# H.R. 3962/Division A/Title III/Subtitle C
## SUBTITLE C — INDIVIDUAL AFFORDABILITY CREDITS
### Sec. 341. Availability Through Health Insurance Exchange.

    (a) In General.—
       Subject to the succeeding provisions of this subtitle, in the case of an affordable credit eligible individual enrolled in an Exchange-participating health benefits plan—
          (1) the individual shall be eligible for, in accordance with this subtitle, affordability credits consisting of—
                (A) an affordability premium credit under section 343 to be applied against the premium for the Exchange-participating health benefits plan in which the individual is enrolled; and
                (B) an affordability cost-sharing credit under section 344 to be applied as a reduction of the cost-sharing otherwise applicable to such plan; and
          (2) the Commissioner shall pay the QHBP offering entity that offers such plan from the Health Insurance Exchange Trust Fund the aggregate amount of affordability credits for all affordable credit eligible individuals enrolled in such plan.
    (b) Application.—
          (1) IN GENERAL.—
             An Exchange eligible individual may apply to the Commissioner through the Health Insurance Exchange or through another entity under an arrangement made with the Commissioner, in a form and manner specified by the Commissioner. The Commissioner through the Health Insurance Exchange or through another public entity under an arrangement made with the Commissioner shall make a determination as to eligibility of an individual for affordability credits under this subtitle. The Commissioner shall establish a process whereby, on the basis of information otherwise available, individuals may be deemed to be affordable credit eligible individuals. In carrying this subtitle, the Commissioner shall establish effective methods that ensure that individuals with limited English proficiency are able to apply for affordability credits.
          (2) USE OF STATE MEDICAID AGENCIES.—
             If the Commissioner determines that a State Medicaid agency has the capacity to make a determination of eligibility for affordability credits under this subtitle and under the same standards as used by the Commissioner, under the Medicaid memorandum of understanding under section 305(e)(2)—
                (A) the State Medicaid agency is authorized to conduct such determinations for any Exchange-eligible individual who requests such a determination; and
                (B) the Commissioner shall reimburse the State Medicaid agency for the costs of conducting such determinations.
          (3) MEDICAID SCREEN AND ENROLL OBLIGATION.—
             In the case of an application made under paragraph (1), there shall be 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 under section 305(e)(2), shall provide for the enrollment of the individual under the State Medicaid plan in accordance with such Medicaid memorandum of understanding. 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.
          (4) APPLICATION AND VERIFICATION OF REQUIREMENT OF CITIZENSHIP OR LAWFUL PRESENCE IN THE UNITED STATES.—
                (A) REQUIREMENT.—
                   No individual shall be an affordable credit eligible individual (as defined in section 342(a)(1)) unless the individual is a citizen or national of the United States or is lawfully present in a State in the United States (other than as a nonimmigrant described in a subparagraph (excluding subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) of the Immigration and Nationality Act).
                (B) DECLARATION OF CITIZENSHIP OR LAWFUL IMMIGRATION STATUS.—
                   No individual shall be an affordable credit eligible individual unless there has been a declaration made, in a form and manner specified by the Health Choices Commissioner similar to the manner required under section 1137(d)(1) of the Social Security Act and under penalty of perjury, that the individual—
                      (i) is a citizen or national of the United States; or
                      (ii) is not such a citizen or national but is lawfully present in a State in the United States (other than as a nonimmigrant described in a subparagraph (excluding subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) of the Immigration and Nationality Act).
                   Such declaration shall be verified in accordance with subparagraph (C) or (D), as the case may be.
                (C) VERIFICATION PROCESS FOR CITIZENS.—
                      (i) IN GENERAL.—
                         In the case of an individual making the declaration described in subparagraph (B)(i), subject to clause (ii), section 1902(ee) of the Social Security Act shall apply to such declaration in the same manner as such section applies to a declaration described in paragraph (1) of such section.
                      (ii) SPECIAL RULES.—
                         In applying section 1902(ee) of such Act under clause (i)—
                            (I) any reference in such section to a State is deemed a reference to the Commissioner (or other public entity making the eligibility determination);
                            (II) any reference to medical assistance or enrollment under a State plan is deemed a reference to provision of affordability credits under this subtitle;
                            (III) a reference to a newly enrolled individual under paragraph (2)(A) of such section is deemed a reference to an individual newly in receipt of an affordability credit under this subtitle;
                            (IV) approval by the Secretary shall not be required in applying paragraph (2)(B)(ii) of such section;
                            (V) paragraph (3) of such section shall not apply; and
                            (VI) before the end of Y2, the Health Choices Commissioner, in consultation with the Commissioner of Social Security, may extend the periods specified in paragraph (1)(B)(ii) of such section.
