# H.R. 3200/Division A/Title II/Subtitle A
## SUBTITLE A — HEALTH INSURANCE EXCHANGE
### Sec. 201. Establishment of Health Insurance Exchange; Outline of Duties; Definitions.

    (a) Establishment.—
       There is established within the Health Choices Administration and under the direction of the Commissioner a Health Insurance Exchange in order to facilitate access of individuals and employers, through a transparent process, to a variety of choices of affordable, quality health insurance coverage, including a public health insurance option.
    (b) Outline of duties of Commissioner.—
       In accordance with this subtitle and in coordination with appropriate Federal and State officials as provided under section 143(b), the Commissioner shall—
          (1) under section 204 establish standards for, accept bids from, and negotiate and enter into contracts with, QHBP offering entities for the offering of health benefits plans through the Health Insurance Exchange, with different levels of benefits required under section 203, and including with respect to oversight and enforcement;
          (2) under section 205 facilitate outreach and enrollment in such plans of Exchange-eligible individuals and employers described in section 202; and
          (3) conduct such activities related to the Health Insurance Exchange as required, including establishment of a risk pooling mechanism under section 206 and consumer protections under subtitle D of title I.
    (c) Exchange-participating health benefits plan defined.—
       In this division, the term “Exchange-participating health benefits plan” means a qualified health benefits plan that is offered through the Health Insurance Exchange.

