I 

113TH CONGRESS 

1ST SESSION H. R. 2688 

To improve healthcare-related, tax-preferred savings accounts and to provide 

for cooperative governing of individual and group health insurance coverage across State lines, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 15, 2013 

Mr. ROSS introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committee on Energy and 

Commerce, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To improve healthcare-related, tax-preferred savings accounts 

and to provide for cooperative governing of individual 

and group health insurance coverage across State lines, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Providing Accountability and Transparency to 

6 Incentivize Economically Necessary Transitions in Health 


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1 Care Act of 2013’’ or the ‘‘PATIENT’s Health Care Act 

2 of 2013’’. 

3 (b) TABLE OF CONTENTS.—The table of contents for 

4 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—HEALTHCARE-RELATED SAVINGS ACCOUNTS 

Sec. 101. Deduction of premiums for high deductible health plans. 

Sec. 102. Repeal of high deductible health plan requirement. 

Sec. 103. Increase in deductible HSA contribution limitations. 

Sec. 104. Medicare eligible individuals eligible to contribute to HSA. 

Sec. 105. HSA rollover to Medicare Advantage MSA. 

Sec. 106. One-time transfer of flexible spending arrangement balance to health 

savings account in case of separation from employment. 

Sec. 107. Payment of high deductible health plan premiums from HSA. 

Sec. 108. Repeal of disqualification of expenses for over-the-counter drugs 

under certain accounts and arrangements. 

Sec. 109. Payment of long-term care premiums from health flexible spending 

arrangement. 

Sec. 110. Allowing MSA and HSA rollover to adult child of account holder. 

Sec. 111. Disposition of unused health benefits in cafeteria plans and flexible 

spending arrangements. 

Sec. 112. Permitting beneficiary contributions to Medicare Advantage MSA. 

Sec. 113. Child health savings account. 

TITLE II—HEALTH INSURANCE PROVISIONS 

Sec. 201. Cooperative governing of individual and group health insurance coverage. 

Sec. 202. Reauthorization of the Preexisting Condition Insurance Plan (PCIP) 

Program. 

5 TITLE I—HEALTHCARE-RELATED 

6 SAVINGS ACCOUNTS 

7 SEC. 101. DEDUCTION OF PREMIUMS FOR HIGH DEDUCT8 IBLE HEALTH PLANS. 

9 (a) IN GENERAL.—Part VII of subchapter B of chap10 ter 1 of the Internal Revenue Code of 1986 is amended 

11 by redesignating section 224 as section 225 and by insert12 ing after section 223 the following new section: 


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1 ‘‘SEC. 224. PREMIUMS FOR HIGH DEDUCTIBLE HEALTH 

2 PLANS. 

3 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi4 vidual, there shall be allowed as a deduction for the tax5 able year the aggregate amount paid by such individual 

6 as premiums under a high deductible health plan with re7 spect to months during such year for which such indi8 vidual is an eligible individual with respect to such health 

9 plan. 

10 ‘‘(b) DEFINITIONS.—For purposes of this section— 

11 ‘‘(1) ELIGIBLE INDIVIDUAL.— 

12 ‘‘(A) IN GENERAL.—The term ‘eligible in13 dividual’ means, with respect to any month, any 

14 individual if— 

15 ‘‘(i) such individual is covered under a 

16 high deductible health plan as of the 1st 

17 day of such month, and 

18 ‘‘(ii) such individual is not, while cov19 ered under a high deductible health plan, 

20 covered under any health plan— 

21 ‘‘(I) which is not a high deduct22 ible health plan, and 

23 ‘‘(II) which provides coverage for 

24 any benefit which is covered under the 

25 high deductible health plan. 


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1 ‘‘(B) CERTAIN COVERAGE DIS2 REGARDED.—Subparagraph (A)(ii) shall be ap3 plied without regard to— 

4 ‘‘(i) coverage for any benefit provided 

5 by permitted insurance, 

6 ‘‘(ii) coverage (whether through insur7 ance or otherwise) for accidents, disability, 

8 dental care, vision care, or long-term care, 

9 and 

10 ‘‘(iii) coverage under a health flexible 

11 spending arrangement during any period 

12 immediately following the end of a plan 

13 year of such arrangement during which un14 used benefits or contributions remaining at 

15 the end of such plan year may be paid or 

16 reimbursed to plan participants for quali17 fied benefit expenses incurred during such 

18 period if— 

19 ‘‘(I) the balance in such arrange20 ment at the end of such plan year is 

21 zero, or 

22 ‘‘(II) the individual is making a 

23 qualified HSA distribution (as defined 

24 in section 106(e)) in an amount equal 

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1 rangement as of the end of such plan 

2 year, in accordance with rules pre3 scribed by the Secretary. 