                (D) VERIFICATION PROCESS FOR NONCITIZENS.—
                      (i) IN GENERAL.—
                         In the case of an individual making the declaration described in subparagraph (B)(ii), subject to clause (ii), the verification procedures of paragraphs (2) through (5) of section 1137(d) of the Social Security Act shall apply to such declaration in the same manner as such procedures apply to a declaration described in paragraph (1) of such section.
                      (ii) SPECIAL RULES.—
                         In applying such paragraphs of section 1137(d) of such Act under clause (i)—
                            (I) any reference in such paragraphs to a State is deemed a reference to the Health Choices Commissioner; and
                            (II) any reference to benefits under a program is deemed a reference to affordability credits under this subtitle.
                      (iii) APPLICATION TO STATE-BASED EXCHANGES.—
                         In the case of the application of the verification process under this subparagraph to a State-based Health Insurance Exchange approved under section 308, section 1137(e) of such Act shall apply to the Health Choices Commissioner in relation to the State.
                (E) ANNUAL REPORTS.—
                   The Health Choices Commissioner shall report to Congress annually on the number of applicants for affordability credits under this subtitle, their citizenship or immigration status, and the disposition of their applications. Such report shall be made publicly available and shall include information on—
                      (i) the number of applicants whose declaration of citizenship or immigration status, name, or social security account number was not consistent with records maintained by the Commissioner of Social Security or the Department of Homeland Security and, of such applicants, the number who contested the inconsistency and sought to document their citizenship or immigration status, name, or social security account number or to correct the information maintained in such records and, of those, the results of such contestations; and
                      (ii) the administrative costs of conducting the status verification under this paragraph.
                (F) GAO REPORT.—
                   Not later than the end of Y2, the Comptroller General of the United States shall submit to the Committee on Ways and Means, the Committee on Energy and Commerce, the Committee on Education and Labor, and the Committee on the Judiciary of the House of Representatives and the Committee on Finance, the Committee on Health, Education, Labor, and Pensions, and the Committee on the Judiciary of the Senate a report examining the effectiveness of the citizenship and immigration verification systems applied under this paragraph. Such report shall include an analysis of the following:
                      (i) The causes of erroneous determinations under such systems.
                      (ii) The effectiveness of the processes used in remedying such erroneous determinations.
                      (iii) The impact of such systems on individuals, health care providers, and Federal and State agencies, including the effect of erroneous determinations under such systems.
                      (iv) The effectiveness of such systems in preventing ineligible individuals from receiving for affordability credits.
                      (v) The characteristics of applicants described in subparagraph (E)(i).
                (G) PROHIBITION OF DATABASE.—
                   Nothing in this paragraph or the amendments made by paragraph (6) shall be construed as authorizing the Health Choices Commissioner or the Commissioner of Social Security to establish a database of information on citizenship or immigration status.
                (H) INITIAL FUNDING.—
                      (i) IN GENERAL.—
                         Out of any funds in the Treasury not otherwise appropriated, there is appropriated to the Commissioner of Social Security $30,000,000, to be available without fiscal year limit to carry out this paragraph and section 205(v) of the Social Security Act.
                      (ii) FUNDING LIMITATION.—
                         In no case shall funds from the Social Security Administration’s Limitation on Administrative Expenses be used to carry out activities related to this paragraph or section 205(v) of the Social Security Act.
          (5) AGREEMENT WITH SOCIAL SECURITY COMMISSIONER.—
                (A) IN GENERAL.—
                   The Health Choices Commissioner shall enter into and maintain an agreement described in section 205(v)(2) of the Social Security Act with the Commissioner of Social Security.
                (B) FUNDING.—
                   The agreement entered into under subparagraph (A) shall, for each fiscal year (beginning with fiscal year 2013)—
                      (i) provide funds to the Commissioner of Social Security for the full costs of the responsibilities of the Commissioner of Social Security under paragraph (4), including—
                            (I) acquiring, installing, and maintaining technological equipment and systems necessary for the fulfillment of the responsibilities of the Commissioner of Social Security under paragraph (4), but only that portion of such costs that are attributable to such responsibilities; and
                            (II) responding to individuals who contest with the Commissioner of Social Security a reported inconsistency with records maintained by the Commissioner of Social Security or the Department of Homeland Security relating to citizenship or immigration status, name, or social security account number under paragraph (4);
                      (ii) based on an estimating methodology agreed to by the Commissioner of Social Security and the Health Choices Commissioner, provide such funds, within 10 calendar days of the beginning of the fiscal year for the first quarter and in advance for all subsequent quarters in that fiscal year; and
                      (iii) provide for an annual accounting and reconciliation of the actual costs incurred and the funds provided under the agreement.