### Sec. 202. Exchange-Eligible Individuals and Employers.

    (a) Access to coverage.—
       In accordance with this section, all individuals are eligible to obtain coverage through enrollment in an Exchange-participating health benefits plan offered through the Health Insurance Exchange unless such individuals are enrolled in another qualified health benefits plan or other acceptable coverage.
    (b) Definitions.—
       In this division:
          (1) Exchange-eligible individual.—
             The term “Exchange-eligible individual” means an individual who is eligible under this section to be enrolled through the Health Insurance Exchange in an Exchange-participating health benefits plan and, with respect to family coverage, includes dependents of such individual.
          (2) Exchange-eligible employer.—
             The term “Exchange-eligible employer” means an employer that is eligible under this section to enroll through the Health Insurance Exchange employees of the employer (and their dependents) in Exchange-eligible health benefits plans.
          (3) Employment-related definitions.—
             The terms “employer”, “employee”, “full-time employee”, and “part-time employee” have the meanings given such terms by the Commissioner for purposes of this division.
    (c) Transition.—
       Individuals and employers shall only be eligible to enroll or participate in the Health Insurance Exchange in accordance with the following transition schedule:
          (1) First Year.—
             In Y1 (as defined in section 100(c))—
                (A) individuals described in subsection (d)(1), including individuals described in paragraphs (3) and (4) of subsection (d); and
                (B) smallest employers described in subsection (e)(1).
          (2) Second year.—
             In Y2—
                (A) individuals and employers described in paragraph (1); and
                (B) smaller employers described in subsection (e)(2).
          (3) Third and subsequent years.—
             In Y3 and subsequent years—
                (A) individuals and employers described in paragraph (2); and
                (B) larger employers as permitted by the Commissioner under subsection (e)(3).
    (d) Individuals.—
          (1) Individual described.—
             Subject to the succeeding provisions of this subsection, an individual described in this paragraph is an individual who—
                (A) is not enrolled in coverage described in subparagraphs (C) through (F) of paragraph (2); and
                (B) is not enrolled in coverage as a full-time employee (or as a dependent of such an employee) under a group health plan if the coverage and an employer contribution under the plan meet the requirements of section 312.
             For purposes of subparagraph (B), in the case of an individual who is self-employed, who has at least 1 employee, and who meets the requirements of section 312, such individual shall be deemed a full-time employee described in such subparagraph.
          (2) Acceptable coverage.—
             For purposes of this division, the term “acceptable coverage” means any of the following:
                (A) Qualified health benefits plan coverage.—
                   Coverage under a qualified health benefits plan.
                (B) Grandfathered health insurance coverage; coverage under current group health plan.—
                   Coverage under a grandfathered health insurance coverage (as defined in subsection (a) of section 102) or under a current group health plan (described in subsection (b) of such section).
                (C) Medicare.—
                   Coverage under part A of title XVIII of the Social Security Act.
                (D) Medicaid.—
                   Coverage for medical assistance under title XIX of the Social Security Act, excluding such coverage that is only available because of the application of subsection (u), (z), or (aa) of section 1902 of such Act.
                (E) Members of the Armed Forces and dependents (including TRICARE).—
                   Coverage under chapter 55 of title 10, United States Code, including similar coverage furnished under section 1781 of title 38 of such Code.
                (F) VA.—
                   Coverage under the veteran’s health care program under chapter 17 of title 38, United States Code, but only if the coverage for the individual involved is determined by the Commissioner in coordination with the Secretary of Treasury to be not less than a level specified by the Commissioner and Secretary of Veteran’s Affairs, in coordination with the Secretary of Treasury, based on the individual’s priority for services as provided under section 1705(a) of such title.
                (G) Other coverage.—
                   Such other health benefits coverage, such as a State health benefits risk pool, as the Commissioner, in coordination with the Secretary of the Treasury, recognizes for purposes of this paragraph.
             The Commissioner shall make determinations under this paragraph in coordination with the Secretary of the Treasury.
          (3) Treatment of certain non-traditional Medicaid eligible individuals.—
             An individual who is a non-traditional Medicaid eligible individual (as defined in section 205(e)(4)(C)) in a State may be an Exchange-eligible individual if the individual was enrolled in a qualified health benefits plan, grandfathered health insurance coverage, or current group health plan during the 6 months before the individual became a non-traditional Medicaid eligible individual. During the period in which such an individual has chosen to enroll in an Exchange-participating health benefits plan, the individual is not also eligible for medical assistance under Medicaid.
          (4) Continuing eligibility permitted.—
                (A) In general.—
                   Except as provided in subparagraph (B), once an individual qualifies as an Exchange-eligible individual under this subsection (including as an employee or dependent of an employee of an Exchange-eligible employer) and enrolls under an Exchange-participating health benefits plan through the Health Insurance Exchange, the individual shall continue to be treated as an Exchange-eligible individual until the individual is no longer enrolled with an Exchange-participating health benefits plan.
                (B) Exceptions.—
                      (i) In general.—
                         Subparagraph (A) shall not apply to an individual once the individual becomes eligible for coverage—
                            (I) under part A of the Medicare program;
                            (II) under the Medicaid program as a Medicaid eligible individual, except as permitted under paragraph (3) or clause (ii); or
                            (III) in such other circumstances as the Commissioner may provide.
                      (ii) Transition period.—
                         In the case described in clause (i)(II), the Commissioner shall permit the individual to continue treatment under subparagraph (A) until such limited time as the Commissioner determines it is administratively feasible, consistent with minimizing disruption in the individual’s access to health care.
    (e) Employers.—
          (1) Smallest employer.—
             Subject to paragraph (4), smallest employers described in this paragraph are employers with 10 or fewer employees.
          (2) Smaller employers.—
             Subject to paragraph (4), smaller employers described in this paragraph are employers that are not smallest employers described in paragraph (1) and have 20 or fewer employees.
          (3) Larger employers.—
                (A) In general.—
                   Beginning with Y3, the Commissioner may permit employers not described in paragraph (1) or (2) to be Exchange-eligible employers.
                (B) Phase-in.—
                   In applying subparagraph (A), the Commissioner may phase-in the application of such subparagraph based on the number of full-time employees of an employer and such other considerations as the Commissioner deems appropriate.
          (4) Continuing eligibility.—
             Once an employer is permitted to be an Exchange-eligible employer under this subsection and enrolls employees through the Health Insurance Exchange, the employer shall continue to be treated as an Exchange-eligible employer for each subsequent plan year regardless of the number of employees involved unless and until the employer meets the requirement of section 311(a) through paragraph (1) of such section by offering a group health plan and not through offering Exchange-participating health benefits plan.
          (5) Employer participation and contributions.—
                (A) Satisfaction of employer responsibility.—
                   For any year in which an employer is an Exchange-eligible employer, such employer may meet the requirements of section 312 with respect to employees of such employer by offering such employees the option of enrolling with Exchange-participating health benefits plans through the Health Insurance Exchange consistent with the provisions of subtitle B of title III.
                (B) Employee choice.—
                   Any employee offered Exchange-participating health benefits plans by the employer of such employee under subparagraph (A) may choose coverage under any such plan. That choice includes, with respect to family coverage, coverage of the dependents of such employee.
          (6) Affiliated groups.—
             Any employer which is part of a group of employers who are 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, for purposes of this subtitle, as a single employer.
          (7) Other counting rules.—
             The Commissioner shall establish rules relating to how employees are counted for purposes of carrying out this subsection.
    (f) Special situation authority.—
       The Commissioner shall have the authority to establish such rules as may be necessary to deal with special situations with regard to uninsured individuals and employers participating as Exchange-eligible individuals and employers, such as transition periods for individuals and employers who gain, or lose, Exchange-eligible participation status, and to establish grace periods for premium payment.
    (g) Surveys of individuals and employers.—
       The Commissioner shall provide for periodic surveys of Exchange-eligible individuals and employers concerning satisfaction of such individuals and employers with the Health Insurance Exchange and Exchange-participating health benefits plans.
    (h) Exchange access study.—
          (1) In general.—
             The Commissioner shall conduct a study of access to the Health Insurance Exchange for individuals and for employers, including individuals and employers who are not eligible and enrolled in Exchange-participating health benefits plans. The goal of the study is to determine if there are significant groups and types of individuals and employers who are not Exchange eligible individuals or employers, but who would have improved benefits and affordability if made eligible for coverage in the Exchange.
          (2) Items included in study.—
             Such study also shall examine—
                (A) the terms, conditions, and affordability of group health coverage offered by employers and QHBP offering entities outside of the Exchange compared to Exchange-participating health benefits plans; and
                (B) the affordability-test standard for access of certain employed individuals to coverage in the Health Insurance Exchange.
          (3) Report.—
             Not later than January 1 of Y3, in Y6, and thereafter, the Commissioner shall submit to Congress on the study conducted under this subsection and shall include in such report recommendations regarding changes in standards for Exchange eligibility for for individuals and employers.

