaining funds, in accordance with the allocation
methodology specified pursuant to subsection
(b)(2)(B)--
``(A) to States that have submitted an
application approved under section 2203(a) for
such previous year for any purpose for which
such an application was approved; and
``(B) for States for which allocations were
made pursuant to section 2203(b) for such
previous year, to be used by the Administrator
for such States, to carry out the purpose
described in section 2202(2) in such States by
providing payments to appropriate entities
described in such section with respect to
claims that exceed $1,000,000;
with, respect to a year before 2027, any remaining
funds being made available for allocations to States
for the subsequent year.
``(d) Availability.--Amounts appropriated under subsection
(a) for a year and allocated to States in accordance with this
section shall remain available for expenditure through December
31, 2027.
``(e) Conditions for and Limitations on Receipt of Funds.--
The Secretary may not make an allocation under this title for a
State, with respect to a purpose described in section 2202--
``(1) in the case of an allocation that would be made
to a State pursuant to section 2203(a), if the State
does not agree that the State will make available non-
Federal contributions towards such purpose in an amount
equal to--
``(A) for 2020, 7 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(B) for 2021, 14 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(C) for 2022, 21 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(D) for 2023, 28 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(E) for 2024, 35 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(F) for 2025, 42 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
``(G) for 2026, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(2) in the case of an allocation that would be made
for a State pursuant to section 2203(b), if the State
does not agree that the State will make available non-
Federal contributions towards such purpose in an amount
equal to--
``(A) for 2020, 10 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(B) for 2021, 20 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
``(C) for 2022, 30 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(D) for 2023, 40 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(E) for 2024, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose;
``(F) for 2025, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose; and
``(G) for 2026, 50 percent of the amount
allocated under this subsection to such State
for such year and purpose; or
``(3) if such an allocation for such purpose would
not be permitted under subsection (c)(7) of section
2105 if such allocation were payment made under such
section.''.
SEC. 133. CONTINUOUS HEALTH INSURANCE COVERAGE INCENTIVE.
Subpart I of part A of title XXVII of the Public Health
Service Act is amended--
(1) in section 2701(a)(1)(B), by striking ``such
rate'' and inserting ``subject to section 2710A, such
rate'';
(2) by redesignating the second section 2709 as
section 2710; and
(3) by adding at the end the following new section:
``SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.
``(a) Penalty Applied.--
``(1) In general.--Notwithstanding section 2701,
subject to the succeeding provisions of this section, a
health insurance issuer offering health insurance
coverage in the individual or small group market shall,
in the case of an individual who is an applicable
policyholder of such coverage with respect to an
enforcement period applicable to enrollments for a plan
year beginning with plan year 2019 (or, in the case of
enrollments during a special enrollment period,
beginning with plan year 2018), increase the monthly
premium rate otherwise applicable to such individual
for such coverage during each month of such period, by
an amount determined under paragraph (2).
``(2) Amount of penalty.--The amount determined under
this paragraph for an applicable policyholder enrolling
in health insurance coverage described in paragraph (1)
for a plan year, with respect to each month during the
enforcement period applicable to enrollments for such
plan year, is the amount that is equal to 30 percent of
the monthly premium rate otherwise applicable to such
applicable policyholder for such coverage during such
month.
``(b) Definitions.--For purposes of this section:
``(1) Applicable policyholder.--The term `applicable
policyholder' means, with respect to months of an
enforcement period and health insurance coverage, an
individual who--
``(A) is a policyholder of such coverage for
such months;
``(B) cannot demonstrate (through
presentation of certifications described in
section 2704(e) or in such other manner as may
be specified in regulations, such as a return
or statement made under section 6055(d) or 36C
of the Internal Revenue Code of 1986), during
the look-back period that is with respect to
such enforcement period, there was not a period
of at least 63 continuous days during which the
individual did not have creditable coverage (as
defined in paragraph (1) of section 2704(c) and
credited in accordance with paragraphs (2) and
(3) of such section); and
``(C) in the case of an individual who had
been enrolled under dependent coverage under a
group health plan or health insurance coverage
by reason of section 2714 and such dependent
coverage of such individual ceased because of
the age of such individual, is not enrolling
during the first open enrollment period
following the date on which such coverage so
ceased.
``(2) Look-back period.--The term `look-back period'
means, with respect to an enforcement period applicable
to an enrollment of an individual for a plan year
beginning with plan year 2019 (or, in the case of an
enrollment of an individual during a special enrollment
period, beginning with plan year 2018) in health
insurance coverage described in subsection (a)(1), the
12-month period ending on the date the individual
enrolls in such coverage for such plan year.
``(3) Enforcement period.--The term `enforcement
period' means--
``(A) with respect to enrollments during a
special enrollment period for plan year 2018,
the period beginning with the first month that
is during such plan year and that begins
subsequent to such date of enrollment, and
ending with the last month of such plan year;
and
``(B) with respect to enrollments for plan
year 2019 or a subsequent plan year, the 12-
month period beginning on the first day of the
respective plan year.''.
SEC. 134. INCREASING COVERAGE OPTIONS.
Section 1302 of the Patient Protection and Affordable Care
Act (42 U.S.C. 18022) is amended--
(1) in subsection (a)(3), by inserting ``and with
respect to a plan year before plan year 2020'' after
``subsection (e)''; and
(2) in subsection (d), by adding at the end the
following:
``(5) Sunset.--The provisions of this subsection
shall not apply after December 31, 2019, and after such
date any reference to this subsection or level of
coverage or plan described in this subsection and any
requirement under law applying such a level of coverage
or plan shall have no force or effect (and such a
requirement shall be applied as if this section had
been repealed).''.
SEC. 135. CHANGE IN PERMISSIBLE AGE VARIATION IN HEALTH INSURANCE
PREMIUM RATES.
Section 2701(a)(1)(A)(iii) of the Public Health Service Act
(42 U.S.C. 300gg(a)(1)(A)(iii)), as inserted by section 1201(4)
of the Patient Protection and Affordable Care Act, is amended
by inserting after ``(consistent with section 2707(c))'' the
following: ``or, for plan years beginning on or after January
1, 2018, as the Secretary may implement through interim final
regulation, 5 to 1 for adults (consistent with section 2707(c))
or such other ratio for adults (consistent with section
2707(c)) as the State involved may provide''.
TITLE II--COMMITTEE ON WAYS AND MEANS
Subtitle A--Repeal and Replace of Health-Related Tax Policy
SEC. 201. RECAPTURE EXCESS ADVANCE PAYMENTS OF PREMIUM TAX CREDITS.