                (C) REVIEW OF ACCOUNTING.—
                   The annual accounting and reconciliation conducted pursuant to subparagraph (B)(iii) shall be reviewed by the Inspectors General of the Social Security Administration and the Health Choices Administration, including an analysis of consistency with the requirements of paragraph (4).
                (D) CONTINGENCY.—
                   In any case in which agreement with respect to the provisions required under subparagraph (B) for any fiscal year has not been reached as of the first day of such fiscal year, the latest agreement with respect to such provisions shall be deemed in effect on an interim basis for such fiscal year until such time as an agreement relating to such provisions is subsequently reached. In any case in which an interim agreement applies for any fiscal year under this subparagraph, the Commissioner of Social Security shall, not later than the first day of such fiscal year, notify the appropriate Committees of the Congress of the failure to reach the agreement with respect to such provisions for such fiscal year. Until such time as the agreement with respect to such provisions has been reached for such fiscal year, the Commissioner of Social Security shall, not later than the end of each 90-day period after October 1 of such fiscal year, notify such Committees of the status of negotiations between such Commissioner and the Health Choices Commissioner in order to reach such an agreement.
                (E) APPLICATION TO PUBLIC ENTITIES ADMINISTERING AFFORDABILITY CREDITS.—
                   If the Health Choices Commissioner provides for the conduct of verifications under paragraph (4) through a public entity, the Health Choices Commissioner shall require the public entity to enter into an agreement with the Commissioner of Social Security which provides the same terms as the agreement described in this paragraph (and section 205(v) of the Social Security Act) between the Health Choices Commissioner and the Commissioner of Social Security, except that the Health Choices Commissioner shall be responsible for providing funds for the Commissioner of Social Security in accordance with subparagraphs (B) through (D).
          (6) AMENDMENTS TO SOCIAL SECURITY ACT.—
                (A) COORDINATION OF INFORMATION BETWEEN SOCIAL SECURITY ADMINISTRATION AND HEALTH CHOICES ADMINISTRATION.—
                      (i) IN GENERAL.—
                         Section 205 of the Social Security Act (42 U.S.C. 405) is amended by adding at the end the following new subsection:
          ``Coordination Of Information With Health Choices Administration
             ``(v)(1) The Health Choices Commissioner may collect and use the names and social security account numbers of individuals as required to provide for verification of citizenship under subsection (b)(4)(C) of section 341 of the Affordable Health Care for America Act in connection with determinations of eligibility for affordability credits under such section.
                ``(2)(A) The Commissioner of Social Security shall enter into and maintain an agreement with the Health Choices Commissioner for the purpose of establishing, in compliance with the requirements of section 1902(ee) as applied pursuant to section 341(b)(4)(C) of the Affordable Health Care for America Act, a program for verifying information required to be collected by the Health Choices Commissioner under such section 341(b)(4)(C).
                      ``(B) The agreement entered into pursuant to subparagraph (A) shall include such safeguards as are necessary to ensure the maintenance of confidentiality of any information disclosed for purposes of verifying information described in subparagraph (A) and to provide procedures for permitting the Health Choices Commissioner to use the information for purposes of maintaining the records of the Health Choices Administration.
                      ``(C) The agreement entered into pursuant to subparagraph (A) shall provide that information provided by the Commissioner of Social Security to the Health Choices Commissioner pursuant to the agreement shall be provided at such time, at such place, and in such manner as the Commissioner of Social Security determines appropriate.
                      ``(D) Information provided by the Commissioner of Social Security to the Health Choices Commissioner pursuant to an agreement entered into pursuant to subparagraph (A) shall be considered as strictly confidential and shall be used only for the purposes described in this paragraph and for carrying out such agreement. Any officer or employee or former officer or employee of the Health Choices Commissioner, or any officer or employee or former officer or employee of a contractor of the Health Choices Commissioner, who, without the written authority of the Commissioner of Social Security, publishes or communicates any information in such individual’s possession by reason of such employment or position as such an officer shall be guilty of a felony and, upon conviction thereof, shall be fined or imprisoned, or both, as described in section 208.
                ``(3) The agreement entered into under paragraph (2) shall provide for funding to the Commissioner of Social Security consistent with section 341(b)(5) of Affordable Health Care for America Act.
                ``(4) This subsection shall apply in the case of a public entity that conducts verifications under section 341(b)(4) of the Affordable Health Care for America Act and the obligations of this subsection shall apply to such an entity in the same manner as such obligations apply to the Health Choices Commissioner when such Commissioner is conducting such verifications.´´.
                      (ii) CONFORMING AMENDMENT.—
                         Section 205(c)(2)(C) of such Act (42 U.S.C. 405(c)(2)(C)) is amended by adding at the end the following new clause:
                      ``(x) For purposes of the administration of the verification procedures described in section 341(b)(4) of the Affordable Health Care for America Act, the Health Choices Commissioner may collect and use social security account numbers as provided for in section 205(v)(1).´´.