### Sec. 203. Benefits Package Levels.

    (a) In general.—
       The Commissioner shall specify the benefits to be made available under Exchange-participating health benefits plans during each plan year, consistent with subtitle C of title I and this section.
    (b) Limitation on health benefits plans offered by offering entities.—
       The Commissioner may not enter into a contract with a QHBP offering entity under section 204(c) for the offering of an Exchange-participating health benefits plan in a service area unless the following requirements are met:
          (1) Required offering of basic plan.—
             The entity offers only one basic plan for such service area.
          (2) Optional offering of enhanced plan.—
             If and only if the entity offers a basic plan for such service area, the entity may offer one enhanced plan for such area.
          (3) Optional offering of premium plan.—
             If and only if the entity offers an enhanced plan for such service area, the entity may offer one premium plan for such area.
          (4) Optional offering of premium-plus plans.—
             If and only if the entity offers a premium plan for such service area, the entity may offer one or more premium-plus plans for such area.
       All such plans may be offered under a single contract with the Commissioner.
    (c) Specification of benefit levels for plans.—
          (1) In general.—
             The Commissioner shall establish the following standards consistent with this subsection and title I:
                (A) Basic, enhanced, and premium plans.—
                   Standards for 3 levels of Exchange-participating health benefits plans: basic, enhanced, and premium (in this division referred to as a “basic plan”, “enhanced plan”, and “premium plan”, respectively).
                (B) Premium-plus plan benefits.—
                   Standards for additional benefits that may be offered, consistent with this subsection and subtitle C of title I, under a premium plan (such a plan with additional benefits referred to in this division as a “premium-plus plan”).
          (2) Basic plan.—
                (A) In general.—
                   A basic plan shall offer the essential benefits package required under title I for a qualified health benefits plan.
                (B) Tiered cost-sharing for affordable credit eligible individuals.—
                   In the case of an affordable credit eligible individual (as defined in section 242(a)(1)) enrolled in an Exchange-participating health benefits plan, the benefits under a basic plan are modified to provide for the reduced cost-sharing for the income tier applicable to the individual under section 244(c).
          (3) Enhanced plan.—
             A enhanced plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided under title I consistent with section 123(b)(5)(A).
          (4) Premium plan.—
             A premium plan shall offer, in addition to the level of benefits under the basic plan, a lower level of cost-sharing as provided under title I consistent with section 123(b)(5)(B).
          (5) Premium-plus plan.—
             A premium-plus plan is a premium plan that also provides additional benefits, such as adult oral health and vision care, approved by the Commissioner. The portion of the premium that is attributable to such additional benefits shall be separately specified.
          (6) Range of permissible variation in cost-sharing.—
             The Commissioner shall establish a permissible range of variation of cost-sharing for each basic, enhanced, and premium plan, except with respect to any benefit for which there is no cost-sharing permitted under the essential benefits package. Such variation shall permit a variation of not more than plus (or minus) 10 percent in cost-sharing with respect to each benefit category specified under section 122.
    (d) Treatment of State benefit mandates.—
       Insofar as a State requires a health insurance issuer offering health insurance coverage to include benefits beyond the essential benefits package, such requirement shall continue to apply to an Exchange-participating health benefits plan, if the State has entered into an arrangement satisfactory to the Commissioner to reimburse the Commissioner for the amount of any net increase in affordability premium credits under subtitle C as a result of an increase in premium in basic plans as a result of application of such requirement.