4 ‘‘(2) HIGH DEDUCTIBLE HEALTH PLAN.— 

5 ‘‘(A) IN GENERAL.—The term ‘high de6 ductible health plan’ means a health plan— 

7 ‘‘(i) which has an annual deductible 

8 which is not less than— 

9 ‘‘(I) $1,000 for self-only cov10 erage, and 

11 ‘‘(II) twice the dollar amount in 

12 subclause (I) for family coverage, and 

13 ‘‘(ii) the sum of the annual deductible 

14 and the other annual out-of-pocket ex15 penses required to be paid under the plan 

16 (other than for premiums) for covered ben17 efits does not exceed— 

18 ‘‘(I) $5,000 for self-only cov19 erage, and 

20 ‘‘(II) twice the dollar amount in 

21 subclause (I) for family coverage. 

22 ‘‘(B) EXCLUSION OF CERTAIN PLANS.— 

23 Such term does not include a health plan if 

24 substantially all of its coverage is described in 

25 paragraph (1)(B). 


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1 ‘‘(C) SAFE HARBOR FOR ABSENCE OF PRE2 VENTIVE CARE DEDUCTIBLE.—A plan shall not 

3 fail to be treated as a high deductible health 

4 plan by reason of failing to have a deductible 

5 for preventive care (within the meaning of sec6 tion 1871 of the Social Security Act, except as 

7 otherwise provided by the Secretary). 

8 ‘‘(D) SPECIAL RULE FOR ANNUAL OUT-OF9 POCKET LIMITATION FOR NETWORK PLANS.—In 

10 the case of a plan using a network of providers, 

11 such plan shall not fail to be treated as a high 

12 deductible health plan by reason of having an 

13 out-of-pocket limitation for services provided 

14 outside of such network which exceeds the ap15 plicable limitation under subparagraph (A)(ii). 

16 ‘‘(3) PERMITTED INSURANCE.—The term ‘per17 mitted insurance’ means— 

18 ‘‘(A) insurance if substantially all of the 

19 coverage provided under such insurance relates 

20 to— 

21 ‘‘(i) liabilities incurred under workers’ 

22 compensation laws, 

23 ‘‘(ii) tort liabilities, 

24 ‘‘(iii) liabilities relating to ownership 

25 or use of property, or 


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1 ‘‘(iv) such other similar liabilities as 

2 the Secretary may specify by regulations, 

3 ‘‘(B) insurance for a specified disease or 

4 illness, and 

5 ‘‘(C) insurance paying a fixed amount per 

6 day (or other period) of hospitalization. 

7 ‘‘(4) FAMILY COVERAGE.—The term ‘family 

8 coverage’ means any coverage other than self-only 

9 coverage. 

10 ‘‘(c) SPECIAL RULES.— 

11 ‘‘(1) DEDUCTION ALLOWABLE FOR ONLY 1

12 PLAN.—For purposes of this section, in the case of 

13 an individual covered by more than 1 high deductible 

14 health plan for any month, the individual may only 

15 take into account amounts paid for 1 of such plans 

16 for such month. 

17 ‘‘(2) EMPLOYER PROVIDED COVERAGE.— 

18 ‘‘(A) IN GENERAL.—No deduction shall be 

19 allowed to an individual under subsection (a) 

20 for any amount paid for coverage under a high 

21 deductible health plan for a month if that indi22 vidual participates in any coverage for such 

23 month that is excluded (in whole or in part) 

24 from the gross income of the individual or the 

25 individual’s spouse under section 106. 


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1 ‘‘(B) CAFETERIA PLANS, ETC.—Employer 

2 contributions to a cafeteria plan or a flexible 

3 spending or similar arrangement which are ex4 cluded from gross income under section 106 

5 shall be treated for purposes of this section as 

6 paid by the employer. 

7 ‘‘(3) CONTRIBUTIONS TO HEALTH SAVINGS AC8 COUNT REQUIRED.—A deduction shall not be al9 lowed under subsection (a) for a taxable year with 

10 respect to such individual if such individual is not al11 lowed a deduction under section 223 for such tax12 able year. 