                (B) IMPROVING THE INTEGRITY OF DATA AND EFFECTIVENESS OF SAVE PROGRAM.—
                   Section 1137(d) of the Social Security Act (42 U.S.C. 1320b–7(d)) is amended by adding at the end the following new paragraphs:
          ``(6)(A) With respect to the use by any agency of the system described in subsection (b) by programs specified in subsection (b) or any other use of such system, the United States Citizenship and Immigration Services and any other agency charged with the management of the system shall establish appropriate safeguards necessary to protect and improve the integrity and accuracy of data relating to individuals by—
                      ``(i) establishing a process through which such individuals are provided access to, and the ability to amend, correct, and update, their own personally identifiable information contained within the system;
                      ``(ii) providing a written response, without undue delay, to any individual who has made such a request to amend, correct, or update such individual’s own personally identifiable information contained within the system; and
                      ``(iii) developing a written notice for user agencies to provide to individuals who are denied a benefit due to a determination of ineligibility based on a final verification determination under the system.
                ``(B) The notice described in subparagraph (A)(ii) shall include—
                      ``(i) information about the reason for such notice;
                      ``(ii) a description of the right of the recipient of the notice under subparagraph (A)(i) to contest such notice;
                      ``(iii) a description of the right of the recipient under subparagraph (A)(i) to access and attempt to amend, correct, and update the recipient’s own personally identifiable information contained within records of the system described in paragraph (3); and
                      ``(iv) instructions on how to contest such notice and attempt to correct records of such system relating to the recipient, including contact information for relevant agencies.´´.
                (C) STREAMLINING ADMINISTRATION OF VERIFICATION PROCESS FOR UNITED STATES CITIZENS.—
                   Section 1902(ee)(2) of the Social Security Act (42 U.S.C. 1396a(ee)(2)) is amended by adding at the end the following:
                ``(D) In carrying out the verification procedures under this subsection with respect to a State, if the Commissioner of Social Security determines that the records maintained by such Commissioner are not consistent with an individual’s allegation of United States citizenship, pursuant to procedures which shall be established by the State in coordination with the Commissioner of Social Security, the Secretary of Homeland Security, and the Secretary of Health and Human Services—
                      ``(i) the Commissioner of Social Security shall inform the State of the inconsistency;
                      ``(ii) upon being so informed of the inconsistency, the State shall submit the information on the individual to the Secretary of Homeland Security for a determination of whether the records of the Department of Homeland Security indicate that the individual is a citizen;
                      ``(iii) upon making such determination, the Department of Homeland Security shall inform the State of such determination; and
                      ``(iv) information provided by the Commissioner of Social Security shall be considered as strictly confidential and shall only be used by the State and the Secretary of Homeland Security for the purposes of such verification procedures.
                ``(E) Verification of status eligibility pursuant to the procedures established under this subsection shall be deemed a verification of status eligibility for purposes of this title, title XXI, and affordability credits under section 341(b)(4) of the Affordable Health Care for America Act, regardless of the program in which the individual is applying for benefits.´´.
    (c) Use of Affordability Credits.—
          (1) IN GENERAL.—
             In Y1 and Y2 an affordable credit eligible individual may use an affordability credit only with respect to a basic plan.
          (2) FLEXIBILITY IN PLAN ENROLLMENT AUTHORIZED.—
             Beginning with Y3, the Commissioner shall establish a process to allow an affordability premium credit under section 343, but not the affordability cost-sharing credit under section 344, to be used for enrollees in enhanced or premium plans. In the case of an affordable credit eligible individual who enrolls in an enhanced or premium plan, the individual shall be responsible for any difference between the premium for such plan and the affordability credit amount otherwise applicable if the individual had enrolled in a basic plan.
    (d) Access to Data.—
       In carrying out this subtitle, the Commissioner shall request from the Secretary of the Treasury consistent with section 6103 of the Internal Revenue Code of 1986 such information as may be required to carry out this subtitle.
    (e) No Cash Rebates.—
       In no case shall an affordable credit eligible individual receive any cash payment as a result of the application of this subtitle.

### Sec. 342. Affordable Credit Eligible Individual.

    (a) Definition.—
          (1) IN GENERAL.—
             For purposes of this division, the term “affordable credit eligible individual” means, subject to subsection (b) and section 346, an individual who is lawfully present in a State in the United States (other than as a nonimmigrant described in a subparagraph (excluding subparagraphs (K), (T), (U), and (V)) of section 101(a)(15) of the Immigration and Nationality Act)—
                (A) who is enrolled under an Exchange-participating health benefits plan and is not enrolled under such plan as an employee (or dependent of an employee) through an employer qualified health benefits plan that meets the requirements of section 412;
                (B) with modified adjusted gross income below 400 percent of the Federal poverty level for a family of the size involved;
                (C) who is not a Medicaid eligible individual, other than an individual during a transition period under section 302(d)(3)(B)(ii); and
                (D) subject to paragraph (3), who is not enrolled in acceptable coverage (other than an Exchange-participating health benefits plan).