### Sec. 204. Contracts for the Offering of Exchange-Participating Health Benefits Plans.

    (a) Contracting duties.—
       In carrying out section 201(b)(1) and consistent with this subtitle:
          (1) Offering entity and plan standards.—
             The Commissioner shall—
                (A) establish standards necessary to implement the requirements of this title and title I for—
                      (i) QHBP offering entities for the offering of an Exchange-participating health benefits plan; and
                      (ii) for Exchange-participating health benefits plans; and
                (B) certify QHBP offering entities and qualified health benefits plans as meeting such standards and requirements of this title and title I for purposes of this subtitle.
          (2) Soliciting and negotiating bids; contracts.—
             The Commissioner shall—
                (A) solicit bids from QHBP offering entities for the offering of Exchange-participating health benefits plans;
                (B) based upon a review of such bids, negotiate with such entities for the offering of such plans; and
                (C) enter into contracts with such entities for the offering of such plans through the Health Insurance Exchange under terms (consistent with this title) negotiated between the Commissioner and such entities.
          (3) FAR not applicable.—
             The provisions of the Federal Acquisition Regulation shall not apply to contracts between the Commissioner and QHBP offering entities for the offering of Exchange-participating health benefits plans under this title.
    (b) Standards for QHBP offering entities to offer Exchange-Participating health benefits plans.—
       The standards established under subsection (a)(1)(A) shall require that, in order for a QHBP offering entity to offer an Exchange-participating health benefits plan, the entity must meet the following requirements:
          (1) Licensed.—
             The entity shall be licensed to offer health insurance coverage under State law for each State in which it is offering such coverage.
          (2) Data reporting.—
             The entity shall provide for the reporting of such information as the Commissioner may specify, including information necessary to administer the risk pooling mechanism described in section 206(b) and information to address disparities in health and health care.
          (3) Implementing affordability credits.—
             The entity shall provide for implementation of the affordability credits provided for enrollees under subtitle C, including the reduction in cost-sharing under section 244(c).
          (4) Enrollment.—
             The entity shall accept all enrollments under this subtitle, subject to such exceptions (such as capacity limitations) in accordance with the requirements under title I for a qualified health benefits plan. The entity shall notify the Commissioner if the entity projects or anticipates reaching such a capacity limitation that would result in a limitation in enrollment.
          (5) Risk pooling participation.—
             The entity shall participate in such risk pooling mechanism as the Commissioner establishes under section 206(b).
          (6) Essential community providers.—
             With respect to the basic plan offered by the entity, the entity shall contract for outpatient services with covered entities (as defined in section 340B(a)(4) of the Public Health Service Act, as in effect as of July 1, 2009). The Commissioner shall specify the extent to which and manner in which the previous sentence shall apply in the case of a basic plan with respect to which the Commissioner determines provides substantially all benefits through a health maintenance organization, as defined in section 2791(b)(3) of the Public Health Service Act.
          (7) Culturally and linguistically appropriate services and communications.—
             The entity shall provide for culturally and linguistically appropriate communication and health services.
          (8) Additional requirements.—
             The entity shall comply with other applicable requirements of this title, as specified by the Commissioner, which shall include standards regarding billing and collection practices for premiums and related grace periods and which may include standards to ensure that the entity does not use coercive practices to force providers not to contract with other entities offering coverage through the Health Insurance Exchange.
    (c) Contracts.—
          (1) Bid application.—
             To be eligible to enter into a contract under this section, a QHBP offering entity shall submit to the Commissioner a bid at such time, in such manner, and containing such information as the Commissioner may require.
          (2) Term.—
             Each contract with a QHBP offering entity under this section shall be for a term of not less than one year, but may be made automatically renewable from term to term in the absence of notice of termination by either party.
          (3) Enforcement of Network Adequacy.—
             In the case of a health benefits plan of a QHBP offering entity that uses a provider network, the contract under this section with the entity shall provide that if—
                (A) the Commissioner determines that such provider network does not meet such standards as the Commissioner shall establish under section 115; and
                (B) an individual enrolled in such plan receives an item or service from a provider that is not within such network;
             then any cost-sharing for such item or service shall be equal to the amount of such cost-sharing that would be imposed if such item or service was furnished by a provider within such network.
          (4) Oversight and enforcement responsibilities.—
             The Commissioner shall establish processes, in coordination with State insurance regulators, to oversee, monitor, and enforce applicable requirements of this title with respect to QHBP offering entities offering Exchange-participating health benefits plans and such plans, including the marketing of such plans. Such processes shall include the following:
                (A) Grievance and complaint mechanisms.—
                   The Commissioner shall establish, in coordination with State insurance regulators, a process under which Exchange-eligible individuals and employers may file complaints concerning violations of such standards.
                (B) Enforcement.—
                   In carrying out authorities under this division relating to the Health Insurance Exchange, the Commissioner may impose one or more of the intermediate sanctions described in section 142(c).
                (C) Termination.—
                      (i) In general.—
                         The Commissioner may terminate a contract with a QHBP offering entity under this section for the offering of an Exchange-participating health benefits plan if such entity fails to comply with the applicable requirements of this title. Any determination by the Commissioner to terminate a contract shall be made in accordance with formal investigation and compliance procedures established by the Commissioner under which—
                            (I) the Commissioner provides the entity with the reasonable opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the Commissioner’s determination; and
                            (II) the Commissioner provides the entity with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before terminating the contract.
                      (ii) Exception for imminent and serious risk to health.—
                         Clause (i) shall not apply if the Commissioner determines that a delay in termination, resulting from compliance with the procedures specified in such clause prior to termination, would pose an imminent and serious risk to the health of individuals enrolled under the qualified health benefits plan of the QHBP offering entity.
                (D) Construction.—
                   Nothing in this subsection shall be construed as preventing the application of other sanctions under subtitle E of title I with respect to an entity for a violation of such a requirement.