Subparagraph (B) of section 36B(f)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
clause:
``(iii) Nonapplicability of
limitation.--This subparagraph shall
not apply to taxable years beginning
after December 31, 2017, and before
January 1, 2020.''.
SEC. 202. ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT.
(a) Modification of Definition of Qualified Health Plan.--
(1) In general.--Section 36B(c)(3)(A) of the Internal
Revenue Code of 1986 is amended--
(A) by inserting ``(determined without regard
to subparagraphs (A), (C)(ii), and (C)(iv) of
paragraph (1) thereof and without regard to
whether the plan is offered on an Exchange)''
after ``1301(a) of the Patient Protection and
Affordable Care Act'', and
(B) by striking ``shall not include'' and all
that follows and inserting ``shall not include
any health plan that--
``(i) is a grandfathered health plan
or a grandmothered health plan, or
``(ii) includes coverage for
abortions (other than any abortion
necessary to save the life of the
mother or any abortion with respect to
a pregnancy that is the result of an
act of rape or incest).''.
(2) Definition of grandmothered health plan.--Section
36B(c)(3) of such Code is amended by adding at the end
the following new subparagraph:
``(C) Grandmothered health plan.--
``(i) In general.--The term
`grandmothered health plan' means
health insurance coverage which is
offered in the individual health
insurance market as of October 1, 2013,
and is permitted to be offered in such
market after January 1, 2014, as a
result of CCIIO guidance.
``(ii) CCIIO guidance defined.--The
term `CCIIO guidance' means the letter
issued by the Centers for Medicare &
Medicaid Services on November 14, 2013,
to the State Insurance Commissioners
outlining a transitional policy for
non-grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified
(including by a communication entitled
`Insurance Standards Bulletin Series--
INFORMATION--Extension of Transitional
Policy through Calendar Year 2017'
issued on February 29, 2016, by the
Director of the Center for Consumer
Information & Insurance Oversight of
such Centers).
``(iii) Individual health insurance
market.--The term `individual health
insurance market' means the market for
health insurance coverage (as defined
in section 9832(b)) offered to
individuals other than in connection
with a group health plan (within the
meaning of section 5000(b)(1)).''.
(3) Conforming amendment related to abortion
coverage.--Section 36B(c)(3) of such Code, as amended
by paragraph (2), is amended by adding at the end the
following new subparagraph:
``(D) Certain rules related to abortion.--
``(i) Option to purchase separate
coverage or plan.--Nothing in
subparagraph (A) shall be construed as
prohibiting any individual from
purchasing separate coverage for
abortions described in such
subparagraph, or a health plan that
includes such abortions, so long as no
credit is allowed under this section
with respect to the premiums for such
coverage or plan.
``(ii) Option to offer coverage or
plan.--Nothing in subparagraph (A)
shall restrict any health insurance
issuer offering a health plan from
offering separate coverage for
abortions described in such
subparagraph, or a plan that includes
such abortions, so long as premiums for
such separate coverage or plan are not
paid for with any amount attributable
to the credit allowed under this
section (or the amount of any advance
payment of the credit under section
1412 of the Patient Protection and
Affordable Care Act).
``(iii) Other treatments.--The
treatment of any infection, injury,
disease, or disorder that has been
caused by or exacerbated by the
performance of an abortion shall not be
treated as an abortion for purposes of
subparagraph (A).''.
(4) Conforming amendments related to off-exchange
coverage.--
(A) Advance payment not applicable.--Section
1412 of the Patient Protection and Affordable
Care Act is amended by adding at the end the
following new subsection:
``(f) Exclusion of Off-Exchange Coverage.--Advance payments
under this section, and advance determinations under section
1411, with respect to any credit allowed under section 36B
shall not be made with respect to any health plan which is not
enrolled in through an Exchange.''.
(B) Reporting.--Section 6055(b) of the
Internal Revenue Code of 1986 is amended by
adding at the end the following new paragraph:
``(3) Information relating to off-exchange premium
credit eligible coverage.--If minimum essential
coverage provided to an individual under subsection (a)
consists of a qualified health plan (as defined in
section 36B(c)(3)) which is not enrolled in through an
Exchange established under title I of the Patient
Protection and Affordable Care Act, a return described
in this subsection shall include--
``(A) a statement that such plan is a
qualified health plan (as defined in section
36B(c)(3)),
``(B) the premiums paid with respect to such
coverage,
``(C) the months during which such coverage
is provided to the individual,
``(D) the adjusted monthly premium for the
applicable second lowest cost silver plan (as
defined in section 36B(b)(3)) for each such
month with respect to such individual, and
``(E) such other information as the Secretary
may prescribe.
This paragraph shall not apply with respect to coverage
provided for any month beginning after December 31,
2019.''.
(C) Other conforming amendments.--
(i) Section 36B(b)(2)(A) is amended
by striking ``and which were enrolled''
and all that follows and inserting ``,
or''.
(ii) Section 36B(b)(3)(B)(i) is
amended by striking ``the same
Exchange'' and all that follows and
inserting ``the Exchange through which
such taxpayer is permitted to obtain
coverage, and''.
(b) Modification of Applicable Percentage.--Section
36B(b)(3)(A) of such Code is amended to read as follows:
``(A) Applicable percentage.--
``(i) In general.--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 percentage to the final
percentage specified in such table for
such income tier with respect to a
taxpayer of the age involved:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``In the case of Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59
household income ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(expressed as a
percent of the
poverty line)
within the Initial % Final % Initial % Final % Initial % Final % Initial % Final % Initial % Final %
following income
tier:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Up to 133% 2............... 2............... 2............... 2.............. 2.............. 2.............. 2.............. 2.............. 2.............. 2
133%-150% 3............... 4............... 3............... 4.............. 3.............. 4.............. 3.............. 4.............. 3.............. 4
150%-200% 4............... 4.3............. 4............... 5.3............ 4.............. 6.3............ 4.............. 7.3............ 4.............. 8.3
200%-250% 4.3............. 4.3............. 5.3............. 5.9............ 6.3............ 8.05........... 7.3............ 9.............. 8.3............ 10
250%-300% 4.3............. 4.3............. 5.9............. 5.9............ 8.05........... 8.35........... 9.............. 10.5........... 10............. 11.5
300%-400% 4.3............. 4.3............. 5.9............. 5.9............ 8.35........... 8.35........... 10.5........... 10.5........... 11.5........... 11.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``(ii) Age determinations.--
``(I) In general.--For
purposes of clause (i), the age
of the taxpayer taken into
account under clause (i) with
respect to any taxable year is
the age attained by such
taxpayer before the close of
such taxable year.
``(II) Joint returns.--In the
case of a joint return, the age
of the older spouse shall be
taken into account under clause
(i).