          (2) TREATMENT OF FAMILY.—
             Except as the Commissioner may otherwise provide, members of the same family who are affordable credit eligible individuals shall be treated as a single affordable credit individual eligible for the applicable credit for such a family under this subtitle.
          (3) SPECIAL RULE FOR INDIANS.—
             Subparagraph (D) of paragraph (1) shall not apply to an individual who has coverage that is treated as acceptable coverage for purposes of section 59B(d)(2) of the Internal Revenue Code of 1986 but is not treated as acceptable coverage for purposes of this division.
    (b) Limitations on Employee and Dependent Disqualification.—
          (1) IN GENERAL.—
             Subject to paragraph (2), the term “affordable credit eligible individual” does not include a full-time employee of an employer if the employer offers the employee coverage (for the employee and dependents) as a full-time employee under a group health plan if the coverage and employer contribution under the plan meet the requirements of section 412.
          (2) EXCEPTIONS.—
                (A) FOR CERTAIN FAMILY CIRCUMSTANCES.—
                   The Commissioner shall establish such exceptions and special rules in the case described in paragraph (1) as may be appropriate in the case of a divorced or separated individual or such a dependent of an employee who would otherwise be an affordable credit eligible individual.
                (B) FOR UNAFFORDABLE EMPLOYER COVERAGE.—
                   Beginning in Y2, in the case of full-time employees for which the cost of the employee premium for coverage under a group health plan would exceed 12 percent of current modified adjusted gross income (determined by the Commissioner on the basis of verifiable documentation), paragraph (1) shall not apply.
    (c) Income Defined.—
          (1) IN GENERAL.—
             In this title, the term “income” means modified adjusted gross income (as defined in section 59B of the Internal Revenue Code of 1986).
          (2) STUDY OF INCOME DISREGARDS.—
             The Commissioner shall conduct a study that examines the application of income disregards for purposes of this subtitle. Not later than the first day of Y2, the Commissioner shall submit to Congress a report on such study and shall include such recommendations as the Commissioner determines appropriate.
    (d) Clarification of Treatment of Affordability Credits.—
       Affordability credits under this subtitle shall not be treated, for purposes of title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, to be a benefit provided under section 403 of such title.

### Sec. 343. Affordable Premium Credit.

    (a) In General.—
       The affordability premium credit under this section for an affordable credit eligible individual enrolled in an Exchange-participating health benefits plan is in an amount equal to the amount (if any) by which the reference premium amount specified in subsection (c), exceeds the affordable premium amount specified in subsection (b) for the individual, except that in no case shall the affordable premium credit exceed the premium for the plan.
    (b) Affordable Premium Amount.—
          (1) IN GENERAL.—
             The affordable premium amount specified in this subsection for an individual for the annual premium in a plan year shall be equal to the product of—
                (A) the premium percentage limit specified in paragraph (2) for the individual based upon the individual’s modified adjusted gross income for the plan year; and
                (B) the individual’s modified adjusted gross income for such plan year.
          (2) PREMIUM PERCENTAGE LIMITS BASED ON TABLE.—
             The Commissioner shall establish premium percentage limits so that for individuals whose modified adjusted gross income is within an income tier specified in the table in subsection (d) such percentage limits 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.
    (c) Reference Premium Amount.—
       The reference premium amount specified in this subsection for a plan year for an individual in a premium rating area is equal to the average premium for the 3 basic plans in the area for the plan year with the lowest premium levels. In computing such amount the Commissioner may exclude plans with extremely limited enrollments.
    (d) Table of Premium Percentage Limits, Actuarial Value Percentages, and Out-of-Pocket Limits for Y1 Based on Income Tier.—
          (1) IN GENERAL.—
             For purposes of this subtitle, subject to paragraph (3) and section 346, the table specified in this subsection is as follows:
| In the case of modified adjusted gross income (expressed as a percent of FPL) within the following income tier: | The initial premium percentage is— | The final premium percentage is— | The actuarial value percentage is— | The out-of-pocket limit for Y1 is— |
| 133% through 150% | 1.5% | 3.0% | 97% | $500 |
| 150% through 200% | 3.0% | 5.5% | 93% | $1,000 |
| 200% through 250% | 5.5% | 8.0% | 85% | $2,000 |
| 250% through 300% | 8.0% | 10.0% | 78% | $4,000 |
| 300% through 350% | 10.0% | 11.0% | 72% | $4,500 |
| 350% through 400% | 11.0% | 12.0% | 70% | $5,000 |
          (2) SPECIAL RULES.—
             For purposes of applying the table under paragraph (1):
                (A) FOR LOWEST LEVEL OF INCOME.—
                   In the case of an individual with income that does not exceed 133 percent of FPL, the individual shall be considered to have income that is 133 percent of FPL.