### Sec. 205. Outreach and Enrollment of Exchange-Eligible Individuals and Employers in Exchange-Participating Health Benefits Plan.

    (a) In general.—
          (1) Outreach.—
             The Commissioner shall conduct outreach activities consistent with subsection (c), including through use of appropriate entities as described in paragraph (4) of such subsection, to inform and educate individuals and employers about the Health Insurance Exchange and Exchange-participating health benefits plan options. Such outreach shall include outreach specific to vulnerable populations, such as children, individuals with disabilities, individuals with mental illness, and individuals with other cognitive impairments.
          (2) Eligibility.—
             The Commissioner shall make timely determinations of whether individuals and employers are Exchange-eligible individuals and employers (as defined in section 202).
          (3) Enrollment.—
             The Commissioner shall establish and carry out an enrollment process for Exchange-eligible individuals and employers, including at community locations, in accordance with subsection (b).
    (b) Enrollment process.—
          (1) In general.—
             The Commissioner shall establish a process consistent with this title for enrollments in Exchange-participating health benefits plans. Such process shall provide for enrollment through means such as the mail, by telephone, electronically, and in person.
          (2) Enrollment periods.—
                (A) Open enrollment period.—
                   The Commissioner shall establish an annual open enrollment period during which an Exchange-eligible individual or employer may elect to enroll in an Exchange-participating health benefits plan for the following plan year and an enrollment period for affordability credits under subtitle C. Such periods shall be during September through November of each year, or such other time that would maximize timeliness of income verification for purposes of such subtitle. The open enrollment period shall not be less than 30 days.
                (B) Special enrollment.—
                   The Commissioner shall also provide for special enrollment periods to take into account special circumstances of individuals and employers, such as an individual who—
                      (i) loses acceptable coverage;
                      (ii) experiences a change in marital or other dependent status;
                      (iii) moves outside the service area of the Exchange-participating health benefits plan in which the individual is enrolled; or
                      (iv) experiences a significant change in income.
                (C) Enrollment Information.—
                   The Commissioner shall provide for the broad dissemination of information to prospective enrollees on the enrollment process, including before each open enrollment period. In carrying out the previous sentence, the Commissioner may work with other appropriate entities to facilitate such provision of information.
          (3) Automatic enrollment for non-Medicaid eligible individuals.—
                (A) In general.—
                   The Commissioner shall provide for a process under which individuals who are Exchange-eligible individuals described in subparagraph (B) are automatically enrolled under an appropriate Exchange-participating health benefits plan. Such process may involve a random assignment or some other form of assignment that takes into account the health care providers used by the individual involved or such other relevant factors as the Commissioner may specify.
                (B) Subsidized individuals described.—
                   An individual described in this subparagraph is an Exchange-eligible individual who is either of the following:
                      (i) Affordability credit eligible individuals.—
                         The individual—
                            (I) has applied for, and been determined eligible for, affordability credits under subtitle C;
                            (II) has not opted out from receiving such affordability credit; and
                            (III) does not otherwise enroll in another Exchange-participating health benefits plan.
                      (ii) Individuals enrolled in a terminated plan.—
                         The individual is enrolled in an Exchange-participating health benefits plan that is terminated (during or at the end of a plan year) and who does not otherwise enroll in another Exchange-participating health benefits plan.
          (4) Direct payment of premiums to plans.—
             Under the enrollment process, individuals enrolled in an Exchange-partcipating health benefits plan shall pay such plans directly, and not through the Commissioner or the Health Insurance Exchange.
    (c) Coverage information and assistance.—
          (1) Coverage information.—
             The Commissioner shall provide for the broad dissemination of information on Exchange-participating health benefits plans offered under this title. Such information shall be provided in a comparative manner, and shall include information on benefits, premiums, cost-sharing, quality, provider networks, and consumer satisfaction.
          (2) Consumer assistance with choice.—
             To provide assistance to Exchange-eligible individuals and employers, the Commissioner shall—
                (A) provide for the operation of a toll-free telephone hotline to respond to requests for assistance and maintain an Internet website through which individuals may obtain information on coverage under Exchange-participating health benefits plans and file complaints;
                (B) develop and disseminate information to Exchange-eligible enrollees on their rights and responsibilities;
                (C) assist Exchange-eligible individuals in selecting Exchange-participating health benefits plans and obtaining benefits through such plans; and
                (D) ensure that the Internet website described in subparagraph (A) and the information described in subparagraph (B) is developed using plain language (as defined in section 133(a)(2)).
          (3) Use of other entities.—
             In carrying out this subsection, the Commissioner may work with other appropriate entities to facilitate the dissemination of information under this subsection and to provide assistance as described in paragraph (2).