``(iii) Indexing.--In the case of any
taxable year beginning in calendar year
2019, the initial and final percentages
contained in clause (i) shall be
adjusted to reflect--
``(I) the excess (if any) of
the rate of premium growth for
the period beginning with
calendar year 2013 and ending
with calendar year 2018, over
the rate of income growth for
such period, and
``(II) in addition to any
adjustment under subclause (I),
the excess (if any) of the rate
of premium growth for calendar
year 2018, over the rate of
growth in the consumer price
index for calendar year 2018.
``(iv) Failsafe.--Clause (iii)(II)
shall apply 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 calendar year 2018 exceeds an
amount equal to 0.504 percent of the
gross domestic product for such
calendar year.''.
(b) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall
apply to taxable years beginning after December 31,
2017.
(2) Advance payment not applicable to off-exchange
coverage.--The amendment made by subsection (a)(4)(A)
shall take effect on January 1, 2018.
(3) Reporting.--The amendment made by subsection
(a)(4)(B) shall apply to coverage provided for months
beginning after December 31, 2017.
(4) Modification of applicable percentage.--The
amendment made by subsection (b) shall apply to taxable
years beginning after December 31, 2018.
SEC. 203. PREMIUM TAX CREDIT.
(a) Repeal of Premium Tax Credit.--Section 36B of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subsection:
``(h) Termination.--No credit shall be allowed under this
section with respect to any coverage month which begins after
December 31, 2019.''.
(b) Repeal of Advance Payment of, and Eligibility
Determination for, Premium Tax Credit.--Section 1412 of the
Patient Protection and Affordable Care Act, as amended by the
preceding provisions of this subtitle, is amended by adding at
the end the following new subsection:
``(g) Termination With Respect to Premium Tax Credit.--
Effective January 1, 2020, no provision of this section or
section 1411 shall apply to the credit allowed under section
36B of the Internal Revenue Code of 1986 (or to the advance
payment of, or determination of eligibility for, such credit or
payment).''.
(c) Effective Dates.--
(1) Premium tax credit.--The amendment made by
subsection (a) shall apply to months beginning after
December 31, 2019, in taxable years ending after such
date.
(2) Eligibility determinations.--The amendment made
by subsection (b) shall take effect on January 1, 2020.
SEC. 204. SMALL BUSINESS TAX CREDIT.
(a) In General.--Section 45R of the Internal Revenue Code of
1986 is amended by adding at the end the following new
subsection:
``(j) Shall Not Apply.--This section shall not apply with
respect to amounts paid or incurred in taxable years beginning
after December 31, 2019.''.
(b) Disallowance of Small Employer Health Insurance Expense
Credit for Plan Which Includes Coverage for Abortion.--
Subsection (h) of section 45R of the Internal Revenue Code of
1986 is amended--
(1) by striking ``Any term'' and inserting the
following:
``(1) In general.--Any term''; and
(2) by adding at the end the following new paragraph:
``(2) Exclusion of health plans including coverage
for abortion.--
``(A) In general.--The term `qualified health
plan' does not include any health plan that
includes coverage for abortions (other than any
abortion necessary to save the life of the
mother or any abortion with respect to a
pregnancy that is the result of an act of rape
or incest) .
``(B) Certain rules related to abortion.--
``(i) Option to purchase separate
coverage or plan.--Nothing in
subparagraph (A) shall be construed as
prohibiting any employer from
purchasing for its employees separate
coverage for abortions described in
such subparagraph, or a health plan
that includes such abortions, so long
as no credit is allowed under this
section with respect to the employer
contributions for such coverage or
plan.
``(ii) Option to offer coverage or
plan.--Nothing in subparagraph (A)
shall restrict any health insurance
issuer offering a health plan from
offering separate coverage for
abortions described in such
subparagraph, or a plan that includes
such abortions, so long as such
separate coverage or plan is not paid
for with any employer contribution
eligible for the credit allowed under
this section.
``(iii) Other treatments.--The
treatment of any infection, injury,
disease, or disorder that has been
caused by or exacerbated by the
performance of an abortion shall not be
treated as an abortion for purposes of
subparagraph (A).''.
(c) Effective Dates.--
(1) In general.--The amendment made by subsection (a)
shall apply to taxable years beginning after December
31, 2019.
(2) Disallowance of small employer health insurance
expense credit for plan which includes coverage for
abortion.--The amendments made by subsection (b) shall
apply to taxable years beginning after December 31,
2017.
SEC. 205. INDIVIDUAL MANDATE.
(a) In General.--Section 5000A(c) of the Internal Revenue
Code of 1986 is amended--
(1) in paragraph (2)(B)(iii), by striking ``2.5
percent'' and inserting ``Zero percent'', and
(2) in paragraph (3)--
(A) by striking ``$695'' in subparagraph (A)
and inserting ``$0'', and
(B) by striking subparagraph (D).
(b) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2015.
SEC. 206. EMPLOYER MANDATE.
(a) In General.--
(1) Paragraph (1) of section 4980H(c) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in
the case of months beginning after December 31, 2015)''
after ``$2,000''.
(2) Paragraph (1) of section 4980H(b) of the Internal
Revenue Code of 1986 is amended by inserting ``($0 in
the case of months beginning after December 31, 2015)''
after ``$3,000''.
(b) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2015.
SEC. 207. REPEAL OF THE TAX ON EMPLOYEE HEALTH INSURANCE PREMIUMS AND
HEALTH PLAN BENEFITS.
Section 4980I of the Internal Revenue Code of 1986 is amended
by adding at the end the following new subsection:
``(h) Shall Not Apply.--No tax shall be imposed under this
section with respect to any taxable period beginning after
December 31, 2019, and before January 1, 2025.''.
SEC. 208. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS.
(a) HSAs.--Subparagraph (A) of section 223(d)(2) of the
Internal Revenue Code of 1986 is amended by striking ``Such
term'' and all that follows through the period.
(b) Archer MSAs.--Subparagraph (A) of section 220(d)(2) of
the Internal Revenue Code of 1986 is amended by striking ``Such
term'' and all that follows through the period.
(c) Health Flexible Spending Arrangements and Health
Reimbursement Arrangements.--Section 106 of the Internal
Revenue Code of 1986 is amended by striking subsection (f) and
by redesignating subsection (g) as subsection (f).
(d) Effective Dates.--
(1) Distributions from savings accounts.--The
amendments made by subsections (a) and (b) shall apply
to amounts paid with respect to taxable years beginning
after December 31, 2017.
(2) Reimbursements.--The amendment made by subsection
(c) shall apply to expenses incurred with respect to
taxable years beginning after December 31, 2017.