                (B) APPLICATION OF HIGHER ACTUARIAL VALUE PERCENTAGE AT TIER TRANSITION POINTS.—
                   If two actuarial value percentages may be determined with respect to an individual, the actuarial value percentage shall be the higher of such percentages.
          (3) INDEXING.—
             For years after Y1, the Commissioner shall adjust the initial and final premium percentages to maintain the ratio of governmental to enrollee shares of premiums over time, for each income tier identified in the table in paragraph (1).

### Sec. 344. Affordability Cost-Sharing Credit.

    (a) In General.—
       The affordability cost-sharing credit under this section for an affordable credit eligible individual enrolled in an Exchange-participating health benefits plan is in the form of the cost-sharing reduction described in subsection (b) provided under this section for the income tier in which the individual is classified based on the individual’s modified adjusted gross income.
    (b) Cost-Sharing Reductions.—
       The Commissioner shall specify a reduction in cost-sharing amounts and the annual limitation on cost-sharing specified in section 222(c)(2)(B) under a basic plan for each income tier specified in the table under section 343(d), with respect to a year, in a manner so that, as estimated by the Commissioner—
          (1) the actuarial value of the coverage with such reduced cost-sharing amounts (and the reduced annual cost-sharing limit) is equal to the actuarial value percentage (specified in the table under section 343(d) for the income tier involved) of the full actuarial value if there were no cost-sharing imposed under the plan; and
          (2) the annual limitation on cost-sharing specified in section 222(c)(2)(B) is reduced to a level that does not exceed the maximum out-of-pocket limit specified in subsection (c).
    (c) Maximum Out-of-Pocket Limit.—
          (1) IN GENERAL.—
             Subject to paragraph (2), the maximum out-of-pocket limit specified in this subsection for an individual within an income tier—
                (A) for individual coverage—
                      (i) for Y1 is the out-of-pocket limit for Y1 specified in subsection (c) in the table under section 343(d) for the income tier involved; or
                      (ii) for a subsequent year is such out-of-pocket limit for the previous year under this subparagraph increased (rounded to the nearest $10) for each subsequent year by the percentage increase in the enrollment-weighted average of premium increases for basic plans applicable to such year; or
                (B) for family coverage is twice the maximum out-of-pocket limit under subparagraph (A) for the year involved.
          (2) ADJUSTMENT.—
             The Commissioner shall adjust the maximum out-of-pocket limits under paragraph (1) to ensure that such limits meet the actuarial value percentage specified in the table under section 343(d) for the income tier involved.
    (d) Determination and Payment of Cost-Sharing Affordability Credit.—
       In the case of an affordable credit eligible individual in a tier enrolled in an Exchange-participating health benefits plan offered by a QHBP offering entity, the Commissioner shall provide for payment to the offering entity of an amount equivalent to the increased actuarial value of the benefits under the plan provided under section 303(c)(2)(B) resulting from the reduction in cost-sharing described in subsections (b) and (c).

### Sec. 345. Income Determinations.

    (a) In General.—
       In applying this subtitle for an affordability credit for an individual for a plan year, the individual’s income shall be the income (as defined in section 342(c)) for the individual for the most recent taxable year (as determined in accordance with rules of the Commissioner). The Federal poverty level applied shall be such level in effect as of the date of the application.
    (b) Program Integrity; Income Verification Procedures.—
          (1) PROGRAM INTEGRITY.—
             The Commissioner shall take such steps as may be appropriate to ensure the accuracy of determinations and redeterminations under this subtitle.
          (2) INCOME VERIFICATION.—
                (A) IN GENERAL.—
                   Upon an initial application of an individual for an affordability credit under this subtitle (or in applying section 342(b)) or upon an application for a change in the affordability credit based upon a significant change in modified adjusted gross income described in subsection (c)(1)—
                      (i) the Commissioner shall request from the Secretary of the Treasury the disclosure to the Commissioner of such information as may be permitted to verify the information contained in such application; and
                      (ii) the Commissioner shall use the information so disclosed to verify such information.
                (B) ALTERNATIVE PROCEDURES.—
                   The Commissioner shall establish procedures for the verification of income for purposes of this subtitle if no income tax return is available for the most recent completed tax year.