    (d) Special duties related to Medicaid and CHIP.—
          (1) Coverage for certain newborns.—
                (A) In general.—
                   In the case of a child born in the United States who at the time of birth is not otherwise covered under acceptable coverage, for the period of time beginning on the date of birth and ending on the date the child otherwise is covered under acceptable coverage (or, if earlier, the end of the month in which the 60-day period, beginning on the date of birth, ends), the child shall be deemed—
                      (i) to be a non-traditional Medicaid eligible individual (as defined in subsection (e)(5)) for purposes of this division and Medicaid; and
                      (ii) to have elected to enroll in Medicaid through the application of paragraph (3).
                (B) Extended treatment as traditional Medicaid eligible individual.—
                   In the case of a child described in subparagraph (A) who at the end of the period referred to in such subparagraph is not otherwise covered under acceptable coverage, the child shall be deemed (until such time as the child obtains such coverage or the State otherwise makes a determination of the child’s eligibility for medical assistance under its Medicaid plan pursuant to section 1943(c)(1) of the Social Security Act) to be a traditional Medicaid eligible individual described in section 1902(l)(1)(B) of such Act.
          (2) CHIP transition.—
             A child who, as of the day before the first day of Y1, is eligible for child health assistance under title XXI of the Social Security Act (including a child receiving coverage under an arrangement described in section 2101(a)(2) of such Act) is deemed as of such first day to be an Exchange-eligible individual unless the individual is a traditional Medicaid eligible individual as of such day.
          (3) Automatic enrollment of Medicaid eligible individuals into Medicaid.—
             The Commissioner shall provide for a process under which an individual who is described in section 202(d)(3) and has not elected to enroll in an Exchange-participating health benefits plan is automatically enrolled under Medicaid.
          (4) Notifications.—
             The Commissioner shall notify each State in Y1 and for purposes of section 1902(gg)(1) of the Social Security Act (as added by section 1703(a)) whether the Health Insurance Exchange can support enrollment of children described in paragraph (2) in such State in such year.
    (e) Medicaid coverage for Medicaid eligible individuals.—
          (1) In general.—
                (A) Choice for limited Exchange-eligible individuals.—
                   As part of the enrollment process under subsection (b), the Commissioner shall provide the option, in the case of an Exchange-eligible individual described in section 202(d)(3), for the individual to elect to enroll under Medicaid instead of under an Exchange-participating health benefits plan. Such an individual may change such election during an enrollment period under subsection (b)(2).
                (B) Medicaid enrollment obligation.—
                   An Exchange eligible individual may apply, in the manner described in section 241(b)(1), for a determination of whether the individual is a Medicaid-eligible individual. If the individual is determined to be so eligible, the Commissioner, through the Medicaid memorandum of understanding, shall provide for the enrollment of the individual under the State Medicaid plan in accordance with the Medicaid memorandum of understanding under paragraph (4). In the case of such an enrollment, the State shall provide for the same periodic redetermination of eligibility under Medicaid as would otherwise apply if the individual had directly applied for medical assistance to the State Medicaid agency.
          (2) Non-traditional Medicaid eligible individuals.—
             In the case of a non-traditional Medicaid eligible individual described in section 202(d)(3) who elects to enroll under Medicaid under paragraph (1)(A), the Commissioner shall provide for the enrollment of the individual under the State Medicaid plan in accordance with the Medicaid memorandum of understanding under paragraph (4).
          (3) Coordinated enrollment with State through memorandum of understanding.—
             The Commissioner, in consultation with the Secretary of Health and Human Services, shall enter into a memorandum of understanding with each State (each in this division referred to as a “Medicaid memorandum of understanding”) with respect to coordinating enrollment of individuals in Exchange-participating health benefits plans and under the State’s Medicaid program consistent with this section and to otherwise coordinate the implementation of the provisions of this division with respect to the Medicaid program. Such memorandum shall permit the exchange of information consistent with the limitations described in section 1902(a)(7) of the Social Security Act. Nothing in this section shall be construed as permitting such memorandum to modify or vitiate any requirement of a State Medicaid plan.
          (4) Medicaid eligible individuals.—
             For purposes of this division:
                (A) Medicaid eligible individual.—
                   The term “Medicaid eligible individual” means an individual who is eligible for medical assistance under Medicaid.
                (B) Traditional Medicaid eligible individual.—
                   The term “traditional Medicaid eligible individual” means a Medicaid eligible individual other than an individual who is—
                      (i) a Medicaid eligible individual by reason of the application of subclause (VIII) of section 1902(a)(10)(A)(i) of the Social Security Act; or
                      (ii) a childless adult not described in section 1902(a)(10) (A) or (C) of such Act (as in effect as of the day before the date of the enactment of this Act).
                (C) Non-traditional Medicaid eligible individual.—
                   The term “non-traditional Medicaid eligible individual” means a Medicaid eligible individual who is not a traditional Medicaid eligible individual.
    (f) Effective culturally and linguistically appropriate communication.—
       In carrying out this section, the Commissioner shall establish effective methods for communicating in plain language and a culturally and linguistically appropriate manner.