SEC. 209. REPEAL OF INCREASE OF TAX ON HEALTH SAVINGS ACCOUNTS.
(a) HSAs.--Section 223(f)(4)(A) of the Internal Revenue Code
of 1986 is amended by striking ``20 percent'' and inserting
``10 percent''.
(b) Archer MSAs.--Section 220(f)(4)(A) of the Internal
Revenue Code of 1986 is amended by striking ``20 percent'' and
inserting ``15 percent''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions made after December 31, 2017.
SEC. 210. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO FLEXIBLE SPENDING
ACCOUNTS.
(a) In General.--Section 125 of the Internal Revenue Code of
1986 is amended by striking subsection (i).
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. 211. REPEAL OF MEDICAL DEVICE EXCISE TAX.
Section 4191 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new subsection:
``(d) Applicability.--The tax imposed under subsection (a)
shall not apply to sales after December 31, 2017.''.
SEC. 212. REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO
MEDICARE PART D SUBSIDY.
(a) In General.--Section 139A of the Internal Revenue Code of
1986 is amended by adding at the end the following new
sentence: ``This section shall not be taken into account for
purposes of determining whether any deduction is allowable with
respect to any cost taken into account in determining such
payment.''.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. 213. REPEAL OF INCREASE IN INCOME THRESHOLD FOR DETERMINING
MEDICAL CARE DEDUCTION.
(a) In General.--Subsection (a) of section 213 of the
Internal Revenue Code of 1986 is amended by striking ``10
percent'' and inserting ``7.5 percent''.
(b) Extension of Special Rule.--Subsection (f) of section 213
of such Code is amended--
(1) by striking ``2017'' and inserting ``2018'', and
(2) by striking ``and 2016'' and inserting ``2016,
and 2017''.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a)
shall apply to taxable years beginning after December
31, 2017.
(2) Extension of special rule.--The amendments made
by subsection (b) shall apply to taxable years
beginning after December 31, 2016.
SEC. 214. REPEAL OF MEDICARE TAX INCREASE.
(a) In General.--Subsection (b) of section 3101 of the
Internal Revenue Code of 1986 is amended to read as follows:
``(b) Hospital Insurance.--In addition to the tax imposed by
the preceding subsection, there is hereby imposed on the income
of every individual a tax equal to 1.45 percent of the wages
(as defined in section 3121(a)) received by such individual
with respect to employment (as defined in section 3121(b)).''.
(b) SECA.--Subsection (b) of section 1401 of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Hospital Insurance.--In addition to the tax imposed by
the preceding subsection, there shall be imposed for each
taxable year, on the self-employment income of every
individual, a tax equal to 2.9 percent of the amount of the
self-employment income for such taxable year.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to remuneration received after, and
taxable years beginning after, December 31, 2017.
SEC. 215. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COVERAGE.
(a) In General.--Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 36B the following new section:
``SEC. 36C. HEALTH INSURANCE COVERAGE.
``(a) In General.--In the case of an individual, there shall
be allowed as a credit against the tax imposed by this subtitle
for the taxable year the sum of the monthly credit amounts with
respect to such taxpayer for calendar months during such
taxable year.
``(b) Monthly Credit Amounts.--
``(1) In general.--The monthly credit amount with
respect to any taxpayer for any calendar month is the
lesser of--
``(A) the sum of the monthly limitation
amounts determined under subsection (c) with
respect to the taxpayer and the taxpayer's
qualifying family members for such month, or
``(B) the amount paid for eligible health
insurance for the taxpayer and the taxpayer's
qualifying family members for such month.
``(2) Eligible coverage month requirement.--No amount
shall be taken into account under subparagraph (A) or
(B) of paragraph (1) with respect to any individual for
any month unless such month is an eligible coverage
month with respect to such individual.
``(c) Monthly Limitation Amounts.--
``(1) In general.--The monthly limitation amount with
respect to any individual for any eligible coverage
month during any taxable year is \1/12\ of--
``(A) $2,000 in the case of an individual who
has not attained age 30 as of the beginning of
such taxable year,
``(B) $2,500 in the case of an individual who
has attained age 30 but who has not attained
age 40 as of such time,
``(C) $3,000 in the case of an individual who
has attained age 40 but who has not attained
age 50 as of such time,
``(D) $3,500 in the case of an individual who
has attained age 50 but who has not attained
age 60 as of such time, and
``(E) $4,000 in the case of an individual who
has attained age 60 as of such time.
``(2) Limitation based on modified adjusted gross
income.--
``(A) In general.--The amount otherwise
determined under subsection (b)(1)(A) (without
regard to this subparagraph but after any other
adjustment of such amount under this section)
for the taxable year shall be reduced (but not
below zero) by 10 percent of the excess (if
any) of--
``(i) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(ii) $75,000 (twice such amount in
the case of a joint return).
``(B) Modified adjusted gross income.--For
purposes of this paragraph, 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) Other limitations.--
``(A) Aggregate dollar limitation.--The sum
of the monthly limitation amounts taken into
account under this section with respect to any
taxpayer for any taxable year shall not exceed
$14,000.
``(B) Maximum number of individuals taken
into account.--With respect to any taxpayer for
any month, monthly limitation amounts shall be
taken into account under this section only with
respect to the 5 oldest individuals with
respect to whom monthly limitation amounts
could (without regard to this subparagraph)
otherwise be so taken into account.
``(d) Eligible Coverage Month.--For purposes of this section,
the term `eligible coverage month' means, with respect to any
individual, any month if, as of the first day of such month,
the individual--
``(1) is covered by eligible health insurance,
``(2) is not eligible for other specified coverage,
``(3) is either--
``(A) a citizen or national of the United
States, or
``(B) a qualified alien (within the meaning
of section 431 of the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1641)), and
``(4) is not incarcerated, other than incarceration
pending the disposition of charges.
``(e) Qualifying Family Member.--For purposes of this
section, the term `qualifying family member' means--
``(1) in the case of a joint return, the taxpayer's
spouse,
``(2) any dependent of the taxpayer, and
``(3) with respect to any eligible coverage month,
any child (as defined in section 152(f)(1)) of the
taxpayer who as of the end of the taxable year has not
attained age 27 if such child is covered for such month
under eligible health insurance which also covers the
taxpayer (in the case of a joint return, either
spouse).