    (c) Special Rules.—
          (1) CHANGES IN INCOME AS A PERCENT OF FPL.—
             In the case that an individual’s income (expressed as a percentage of the Federal poverty level for a family of the size involved) for a plan year is expected (in a manner specified by the Commissioner) to be significantly different from the income (as so expressed) used under subsection (a), the Commissioner shall establish rules requiring an individual to report, consistent with the mechanism established under paragraph (2), significant changes in such income (including a significant change in family composition) to the Commissioner and requiring the substitution of such income for the income otherwise applicable.
          (2) REPORTING OF SIGNIFICANT CHANGES IN INCOME.—
             The Commissioner shall establish rules under which an individual determined to be an affordable credit eligible individual would be required to inform the Commissioner when there is a significant change in the modified adjusted gross income of the individual (expressed as a percentage of the FPL for a family of the size involved) and of the information regarding such change. Such mechanism shall provide for guidelines that specify the circumstances that qualify as a significant change, the verifiable information required to document such a change, and the process for submission of such information. If the Commissioner receives new information from an individual regarding the modified adjusted gross income of the individual, the Commissioner shall provide for a redetermination of the individual’s eligibility to be an affordable credit eligible individual.
          (3) TRANSITION FOR CHIP.—
             In the case of a child described in section 302(d)(4), the Commissioner shall establish rules under which the modified adjusted gross income of the child is deemed to be no greater than the family income of the child as most recently determined before Y1 by the State under title XXI of the Social Security Act.
          (4) STUDY OF GEOGRAPHIC VARIATION IN APPLICATION OF FPL.—
                (A) IN GENERAL.—
                   The Secretary of Health and Human Services shall conduct a study to examine the feasibility and implication of adjusting the application of the Federal poverty level under this subtitle for different geographic areas so as to reflect the variations in cost-of-living among different areas within the United States. If the Secretary determines that an adjustment is feasible, the study should include a methodology to make such an adjustment. Not later than the first day of Y1, the Secretary shall submit to Congress a report on such study and shall include such recommendations as the Secretary determines appropriate.
                (B) INCLUSION OF TERRITORIES.—
                      (i) IN GENERAL.—
                         The Secretary shall ensure that the study under subparagraph (A) covers the territories of the United States and that special attention is paid to the disparity that exists among poverty levels and the cost of living in such territories and to the impact of such disparity on efforts to expand health coverage and ensure health care.
                      (ii) TERRITORIES DEFINED.—
                         In this subparagraph, the term “territories of the United States” includes the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Northern Mariana Islands, and any other territory or possession of the United States.
    (d) Penalties for Misrepresentation.—
       In the case of an individual who intentionally misrepresents modified adjusted gross income or the individual fails (without regard to intent) to disclose to the Commissioner a significant change in modified adjusted gross income under subsection (c) in a manner that results in the individual becoming an affordable credit eligible individual when the individual is not or in the amount of the affordability credit exceeding the correct amount—
          (1) the individual is liable for repayment of the amount of the improper affordability credit; and
          (2) in the case of such an intentional misrepresentation or other egregious circumstances specified by the Commissioner, the Commissioner may impose an additional penalty.

### Sec. 346. Special Rules for Application to Territories.

    (a) One-time election for treatment and application of funding.—
          (1) IN GENERAL.—
             A territory may elect, in a form and manner specified by the Commissioner in consultation with the Secretary of Health and Human Services and the Secretary of the Treasury and not later than October 1, 2012, either—
                (A) to be treated as a State for purposes of applying this title and title II; or
                (B) not to be so treated but instead, to have the dollar limitation otherwise applicable to the territory under subsections (f) and (g) of section 1108 of the Social Security Act (42 U.S.C. 1308) for a fiscal year increased by a dollar amount equivalent to the cap amount determined under subsection (c)(2) for the territory as applied by the Secretary for the fiscal year involved.
          (2) CONDITIONS FOR ACCEPTANCE.—
             The Commissioner has the nonreviewable authority to accept or reject an election described in paragraph (1)(A). Any such acceptance is—
                (A) contingent upon entering into an agreement described in subsection (b) between the Commissioner and the territory and subsection (c); and
                (B) subject to the approval of the Secretary of Health and Human Services and the Secretary of the Treasury and subject to such other terms and conditions as the Commissioner, in consultation with such Secretaries, may specify.
          (3) DEFAULT RULE.—
             A territory failing to make such an election (or having an election under paragraph (1)(A) not accepted under paragraph (2)) shall be treated as having made the election described in paragraph (1)(B).
    (b) Agreement for substitution of percentages for affordability credits.—
          (1) NEGOTIATION.—
             In the case of a territory making an election under subsection (a)(1)(A) (in this section referred to as an “electing territory”), the Commissioner, in consultation with the Secretaries of Health and Human Services and the Treasury, shall enter into negotiations with the government of such territory so that, before Y1, there is an agreement reached between the parties on the percentages that shall be applied under paragraph (2) for that territory. The Commissioner shall not enter into such an agreement unless—
                (A) payments made under this subtitle with respect to residents of the territory are consistent with the cap established under subsection (c) for such territory and with subsection (d); and
                (B) the requirements of paragraphs (3) and (4) are met.