13 ‘‘(4) MEDICAL AND HEALTH SAVINGS AC14 COUNTS.—Subsection (a) shall not apply with re15 spect to any amount which is paid or distributed out 

16 of an Archer MSA or a health savings account which 

17 is not included in gross income under section 220(f) 

18 or 223(f), as the case may be. 

19 ‘‘(5) COORDINATION WITH DEDUCTION FOR

20 HEALTH INSURANCE OF SELF-EMPLOYED INDIVID21 UALS.—The amount taken into account by the tax22 payer in computing the deduction under section 

23 162(l) shall not be taken into account under this 

24 section. 


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1 ‘‘(6) COORDINATION WITH MEDICAL EXPENSE

2 DEDUCTION.—The amount taken into account by 

3 the taxpayer in computing the deduction under this 

4 section shall not be taken into account under section 

5 213.’’. 

6 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI7 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

8 of section 62 of such Code is amended by inserting after 

9 paragraph (21) the following new paragraph: 

10 ‘‘(22) PREMIUMS FOR HIGH DEDUCTIBLE

11 HEALTH PLANS.—The deduction allowed by section 

12 224.’’. 

13 (c) CLERICAL AMENDMENT.—The table of sections 

14 for part VII of subchapter B of chapter 1 of such Code 

15 is amended by striking the last item and inserting the fol16 lowing new items: 

‘‘Sec. 224. Premiums for high deductible health plans. 

‘‘Sec. 225. Cross reference.’’. 

17 (d) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to taxable years beginning after 

19 December 31, 2013. 

20 SEC. 102. REPEAL OF HIGH DEDUCTIBLE HEALTH PLAN RE21 QUIREMENT. 

22 (a) IN GENERAL.—Subsection (a) of section 223 of 

23 such Code is amended to read as follows: 


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1 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi2 vidual, there shall be allowed as a deduction for a taxable 

3 year an amount equal to the aggregate amount paid in 

4 cash during such taxable year by or on behalf of such indi5 vidual to a health savings account of such individual.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Section 223 of such Code is amended by 

8 striking subsection (c) and redesignating subsections 

9 (d) through (h) as subsections (c) through (g), re10 spectively. 

11 (2) Section 223(b) of such Code is amended by 

12 striking paragraph (8). 

13 (3) Subparagraph (A) of section 223(c)(1) of 

14 such Code (as redesignated by paragraph (1)) is 

15 amended— 

16 (A) by striking ‘‘subsection (f)(5)’’ and in17 serting ‘‘subsection (e)(5)’’, and 

18 (B) in clause (ii)— 

19 (i) by striking ‘‘the sum of—’’ and all 

20 that follows and inserting ‘‘the dollar 

21 amount in effect under subsection (b)(1).’’. 

22 (4) Section 223(f)(1) of such Code (as redesig23 nated by paragraph (1)) is amended by striking 

24 ‘‘Each dollar amount in subsections (b)(2) and 

25 (c)(2)(A)’’ and inserting ‘‘In the case of a taxable 


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1 year beginning after December 31, 2010, each dollar 

2 amount in subsection (b)(1)’’. 

3 (5) Section 26(b)(U) of such Code is amended 

4 by striking ‘‘section 223(f)(4)’’ and inserting ‘‘sec5 tion 223(e)(4)’’. 

6 (6) Sections 35(g)(3), 220(f)(5)(A), 

7 848(e)(1)(v), 4973(a)(5), and 6051(a)(12) of such 

8 Code are each amended by striking ‘‘section 223(d)’’ 

9 each place it appears and inserting ‘‘section 223(c)’’. 

10 (7) Section 106(d)(1) of such Code is amend11 ed— 

12 (A) by striking ‘‘who is an eligible indi13 vidual (as defined in section 223(c)(1))’’, and 

14 (B) by striking ‘‘section 223(d)’’ and in15 serting ‘‘section 223(c)’’. 

16 (8) Section 408(d)(9) of such Code is amend17 ed— 

18 (A) in subparagraph (A) by striking ‘‘who 

19 is an eligible individual (as defined in section 

20 223(c)) and’’, and 

21 (B) in subparagraph (C) by striking ‘‘com22 puted on the basis of the type of coverage under 

23 the high deductible health plan covering the in24 dividual at the time of the qualified HSA fund25 ing distribution’’. 