``(f) Eligible Health Insurance.--For purposes of this
section--
``(1) In general.--The term `eligible health
insurance' means any health insurance coverage (as
defined in section 9832(b)) if--
``(A) such coverage is either--
``(i) offered in the individual
health insurance market within a State,
or
``(ii) is unsubsidized COBRA
continuation coverage,
``(B) such coverage is not a grandfathered
health plan (as defined in section 1251 of the
Patient Protection and Affordable Care Act) or
a grandmothered health plan,
``(C) substantially all of such coverage is
not of excepted benefits described in section
9832(c),
``(D) such coverage does not include coverage
for abortions (other than any abortion
necessary to save the life of the mother or any
abortion with respect to a pregnancy that is
the result of an act of rape or incest),
``(E) such coverage does not consist of
short-term limited duration insurance (as
defined by the Secretary), and
``(F) the State in which such insurance is
offered certifies that such coverage meets the
requirements of this paragraph.
``(2) Rules related to state certification.--
``(A) Certification made available to
public.--A certification shall not be taken
into account under paragraph (1)(E) unless such
certification is made available to the public
and meets such other requirements as the
Secretary may provide.
``(B) Special rule for unsubsidized cobra
continuation coverage.--In the case of
unsubsidized COBRA continuation coverage--
``(i) paragraph (1)(E) shall be
applied by substituting `the plan
administrator (as defined in section
414(g)) of the health plan' for `the
State in which such insurance is
offered', and
``(ii) the requirements of
subparagraph (A) shall be treated as
satisfied if the certification meets
such requirements as the Secretary may
provide.
``(3) Grandmothered health plan.--
``(A) In general.--The term `grandmothered
health plan' means health insurance coverage
which is offered in the individual health
insurance market as of January 1, 2013, and is
permitted to be offered in such market after
January 1, 2014, as a result of CCIIO guidance.
``(B) CCIIO guidance defined.--The term
`CCIIO guidance' means the letter issued by the
Centers for Medicare & Medicaid Services on
November 14, 2013, to the State Insurance
Commissioners outlining a transitional policy
for non-grandfathered coverage in the
individual health insurance market, as
subsequently extended and modified (including
by a communication entitled `Insurance
Standards Bulletin Series--INFORMATION--
Extension of Transitional Policy through
Calendar Year 2017' issued on February 29,
2016, by the Director of the Center for
Consumer Information & Insurance Oversight of
such Centers).
``(4) Individual health insurance market.--The term
`individual health insurance market' means the market
for health insurance coverage (as defined in section
9832(b)) offered to individuals other than in
connection with a group health plan (within the meaning
of section 5000(b)(1)).
``(g) Other Specified Coverage.--For purposes of this
section--
``(1) In general.--The term `other specified
coverage' means any of the following:
``(A) Coverage under a group health plan
(within the meaning of section 5000(b)(1))
other than--
``(i) coverage under a plan
substantially all of the coverage of
which is of excepted benefits described
in section 9832(c), and
``(ii) COBRA continuation coverage.
``(B) Coverage under the Medicare program
under part A of title XVIII of the Social
Security Act.
``(C) Coverage under the Medicaid program
under title XIX of the Social Security Act.
``(D) Coverage under the CHIP program under
title XXI of the Social Security Act.
``(E) Medical coverage under chapter 55 of
title 10, United States Code, including
coverage under the TRICARE program.
``(F) Coverage under a health care program
under chapter 17 or 18 of title 38, United
States Code, as determined by the Secretary of
Veterans Affairs, in coordination with the
Secretary of Health and Human Services and the
Secretary of the Treasury.
``(G) Coverage under a health plan under
section 2504(e) of title 22, United States Code
(relating to Peace Corps volunteers).
``(H) Coverage under the Nonappropriated Fund
Health Benefits Program of the Department of
Defense, established under section 349 of the
National Defense Authorization Act for Fiscal
Year 1995 (Public Law 103-337; 10 U.S.C. 1587
note).
``(2) Special rule with respect to veterans health
programs.--In the case of other specified coverage
described in paragraph (1)(F), an individual shall not
be treated as eligible for such coverage unless such
individual is enrolled in such coverage.
``(h) Unsubsidized COBRA Continuation Coverage.--For purposes
of this section--
``(1) In general.--The term `unsubsidized COBRA
continuation coverage' means COBRA continuation
coverage no portion of the premiums for which are
subsidized by the employer.
``(2) COBRA continuation coverage.--The term `COBRA
continuation coverage' means continuation coverage
provided pursuant to part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974
(other than under section 609), title XXII of the
Public Health Service Act, section 4980B of the
Internal Revenue Code of 1986 (other than subsection
(f)(1) of such section insofar as it relates to
pediatric vaccines), or section 8905a of title 5,
United States Code, or under a State program that
provides comparable continuation coverage. Such term
shall not include coverage under a health flexible
spending arrangement.
``(i) Special Rules.--
``(1) Married couples must file joint return.--If the
taxpayer is married (within the meaning of section
7703) at the close of the taxable year, no credit shall
be allowed under this section to such taxpayer unless
such taxpayer and the taxpayer's spouse file a joint
return for such taxable year.
``(2) Denial of credit to dependents.--
``(A) In general.--No credit shall be allowed
under this section to any individual who is a
dependent with respect to another taxpayer for
a taxable year beginning in the calendar year
in which such individual's taxable year begins.
``(B) Coordination with rule for older
children.--In the case of any individual who is
a qualifying family member described in
subsection (e)(3) with respect to another
taxpayer for any month, in determining the
amount of any credit allowable to such
individual under this section for any taxable
year of such individual which includes such
month, the monthly limitation amount with
respect to such individual for such month shall
be zero and no amount paid for eligible health
insurance with respect to such individual for
such month shall be taken into account.
``(3) Coordination with medical expense deduction.--
Amounts described in subsection (b)(1)(B) with respect
to any month shall not be taken into account in
determining the deduction allowed under section 213
except to the extent that such amounts exceed the
amount described in subsection (b)(1)(A) with respect
to such month.
``(4) Insurance which covers other individuals.--For
purposes of this section, rules similar to the rules of
section 213(d)(6) shall apply with respect to any
contract for eligible health insurance under which
amounts are payable for coverage of an individual other
than the taxpayer and the taxpayer's qualifying family
members.
``(5) Coordination with advance payments of credit.--
With respect to any taxable year--
``(A) the amount which would (but for this
subsection) be allowed as a credit to the
taxpayer under subsection (a) shall be reduced
(but not below zero) by the aggregate amount
paid on behalf of such taxpayer under section
7529 for months beginning in such taxable year,
and
``(B) the tax imposed by section 1 for such
taxable year shall be increased by the excess
(if any) of--
``(i) the aggregate amount paid on
behalf of such taxpayer under section
7529 for months beginning in such
taxable year, over
``(ii) the amount which would (but
for this subsection) be allowed as a
credit to the taxpayer under subsection
(a).