          (2) APPLICATION OF SUBSTITUTE PERCENTAGES AND DOLLAR AMOUNTS.—
             In the case of an electing territory, there shall be substituted in section 342(a)(1)(B) and in the table in section 341(d)(1) for 400 percent, 133 percent, and other percentages and dollar amounts specified in such table, such respective percentages and dollar amounts as are established under the agreement under paragraph (1) consistent with the following:
                (A) NO INCOME GAP BETWEEN MEDICAID AND AFFORDABILITY CREDITS.—
                   The substituted percentages shall be specified in a manner so as to prevent any gap in coverage for individuals between income level at which medical assistance is available through Medicaid and the income level at which affordability credits are available.
                (B) ADJUSTMENT FOR OUT-OF-POCKET RESPONSIBILITY FOR PREMIUMS AND COST-SHARING IN RELATION TO INCOME.—
                   The substituted percentages of FPL for income tiers under such table shall be specified in a manner so that—
                      (i) affordable credit eligible individuals residing in the territory bear the same out-of-pocket responsibility for premiums and cost-sharing in relation to average income for residents in that territory, as
                      (ii) the out-of-pocket responsibility for premiums and cost-sharing for affordable credit eligible individuals residing in the 50 States or the District of Columbia in relation to average income for such residents.
          (3) SPECIAL RULES WITH RESPECT TO APPLICATION OF TAX AND PENALTY PROVISIONS.—
             The electing territory shall enact one or more laws under which provisions similar to the following provisions apply with respect to such territory:
                (A) Section 59B of the Internal Revenue Code of 1986, except that any resident of the territory who is not an affordable credit eligible individual but who would be an affordable credit eligible individual if such resident were a resident of one of the 50 States (and any qualifying child residing with such individual) may be treated as covered by acceptable coverage.
                (B) Section 4980H of the Internal Revenue Code of 1986 and section 502(c)(11) of the Employee Retirement Income Security Act of 1974.
                (C) Section 3121(c) of the Internal Revenue Code of 1986.
          (4) IMPLEMENTATION OF INSURANCE REFORM AND CONSUMER PROTECTION REQUIREMENTS.—
             The electing territory shall enact and implement such laws and regulations as may be required to apply the requirements of title II with respect to health insurance coverage offered in the territory.
    (c) Cap on additional expenditures.—
          (1) IN GENERAL.—
             In entering into an agreement with an electing territory under subsection (b), the Commissioner shall ensure that the aggregate expenditures under this subtitle with respect to residents of such territory during the period beginning with Y1 and ending with 2019 will not exceed the cap amount specified in paragraph (2) for such territory. The Commissioner shall adjust from time to time the percentages applicable under such agreement as needed in order to carry out the previous sentence.
          (2) CAP AMOUNT.—
                (A) IN GENERAL.—
                   The cap amount specified in this paragraph—
                      (i) for Puerto Rico is $3,700,000,000 increased by the amount (if any) elected under subparagraph (C); or
                      (ii) for another territory is the portion of $300,000,000 negotiated for such territory under subparagraph (B).
                (B) NEGOTIATION FOR CERTAIN TERRITORIES.—
                   The Commissioner in consultation with the Secretary of Health and Human Services shall negotiate with the governments of the territories (other than Puerto Rico) to allocate the amount specified in subparagraph (A)(ii) among such territories.
                (C) OPTIONAL SUPPLEMENTATION FOR PUERTO RICO.—
                      (i) IN GENERAL.—
                         Puerto Rico may elect, in a form and manner specified by the Secretary of Health and Human Services in consultation with the Commissioner to increase the dollar amount specified in subparagraph (A)(i) by up to $1,000,000,000.
                      (ii) OFFSET IN MEDICAID CAP.—
                         If Puerto Rico makes the election described in clause (i), the Secretary shall decrease the dollar limitation otherwise applicable to Puerto Rico under subsections (f) and (g) of section 1108 of the Social Security Act (42 U.S.C. 1308) for a fiscal year by the additional aggregate payments the Secretary estimates will be payable under this section for the fiscal year because of such election.
    (d) Limitation on Funding.—
       In no case shall this section (including the agreement under subsection (b)) permit—
          (1) the obligation of funds for expenditures under this subtitle for periods beginning on or after January 1, 2020; or
          (2) any increase in the dollar limitation described in subsection (a)(1)(B) for any portion of any fiscal year occurring on or after such date.

### Sec. 347. No Federal Payment for Undocumented Aliens.

    Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.