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1 (9) Section 877A(g)(6) of such Code is amend2 ed by striking ‘‘223(f)(4)’’ and inserting 

3 ‘‘223(e)(4)’’. 

4 (10) Section 4973(g) of such Code is amend5 ed— 

6 (A) by striking ‘‘section 223(d)’’ and in7 serting ‘‘section 223(c)’’, 

8 (B) in paragraph (2), by striking ‘‘section 

9 223(f)(2)’’ and inserting ‘‘section 223(e)(2)’’, 

10 and 

11 (C) by striking ‘‘section 223(f)(3)’’ and in12 serting ‘‘section 223(e)(3)’’. 

13 (11) Section 4975 of such Code is amended— 

14 (A) in subsection (c)(6)— 

15 (i) by striking ‘‘section 223(d)’’ and 

16 inserting ‘‘section 223(c)’’, and 

17 (ii) by striking ‘‘section 223(e)(2)’’ 

18 and inserting ‘‘section 223(d)(2)’’, and 

19 (B) in subsection (e)(1)(E), by striking 

20 ‘‘section 223(d)’’ and inserting ‘‘section 

21 223(c)’’. 

22 (12) Section 6693(a)(2)(C) of such Code is 

23 amended by striking ‘‘section 223(h)’’ and inserting 

24 ‘‘section 223(g)’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2011. 

4 SEC. 103. INCREASE IN DEDUCTIBLE HSA CONTRIBUTION 

5 LIMITATIONS. 

6 (a) IN GENERAL.—Paragraph (1) of section 223(b) 

7 of the Internal Revenue Code of 1986 is amended by strik8 ing ‘‘the sum of the monthly’’ and all that follows through 

9 ‘‘eligible individual’’ and inserting ‘‘$10,000 ($20,000 in 

10 the case of a joint return)’’. 

11 (b) ADDITIONAL CONTRIBUTIONS.—Paragraph (3) of 

12 section 223(b) is amended to read as follows: 

13 ‘‘(3) ADDITIONAL CONTRIBUTIONS FOR INDI14 VIDUALS BETWEEN 55 AND 65.—In the case of an in15 dividual who has attained the age of 55, but has not 

16 attained the age of 66, before the close of the tax17 able year, the limitation under paragraph (1) shall 

18 be increased by $10,000.’’. 

19 (c) CONFORMING AMENDMENTS.— 

20 (1) Section 223(b) of such Code, as amended by 

21 this Act, is amended by striking paragraphs (2) and 

22 (5) and by redesignating paragraphs (3), (4), (6), 

23 and (7) as paragraphs (2), (3), (4), and (5), respec24 tively. 


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1 (2) Section 223(c)(1)(A)(ii) of such Code (as 

2 redesignated by this Act) is amended by striking 

3 ‘‘the sum of—’’ and all that follows and inserting 

4 ‘‘the dollar amount in effect under subsection 

5 (b)(1).’’. 

6 (3) Section 223(f)(1) of such Code (as redesig7 nated by this Act) is amended by striking ‘‘Each 

8 dollar amount in subsections (b)(2) and (c)(2)(A)’’ 

9 and inserting ‘‘In the case of a taxable year begin10 ning after December 31, 2013, each dollar amount 

11 in subsection (b)(1)’’. 

12 (4) Paragraph (3) of section 223(b) of such 

13 Code (as redesignated by paragraph (1)) is amended 

14 by striking the last sentence. 

15 (d) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to taxable years beginning after 

17 December 31, 2013. 

18 SEC. 104. MEDICARE ELIGIBLE INDIVIDUALS ELIGIBLE TO 

19 CONTRIBUTE TO HSA. 

20 (a) Subsection (b) of section 223 of the Internal Rev21 enue Code of 1986, as amended by this Act, is amended 

22 by striking paragraph (4). 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to taxable years beginning after 

25 December 31, 2013. 


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1 SEC. 105. HSA ROLLOVER TO MEDICARE ADVANTAGE MSA. 

2 (a) IN GENERAL.—Paragraph (2) of section 138(b) 

3 of the Internal Revenue Code of 1986 is amended by strik4 ing ‘‘or’’ at the end of subparagraph (A), by adding ‘‘or’’ 

5 at the end of subparagraph (C), and by adding at the end 

6 the following new subparagraph: 

7 ‘‘(C) a HSA rollover contribution described 

8 in subsection (c)(5),’’. 