``(6) Special rules for qualified small employer
health reimbursement arrangements.--
``(A) In general.--If the taxpayer or any
qualifying family member of the taxpayer is
provided a qualified small employer health
reimbursement arrangement for any eligible
coverage month, the sum determined under
subsection (b)(1)(A) with respect to the
taxpayer for such month shall be reduced (but
not below zero) by \1/12\ of the permitted
benefit (as defined in section 9831(d)(3)(C))
under such arrangement.
``(B) 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).
``(C) 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 (A) shall be applied by
substituting `the number of months during the
year for which such arrangement was provided'
for `12'.
``(7) Certain rules related to abortion.--
``(A) Option to purchase separate coverage or
plan.--Nothing in subsection (f)(1)(D) shall be
construed as prohibiting any individual from
purchasing separate coverage for abortions
described in such subparagraph, or a health
plan that includes such abortions, so long as
no credit is allowed under this section with
respect to the premiums for such coverage or
plan.
``(B) Option to offer coverage or plan.--
Nothing in subsection (f)(1)(D) shall restrict
any health insurance issuer offering a health
plan from offering separate coverage for
abortions described in such clause, or a plan
that includes such abortions, so long as
premiums for such separate coverage or plan are
not paid for with any amount attributable to
the credit allowed under this section.
``(C) Other treatments.--The treatment of any
infection, injury, disease, or disorder that
has been caused by or exacerbated by the
performance of an abortion shall not be treated
as an abortion for purposes of subsection
(f)(1)(D).
``(8) Inflation adjustment.--
``(A) In general.--In the case of any taxable
year beginning in a calendar year after 2020,
each dollar amount in subsection (c)(1), the
$75,000 amount in subsection (c)(2)(A)(ii), and
the dollar amount in subsection (c)(3)(A),
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--
``(I) by substituting
`calendar year 2019' for
`calendar year 1992' in
subparagraph (B) thereof, and
``(II) by substituting for
the CPI referred to section
1(f)(3)(A) the amount that such
CPI would have been if the
annual percentage increase in
CPI with respect to each year
after 2019 had been one
percentage point greater.
``(B) Terms related to cpi.--
``(i) Annual percentage increase.--
For purposes of subparagraph
(A)(ii)(II), the term `annual
percentage increase' means the
percentage (if any) by which CPI for
any year exceeds CPI for the prior
year.
``(ii) Other terms.--Terms used in
this paragraph which are also used in
section 1(f)(3) shall have the same
meanings as when used in such section.
``(C) Rounding.--Any increase determined
under subparagraph (A) shall be rounded to the
nearest multiple of $50.
``(9) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section, section 6050X,
and section 7529.''.
(b) Advance Payment of Credit; Excess Health Insurance
Coverage Credit Payable to Health Savings Account.--Chapter 77
of such Code is amended by adding at the end the following:
``SEC. 7529. ADVANCE PAYMENT OF HEALTH INSURANCE COVERAGE CREDIT.
``(a) General Rule.--Not later than January 1, 2020, the
Secretary, in consultation with the Secretary of Health and
Human Services, the Secretary of Homeland Security, and the
Commissioner of Social Security, shall establish a program
(hereafter in this section referred to as the `advance payment
program') for making payments to providers of eligible health
insurance on behalf of taxpayers eligible for the credit under
section 36C.
``(b) Limitation.--The aggregate payments made under this
section with respect to any taxpayer, determined as of any time
during any calendar year, shall not exceed the monthly credit
amounts determined with respect to such taxpayer under section
36C for months during such calendar year which have ended as of
such time.
``(c) Administration.--
``(1) In general.--The advance payment program shall,
to the greatest extent practicable, use the methods and
procedures used to administer the programs created
under sections 1411 and 1412 of the Patient Protection
and Affordable Care Act (determined without regard to
section 1412(f) of such Act) and each entity that is
authorized to take any actions under the programs
created under such sections (as so determined) shall,
at the request of the Secretary, take such actions to
the extent necessary to carry out this section.
``(2) Application to off-exchange coverage.--Except
as otherwise provided by the Secretary, for purposes of
applying this subsection in the case of eligible health
insurance which is not enrolled in through an Exchange
established under title I of the Patient Protection and
Affordable Care Act, the sections referred to in
paragraph (1) shall be applied by treating references
in such sections to an Exchange as references to the
provider of such eligible health insurance (or, as the
Secretary determines appropriate, to the licensed agent
or broker with respect to such insurance), except that
the Secretary of Health and Human Services shall carry
out the responsibilities of the Exchange under section
1411(e)(4) of the Patient Protection and Affordable
Care Act (determined without regard to section 1412(f)
of such Act) in the case of such insurance.
``(3) Documentation regarding other specified
coverage.--
``(A) In general.--The advance payment
program shall provide that any individual
applying to have payments made on their behalf
under such program shall, if such individual
(or any qualifying family member of such
individual taken into account in determining
the amount of the credit allowable under
section 36C) is employed, submit a written
statement from each employer of such individual
or such qualifying family member stating
whether such individual or qualifying family
member (as the case may be) is eligible for
other specified coverage in connection with
such employment.
``(B) Issuance of statements.--An employer
shall, at the request of any employee, provide
the statement under subparagraph (A) at such
time, and in such form and manner, as the
Secretary may provide.
``(d) Definitions.--For purposes of this section, terms used
in this section which are also used in section 36C shall have
the same meaning as when used in section 36C.
``SEC. 7530. EXCESS HEALTH INSURANCE COVERAGE CREDIT PAYABLE TO HEALTH
SAVINGS ACCOUNT.
``(a) In General.--At the request of an eligible taxpayer,
the Secretary shall make a payment to the trustee of the
designated health savings account with respect to such taxpayer
in an amount equal to the sum of the excesses (if any)
described in subsection (c)(2) with respect to months in the
taxable year.
``(b) Designated Health Savings Account.--The term
`designated health savings account' means a health savings
account of an individual described in subsection (c)(3) which
is identified by the eligible taxpayer for purposes of this
section.
``(c) Eligible Taxpayer.--The term `eligible taxpayer' means,
with respect to any taxable year, any taxpayer if--
``(1) such taxpayer is allowed a credit under section
36C for such taxable year,
``(2) the amount described in subparagraph (A) of
section 36C(b)(1) exceeds the amount described in
subparagraph (B) of such section with respect to such
taxpayer applied with respect to any month during such
taxable year, and
``(3) the taxpayer or one or more of the taxpayer's
qualifying family members (as defined in section
36C(e)) were eligible individuals (as defined in
section 223(c)(1)) for one or more months during such
taxable year.