### Sec. 206. Other Functions.

    (a) Coordination of affordability credits.—
       The Commissioner shall coordinate the distribution of affordability premium and cost-sharing credits under subtitle C to QHBP offering entities offering Exchange-participating health benefits plans.
    (b) Coordination of risk pooling.—
       The Commissioner shall establish a mechanism whereby there is an adjustment made of the premium amounts payable among QHBP offering entities offering Exchange-participating health benefits plans of premiums collected for such plans that takes into account (in a manner specified by the Commissioner) the differences in the risk characteristics of individuals and employers enrolled under the different Exchange-participating health benefits plans offered by such entities so as to minimize the impact of adverse selection of enrollees among the plans offered by such entities.
    (c) Special Inspector General for the Health Insurance Exchange.—
          (1) Establishment; appointment.—
             There is hereby established the Office of the Special Inspector General for the Health Insurance Exchange, to be headed by a Special Inspector General for the Health Insurance Exchange (in this subsection referred to as the “Special Inspector General”) to be appointed by the President, by and with the advice and consent of the Senate. The nomination of an individual as Special Inspector General shall be made as soon as practicable after the establishment of the program under this subtitle.
          (2) Duties.—
             The Special Inspector General shall—
                (A) conduct, supervise, and coordinate audits, evaluations and investigations of the Health Insurance Exchange to protect the integrity of the Health Insurance Exchange, as well as the health and welfare of participants in the Exchange;
                (B) report both to the Commissioner and to the Congress regarding program and management problems and recommendations to correct them;
                (C) have other duties (described in paragraphs (2) and (3) of section 121 of division A of Public Law 110-343) in relation to the duties described in the previous subparagraphs; and
                (D) have the authorities provided in section 6 of the Inspector General Act of 1978 in carrying out duties under this paragraph.
          (3) Application of other special inspector general provisions.—
             The provisions of subsections (b) (other than paragraphs (1) and (3)), (d) (other than paragraph (1)), and (e) of section 121 of division A of the Emergency Economic Stabilization Act of 2008 (Public Law 110-343) shall apply to the Special Inspector General under this subsection in the same manner as such provisions apply to the Special Inspector General under such section.
          (4) Reports.—
             Not later than one year after the confirmation of the Special Inspector General, and annually thereafter, the Special Inspector General shall submit to the appropriate committees of Congress a report summarizing the activities of the Special Inspector General during the one year period ending on the date such report is submitted.
          (5) Termination.—
             The Office of the Special Inspector General shall terminate five years after the date of the enactment of this Act.

### Sec. 207. Health Insurance Exchange Trust Fund.

    (a) Establishment of Health Insurance Exchange Trust Fund.—
       There is created within the Treasury of the United States a trust fund to be known as the “Health Insurance Exchange Trust Fund” (in this section referred to as the “Trust Fund”), consisting of such amounts as may be appropriated or credited to the Trust Fund under this section or any other provision of law.
    (b) Payments from Trust Fund.—
       The Commissioner shall pay from time to time from the Trust Fund such amounts as the Commissioner determines are necessary to make payments to operate the Health Insurance Exchange, including payments under subtitle C (relating to affordability credits).
    (c) Transfers to Trust Fund.—
          (1) Dedicated payments.—
             There is hereby appropriated to the Trust Fund amounts equivalent to the following:
                (A) Taxes on individuals not obtaining acceptable coverage.—
                   The amounts received in the Treasury under section 59B of the Internal Revenue Code of 1986 (relating to requirement of health insurance coverage for individuals).
                (B) Employment taxes on employers not providing acceptable coverage.—
                   The amounts received in the Treasury under section 3111(c) of the Internal Revenue Code of 1986 (relating to employers electing to not provide health benefits).
                (C) Excise tax on failures to meet certain health coverage requirements.—
                   The amounts received in the Treasury under section 4980H(b) (relating to excise tax with respect to failure to meet health coverage participation requirements).
          (2) Appropriations to cover government contributions.—
             There are hereby appropriated, out of any moneys in the Treasury not otherwise appropriated, to the Trust Fund, an amount equivalent to the amount of payments made from the Trust Fund under subsection (b) plus such amounts as are necessary reduced by the amounts deposited under paragraph (1).
    (d) Application of Certain Rules.—
       Rules similar to the rules of subchapter B of chapter 98 of the Internal Revenue Code of 1986 shall apply with respect to the Trust Fund.