9 (b) HSA ROLLOVER CONTRIBUTION.—Subsection (c) 

10 of section 138 of such Code is amended by adding at the 

11 end the following new paragraph: 

12 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 

13 described in this paragraph as a rollover contribu14 tion if it meets the requirements of subparagraphs 

15 (A) and (B). 

16 ‘‘(A) IN GENERAL.—The requirements of 

17 this subparagraph are met in the case of an 

18 amount paid or distributed from a health sav19 ings account to the account beneficiary to the 

20 extent the amount received is paid into a Medi21 care Advantage MSA of such beneficiary not 

22 later than the 60th day after the day on which 

23 the beneficiary receives the payment or distribu24 tion. 

25 ‘‘(B) LIMITATION.—This paragraph shall 

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1 graph (A) received by an individual from a 

2 health savings account if, at any time during 

3 the 1-year period ending on the day of such re4 ceipt, such individual received any other amount 

5 described in subparagraph (A) from a health 

6 savings account which was not includible in the 

7 individual’s gross income because of the appli8 cation of section 223(e)(5)(A).’’. 

9 (c) CONFORMING AMENDMENT.—Subparagraph (A) 

10 of section 223(e)(5) of such Code, as amended by this Act, 

11 is amended by inserting ‘‘or Medicare Advantage MSA’’ 

12 after ‘‘into a health savings account’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 December 31, 2013. 

16 SEC. 106. ONE-TIME TRANSFER OF FLEXIBLE SPENDING AR17 RANGEMENT BALANCE TO HEALTH SAVINGS 

18 ACCOUNT IN CASE OF SEPARATION FROM 

19 EMPLOYMENT. 

20 (a) IN GENERAL.—Section 125 of the Internal Rev21 enue Code of 1986 is amended by redesignating subsection 

22 (j) as subsection (k) and by inserting after subsection (i) 

23 the following new subsection: 


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1 ‘‘(j) ONE-TIME TRANSFER OF REMAINING BALANCE

2 IN HEALTH FLEXIBLE SPENDING ARRANGEMENT AFTER

3 SEPARATION FROM EMPLOYMENT.— 

4 ‘‘(1) IN GENERAL.—For purposes of this title, 

5 a plan shall not fail to be treated as a health flexible 

6 spending arrangement solely because a participant 

7 may, in connection with separation from employment 

8 with the employer, direct amounts in the partici9 pant’s account under such arrangement to be con10 tributed on behalf of the participant to a health sav11 ings account (as defined in section 223(c)) main12 tained for the benefit of the participant.’’. 

13 (b) CONFORMING AMENDMENT.—Section 

14 223(c)(1)(A) of such Code, as amended by this Act, is 

15 amended by striking ‘‘or section 220(f)(5)’’ and inserting 

16 ‘‘, section 125(j), or section 220(f)(5)’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to taxable years beginning after 

19 December 31, 2013. 

20 SEC. 107. PAYMENT OF HIGH DEDUCTIBLE HEALTH PLAN 

21 PREMIUMS FROM HSA. 

22 (a) IN GENERAL.—Subparagraph (B) of section 

23 223(c)(2) of such Code, as amended by this Act, is amend24 ed by inserting ‘‘other than a high deductible plan (as de25 fined in section 224(b)(2))’’ before the period at the end. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2013. 

4 SEC. 108. REPEAL OF DISQUALIFICATION OF EXPENSES 

5 FOR OVER-THE-COUNTER DRUGS UNDER 

6 CERTAIN ACCOUNTS AND ARRANGEMENTS. 

7 (a) HSAS.—Subparagraph (A) of section 223(c)(2) 

8 of the Internal Revenue Code of 1986, as amended by this 

9 Act, is amended by striking the last sentence. 

10 (b) ARCHER MSAS.—Subparagraph (A) of section 

11 220(d)(2) of such Code is amended by striking the last 

12 sentence. 

13 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

14 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sec15 tion 106 of such Code is amended by striking subsection 

16 (f). 

17 (d) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to expenses incurred after Decem19 ber 31, 2013. 