``(d) Contributions Treated as Rollovers, etc.--
``(1) In general.--Any amount paid the Secretary to a
health savings account under this section shall be
treated for purposes of this title in the same manner
as a rollover contribution described in section
223(f)(5).
``(2) Coordination with limitation on rollovers.--Any
amount described in paragraph (1) shall not be taken
into account in applying section 223(f)(5)(B) with
respect to any other amount and the limitation of
section 223(f)(5)(B) shall not apply with respect to
the application of paragraph (1).
``(e) Form and Manner of Request.--The request referred to in
subsection (a) shall be made at such time and in such form and
manner as the Secretary may provide. To the extent that the
Secretary determines feasible, such request may identify more
than one designated health savings account (and the amount to
be paid to each such account) provided that the aggregate of
such payments with respect to any taxpayer for any taxable year
do not exceed the excess described in subsection (c)(2).
``(f) Taxpayers With Seriously Delinquent Tax Debt.--In the
case of an individual who has a seriously delinquent tax debt
(as defined in section 7345(b)) which has not been fully
satisfied--
``(1) if such individual is the eligible taxpayer
(or, in the case of a joint return, either spouse), the
Secretary shall not make any payment under this section
with respect to such taxpayer, and
``(2) if such individual is the account beneficiary
(as defined in section 223(d)(3)) of any health savings
account, the Secretary shall not make any payment under
this section to such health savings account.
``(g) Advance Payment.--To the extent that the Secretary
determines feasible, payment under this section may be made in
advance on a monthly basis under rules similar to the rules of
sections 7529 and 36C(i)(5)(B).''.
(c) Information Reporting.--
(1) Reporting by health insurance providers.--Subpart
B of part III of subchapter A of chapter 61 of such
Code is amended by adding at the end the following new
section:
``SEC. 6050X. RETURNS BY HEALTH INSURANCE PROVIDERS RELATING TO HEALTH
INSURANCE COVERAGE CREDIT.
``(a) Requirement of Reporting.--Every person who provides
eligible health insurance for any month of any calendar year
with respect to any individual shall, at such time as the
Secretary may prescribe, make the return described in
subsection (b) with respect to each such individual. With
respect to any individual with respect to whom payments under
section 7529 are made by the Secretary, the reporting under
subsection (b) shall be made on a monthly basis.
``(b) Form and Manner of Returns.--A return is described in
this subsection if such return--
``(1) is in such form as the Secretary may prescribe,
and
``(2) contains, with respect to each policy of
eligible health insurance--
``(A) the name, address, and TIN of each
individual covered under such policy,
``(B) the premiums paid with respect to such
policy,
``(C) the amount of advance payments made on
behalf of the individual under section 7529,
``(D) the months during which such health
insurance is provided to the individual,
``(E) whether such policy constitutes a high
deductible health plan (as defined in section
223(c)(2)), and
``(F) such other information as the Secretary
may prescribe.
``(c) Statements to Be Furnished to Individuals With Respect
to Whom Information Is Required.--Every person required to make
a return under subsection (a) shall furnish to each individual
whose name is required to be set forth in such return a written
statement showing--
``(1) the name and address of the person required to
make such return and the phone number of the
information contact for such person, and
``(2) the information required to be shown on the
return with respect to such individual.
The written statement required under the preceding sentence
shall be furnished on or before January 31 of the year
following the calendar year to which such statement relates.
``(d) Definitions.--For purposes of this section, terms used
in this section which are also used in section 36C shall have
the same meaning as when used in section 36C.''.
(2) Reporting by employers.--Section 6051(a) of such
Code is amended by striking ``and'' at the end of
paragraph (14), by striking the period at the end of
paragraph (15) and inserting ``, and'', and by
inserting after paragraph (15) the following new
paragraph:
``(16) each month with respect to which the employee
is eligible for other specified coverage (as defined in
section 36C(g)) in connection with employment with the
employer.''.
(3) Assessable penalties.--
(A) Section 6724(d)(1)(B) of such Code is
amended by striking ``or'' at the end of clause
(xxiv), by inserting ``or'' at the end of
clause (xxv), and by inserting after clause
(xxv) the following new clause:
``(xxvi) section 6050X (relating to
returns relating to health insurance
coverage credit),''.
(B) Section 6724(d)(2) of such Code is
amended by striking ``or'' at the end of
subparagraph (HH), by striking the period at
the end of subparagraph (II) and inserting a
comma, and by adding after subparagraph (II)
the following new subparagraphs:
``(JJ) section 6050X (relating to returns
relating to health insurance coverage credit),
or
``(KK) section 7529(c)(3) (relating to
documentation regarding other specified
coverage).''.
(d) Disclosures.--Paragraph (21) of section 6103(l) of the
Internal Revenue Code of 1986 is amended--
(1) in subparagraph (A)--
(A) by striking ``any premium tax credit
under section 36B or any cost-sharing reduction
under section 1402 of the Patient Protection
and Affordable Care Act or'' and inserting
``any credit under section 36C'',
(B) by striking ``, a State's children's
health insurance program under title XXI of the
Social Security Act, or a basic health program
under section 1331 of Patient Protection and
Affordable Care Act'' and inserting ``or a
State's children's health insurance program
under title XXI of the Social Security Act'',
(C) by striking ``(as defined in section
36B)'' in clause (iv) and inserting ``(as
defined in section 36C(c)(2)(B))'', and
(D) by striking ``or reduction'' in clause
(v),
(2) in subparagraph (B)--
(A) by striking ``may disclose to an
Exchange'' and inserting ``may disclose--
``(i) to an Exchange'', and
(B) by striking the period at the end and
inserting ``, and'', and
(C) by adding at the end the following new
clause:
``(ii) in the case of any credit
under section 36C with respect to any
health insurance, the amount of such
credit (or the amount of any advance
payment of such credit) to the provider
of such insurance (or, as the Secretary
determines appropriate, the licensed
agent or broker with respect to such
insurance).'', and
(3) in subparagraph (C)(i), by striking ``amount of,
any credit or reduction'' and inserting ``amount of any
credit''.
(e) Increased Penalty on Erroneous Claims of Credit.--Section
6676(a) of such Code is amended by inserting ``(25 percent in
the case of a claim for refund or credit relating to the health
insurance coverage credit under section 36C)'' after ``20
percent''.
(f) Conforming Amendments.--
(1) Section 35(g) of such Code is amended by adding
at the end the following new paragraph:
``(14) Coordination with health insurance coverage
credit.--
``(A) In general.--An eligible coverage month
to which the election under paragraph (11)
applies shall not be treated as an eligible
coverage month (as defined in section 36C(d))
for purposes of section 36C with respect to the
taxpayer or any of the taxpayer's qualifying
family members (as defined in section 36C(e)).