### Sec. 208. Optional Operation of State-Based Health Insurance Exchanges.

    (a) In General.—
       If—
          (1) a State (or group of States, subject to the approval of the Commissioner) applies to the Commissioner for approval of a State-based Health Insurance Exchange to operate in the State (or group of States); and
          (2) the Commissioner approves such State-based Health Insurance Exchange,
       then, subject to subsections (c) and (d), the State-based Health Insurance Exchange shall operate, instead of the Health Insurance Exchange, with respect to such State (or group of States). The Commissioner shall approve a State-based Health Insurance Exchange if it meets the requirements for approval under subsection (b).
    (b) Requirements for Approval.—
       The Commissioner may not approve a State-based Health Insurance Exchange under this section unless the following requirements are met:
          (1) The State-based Health Insurance Exchange must demonstrate the capacity to and provide assurances satisfactory to the Commissioner that the State-based Health Insurance Exchange will carry out the functions specified for the Health Insurance Exchange in the State (or States) involved, including—
                (A) negotiating and contracting with QHBP offering entities for the offering of Exchange-participating health benefits plan, which satisfy the standards and requirements of this title and title I;
                (B) enrolling Exchange-eligible individuals and employers in such State in such plans;
                (C) the establishment of sufficient local offices to meet the needs of Exchange-eligible individuals and employers;
                (D) administering affordability credits under subtitle B using the same methodologies (and at least the same income verification methods) as would otherwise apply under such subtitle and at a cost to the Federal Government which does exceed the cost to the Federal Government if this section did not apply; and
                (E) enforcement activities consistent with federal requirements.
          (2) There is no more than one Health Insurance Exchange operating with respect to any one State.
          (3) The State provides assurances satisfactory to the Commissioner that approval of such an Exchange will not result in any net increase in expenditures to the Federal Government.
          (4) The State provides for reporting of such information as the Commissioner determines and assurances satisfactory to the Commissioner that it will vigorously enforce violations of applicable requirements.
          (5) Such other requirements as the Commissioner may specify.
    (c) Ceasing Operation.—
          (1) In General.—
             A State-based Health Insurance Exchange may, at the option of each State involved, and only after providing timely and reasonable notice to the Commissioner, cease operation as such an Exchange, in which case the Health Insurance Exchange shall operate, instead of such State-based Health Insurance Exchange, with respect to such State (or States).
          (2) Termination; Health Insurance Exchange resumption of functions.—
             The Commissioner may terminate the approval (for some or all functions) of a State-based Health Insurance Exchange under this section if the Commissioner determines that such Exchange no longer meets the requirements of subsection (b) or is no longer capable of carrying out such functions in accordance with the requirements of this subtitle. In lieu of terminating such approval, the Commissioner may temporarily assume some or all functions of the State-based Health Insurance Exchange until such time as the Commissioner determines the State-based Health Insurance Exchange meets such requirements of subsection (b) and is capable of carrying out such functions in accordance with the requirements of this subtitle.
          (3) Effectiveness.—
             The ceasing or termination of a State-based Health Insurance Exchange under this subsection shall be effective in such time and manner as the Commissioner shall specify.
    (d) Retention of Authority.—
          (1) Authority retained.—
             Enforcement authorities of the Commissioner shall be retained by the Commissioner.
          (2) Discretion to retain additional authority.—
             The Commissioner may specify functions of the Health Insurance Exchange that—
                (A) may not be performed by a State-based Health Insurance Exchange under this section; or
                (B) may be performed by the Commissioner and by such a State-based Health Insurance Exchange.
    (e) References.—
       In the case of a State-based Health Insurance Exchange, except as the Commissioner may otherwise specify under subsection (d), any references in this subtitle to the Health Insurance Exchange or to the Commissioner in the area in which the State-based Health Insurance Exchange operates shall be deemed a reference to the State-based Health Insurance Exchange and the head of such Exchange, respectively.
    (f) Funding.—
       In the case of a State-based Health Insurance Exchange, there shall be assistance provided for the operation of such Exchange in the form of a matching grant with a State share of expenditures required.