20 SEC. 109. PAYMENT OF LONG-TERM CARE PREMIUMS FROM 

21 HEALTH FLEXIBLE SPENDING ARRANGE22 MENT. 

23 (a) IN GENERAL.—Section 125 of the Internal Rev24 enue Code of 1986, as amended by this Act, is amended 


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1 by inserting after subsection (h) the following new sub2 section: 

3 ‘‘(i) PAYMENT OF LONG-TERM CARE PREMIUMS

4 FROM HEALTH FLEXIBLE SPENDING ARRANGEMENT.— 

5 ‘‘(1) IN GENERAL.—No payment for insurance 

6 may be made from a health flexible spending ar7 rangement. 

8 ‘‘(2) LONG-TERM CARE INSURANCE.—Para9 graph (1) shall not apply to any expense for cov10 erage under a qualified long-term care insurance 

11 contract (as defined in section 7702B(b)).’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2013. 

15 SEC. 110. ALLOWING MSA AND HSA ROLLOVER TO ADULT 

16 CHILD OF ACCOUNT HOLDER. 

17 (a) MSAS.— 

18 (1) IN GENERAL.—Subparagraph (A) of section 

19 220(f)(8) of the Internal Revenue Code of 1986 (re20 lating to treatment after death of account holder) is 

21 amended— 

22 (A) by inserting ‘‘or adult child’’ after 

23 ‘‘surviving spouse’’, 

24 (B) by inserting ‘‘or adult child, as the 

25 case may be,’’ after ‘‘the spouse’’, and 


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1 (C) by inserting ‘‘or adult child’’ after 

2 ‘‘spouse’’ in the heading thereof. 

3 (2) ADULT CHILD DEFINED.—Paragraph (8) of 

4 section 220(f) of such Code is amended by adding 

5 at the end the following new subparagraph: 

6 ‘‘(C) ADULT CHILD.—For purposes of this 

7 paragraph, the term ‘adult child’ means an in8 dividual— 

9 ‘‘(i) who is a child of the deceased in10 dividual, and 

11 ‘‘(ii) with respect to whom a deduc12 tion under section 151 would not be allow13 able to another taxpayer for a taxable year 

14 beginning in the calendar year in which 

15 such individual’s taxable year begins.’’. 

16 (b) HSAS.— 

17 (1) IN GENERAL.—Subparagraph (A) of section 

18 223(e)(8) of such Code, as amended by this Act, is 

19 amended— 

20 (A) by inserting ‘‘or adult child’’ after 

21 ‘‘surviving spouse’’, 

22 (B) by inserting ‘‘or adult child, as the 

23 case may be,’’ after ‘‘the spouse’’, and 

24 (C) by inserting ‘‘or adult child’’ after 

25 ‘‘spouse’’ in the heading thereof. 


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1 (2) ADULT CHILD DEFINED.—Paragraph (8) of 

2 section 223(e) of such Code, as amended by this 

3 Act, is amended by adding at the end the following 

4 new subparagraph: 

5 ‘‘(C) ADULT CHILD.—For purposes of this 

6 paragraph, the term ‘adult child’ has the mean7 ing given such term by section 220(f)(8)(C).’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2013. 

11 SEC. 111. DISPOSITION OF UNUSED HEALTH BENEFITS IN 

12 CAFETERIA PLANS AND FLEXIBLE SPENDING 

13 ARRANGEMENTS. 

14 (a) IN GENERAL.—Section 125 of the Internal Rev15 enue Code of 1986 is amended by redesignating sub16 sections (k) and (l) as subsections (l) and (m), respec17 tively, and by inserting after subsection (j) the following: 

18 ‘‘(k) CARRYFORWARDS OR PAYMENTS OF CERTAIN

19 UNUSED HEALTH BENEFITS.— 

20 ‘‘(1) IN GENERAL.—For purposes of this title, 

21 a plan or other arrangement shall not fail to be 

22 treated as a cafeteria plan solely because qualified 

23 benefits under such plan include a health flexible 

24 spending arrangement under which not more than 

25 $500 of unused health benefits may be— 


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1 ‘‘(A) carried forward to the succeeding 

2 plan year of such health flexible spending ar3 rangement, or 

4 ‘‘(B) paid to or on behalf of an employee 

5 as compensation as of the end of such plan year 

6 or upon the termination of, or failure to re-en7 roll in, such plan or arrangement. 