``(B) Coordination with advance payments of
health insurance coverage credit.--In the case
of a taxpayer who makes the election under
paragraph (11) with respect to any eligible
coverage month in a taxable year or on behalf
of whom any advance payment is made under
section 7527 with respect to any month in such
taxable year--
``(i) the tax imposed by this chapter
for the taxable year shall be increased
by the excess, if any, of--
``(I) the sum of any advance
payments made on behalf of the
taxpayer under sections 7527
and 7529 for months during such
taxable year, over
``(II) the sum of the credits
allowed under this section
(determined without regard to
paragraph (1)) and section 36C
(determined without regard to
subsection (i)(5)(A) thereof)
for such taxable year, and
``(ii) section 36C(i)(5)(B) shall not
apply with respect to such taxpayer for
such taxable year.''.
(2) Section 162(l) of such Code is amended by adding
at the end the following new paragraph:
``(6) Coordination with health insurance coverage
credit.--The deduction otherwise allowable to a
taxpayer under paragraph (1) for any taxable year shall
be reduced (but not below zero) by the sum of--
``(A) the amount of the credit allowable to
such taxpayer under section 36C (determined
without regard to subsection (i)(5)(A) thereof)
for such taxable year, plus
``(B) the aggregate payments made with
respect to the taxpayer under section 7530 for
months during such taxable year.''.
(3) Section 1324(b)(2) of title 31, United States
Code is amended--
(A) by inserting ``36C,'' after ``36B,'', and
(B) by striking ``or 6431'' and inserting
``6431, or 7530''.
(4) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code
of 1986 is amended by inserting after the item relating
to section 36B the following new item:
``Sec. 36C. Health insurance coverage.''.
(5) The table of sections for subpart B of part III
of subchapter A of chapter 61 of such Code is amended
by adding at the end the following new item:
``Sec. 6050X. Returns by health insurance providers relating to health
insurance coverage credit.''.
(6) The table of sections for chapter 77 of such Code
is amended by adding at the end the following new
items:
``Sec. 7529. Advance payment of health insurance coverage credit.
``Sec. 7530. Excess health insurance coverage credit payable to health
savings account.''.
(g) Effective Date.--The amendments made by this section
shall apply to months beginning after December 31, 2019, in
taxable years ending after such date.
SEC. 216. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT
INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET
LIMITATION.
(a) Self-Only Coverage.--Section 223(b)(2)(A) of the Internal
Revenue Code of 1986 is amended by striking ``$2,250'' and
inserting ``the amount in effect under subsection
(c)(2)(A)(ii)(I)''.
(b) Family Coverage.--Section 223(b)(2)(B) of such Code is
amended by striking ``$4,500'' and inserting ``the amount in
effect under subsection (c)(2)(A)(ii)(II)''.
(c) Conforming Amendments.--Section 223(g)(1) of such Code is
amended--
(1) by striking ``subsections (b)(2) and'' both
places it appears and inserting ``subsection'', and
(2) in subparagraph (B), by striking ``determined
by'' and all that follows through ```calendar year
2003'.'' and inserting ``determined by substituting
`calendar year 2003' for `calendar year 1992' in
subparagraph (B) thereof .''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2017.
SEC. 217. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME
HEALTH SAVINGS ACCOUNT.
(a) In General.--Section 223(b)(5) of the Internal Revenue
Code of 1986 is amended to read as follows:
``(5) Special rule for married individuals with
family coverage.--
``(A) In general.--In the case of individuals
who are married to each other, if both spouses
are eligible individuals and either spouse has
family coverage under a high deductible health
plan as of the first day of any month--
``(i) the limitation under paragraph
(1) shall be applied by not taking into
account any other high deductible
health plan coverage of either spouse
(and if such spouses both have family
coverage under separate high deductible
health plans, only one such coverage
shall be taken into account),
``(ii) such limitation (after
application of clause (i)) shall be
reduced by the aggregate amount paid to
Archer MSAs of such spouses for the
taxable year, and
``(iii) such limitation (after
application of clauses (i) and (ii))
shall be divided equally between such
spouses unless they agree on a
different division.
``(B) Treatment of additional contribution
amounts.--If both spouses referred to in
subparagraph (A) have attained age 55 before
the close of the taxable year, the limitation
referred to in subparagraph (A)(iii) which is
subject to division between the spouses shall
include the additional contribution amounts
determined under paragraph (3) for both
spouses. In any other case, any additional
contribution amount determined under paragraph
(3) shall not be taken into account under
subparagraph (A)(iii) and shall not be subject
to division between the spouses.''.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.
SEC. 218. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE
ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.
(a) In General.--Section 223(d)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:
``(D) Treatment of certain medical expenses
incurred before establishment of account.--If a
health savings account is established during
the 60-day period beginning on the date that
coverage of the account beneficiary under a
high deductible health plan begins, then,
solely for purposes of determining whether an
amount paid is used for a qualified medical
expense, such account shall be treated as
having been established on the date that such
coverage begins.''.
(b) Effective Date.--The amendment made by this section shall
apply with respect to coverage beginning after December 31,
2017.
Subtitle B--Repeal of Certain Consumer Taxes
SEC. 221. REPEAL OF TAX ON PRESCRIPTION MEDICATIONS.
Section 9008 of the Patient Protection and Affordable Care
Act is amended by adding at the end the following new
subsection:
``(l) Termination.--No fee shall be imposed under subsection
(a)(1) with respect to any calendar year beginning after
December 31, 2017.''.
SEC. 222. REPEAL OF HEALTH INSURANCE TAX.
Section 9010 of the Patient Protection and Affordable Care
Act is amended by adding at the end the following new
subsection:
``(k) Termination.--No fee shall be imposed under subsection
(a)(1) with respect to any calendar year beginning after
December 31, 2017.''.
Subtitle C--Repeal of Tanning Tax
SEC. 231. REPEAL OF TANNING TAX.
(a) In General.--The Internal Revenue Code of 1986 is amended
by striking chapter 49.
(b) Effective Date.--The amendment made by this section shall
apply to services performed after December 31, 2017.
Subtitle D--Remuneration From Certain Insurers
SEC. 241. REMUNERATION FROM CERTAIN INSURERS.
Paragraph (6) of section 162(m) of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subparagraph:
``(I) Termination.--This paragraph shall not
apply to taxable years beginning after December
31, 2017.''.
Subtitle E--Repeal of Net Investment Income Tax
SEC. 251. REPEAL OF NET INVESTMENT INCOME TAX.
(a) In General.--Subtitle A of the Internal Revenue Code of
1986 is amended by striking chapter 2A.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2017.