8 ‘‘(2) DISTRIBUTION OF UNUSED HEALTH BENE9 FITS ON BEHALF OF EMPLOYEE.—For purposes of 

10 paragraph (1)(B), unused health benefits paid as 

11 compensation on behalf of an employee by the em12 ployer shall be— 

13 ‘‘(A) includible in gross income and wages 

14 of the employee, whether or not a deduction for 

15 such payment is allowable under this title to the 

16 employee, and 

17 ‘‘(B) excludable from— 

18 ‘‘(i) gross income to the extent pro19 vided under section 402(e), 457(a) (with 

20 respect to contributions to an eligible de21 ferred compensation plan (as defined in 

22 section 457(b)) of an eligible employer de23 scribed in section 457(e)(1)(A)), or 220, 

24 and 


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1 ‘‘(ii) wages to the extent otherwise 

2 provided for amounts so excludable. 

3 ‘‘(3) UNUSED HEALTH BENEFITS.—For pur4 poses of this subsection, the term ‘unused health 

5 benefits’ means the excess of— 

6 ‘‘(A) the maximum amount of reimburse7 ment allowable during a plan year under a 

8 health flexible spending arrangement, over 

9 ‘‘(B) the actual amount of reimbursement 

10 during such year under such arrangement.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 subsection (a) shall apply to taxable years beginning after 

13 December 31, 2013. 

14 SEC. 112. PERMITTING BENEFICIARY CONTRIBUTIONS TO 

15 MEDICARE ADVANTAGE MSA. 

16 (a) IN GENERAL.—Subsection (b) of section 138 of 

17 such Code is amended by striking paragraph (2) and by 

18 redesignating paragraphs (3) and (4) as paragraphs (2) 

19 and (3), respectively. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2013. 


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1 SEC. 113. CHILD HEALTH SAVINGS ACCOUNT. 

2 (a) IN GENERAL.—Section 223 of the Internal Rev3 enue Code of 1986, as amended by this Act, is amended 

4 by adding at the end the following new subsection: 

5 ‘‘(h) CHILD HEALTH SAVINGS ACCOUNTS.— 

6 ‘‘(1) IN GENERAL.—In the case of an indi7 vidual, in addition to any deduction allowed under 

8 subsection (a) for any taxable year, there shall be al9 lowed as a deduction under this section an amount 

10 equal to the aggregate amount paid in cash by the 

11 taxpayer during the taxable year to a child health 

12 savings account of a child of the taxpayer. 

13 ‘‘(2) LIMITATION.—The amount taken into ac14 count under paragraph (1) with respect to each child 

15 of the taxpayer for the taxable year shall not exceed 

16 an amount equal to $3,000. 

17 ‘‘(3) CHILD HEALTH SAVINGS ACCOUNT.—For 

18 purposes of this subsection, the term ‘child health 

19 savings account’ means a health savings account 

20 designated as a child health savings account and es21 tablished for the benefit of a child of a taxpayer, but 

22 only if— 

23 ‘‘(A) such account was established for the 

24 benefit of the child before the child attains the 

25 age of 5, and 


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1 ‘‘(B) under the written governing instru2 ment creating the trust, no contribution will be 

3 accepted to the extent such contribution, when 

4 added to previous contributions to the trust for 

5 the calendar year, exceeds the dollar amount in 

6 effect under paragraph (2). 

7 ‘‘(4) TREATMENT OF ACCOUNT BEFORE AGE

8 18.—For purposes of this section, except as other9 wise provided in this subsection, a child health sav10 ings account established for the benefit of the child 

11 of a taxpayer shall be treated as a health savings ac12 count of the taxpayer until the child attains the age 

13 of 18, after which such account shall be treated as 

14 a health savings account of the child. 

15 ‘‘(5) DISTRIBUTIONS.— 

16 ‘‘(A) IN GENERAL.—In the case of a child 

17 health savings account established under this 

18 section for the benefit of a child of a tax19 payer— 

20 ‘‘(i) BEFORE AGE 18.—Any amount 

21 paid or distributed out of such account be22 fore the child has attained the age of 18, 

23 shall be included in the gross income of the 

24 taxpayer, and subparagraph (A) of sub25 section (f) shall apply (relating to addiVerDate Mar 15 2010 20:19 Jul 19, 2013 Jkt 029200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H2688.IH H2688

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1 tional tax on distributions not used for 

2 qualified medical expenses). 

3 ‘‘(ii) AGE 18 AND OLDER.—Any 

4 amount paid or distributed out of such ac5 count after the child has attained the age 

6 of 18 may only be treated as used to pay 

7 qualified medical expenses to the extent 

8 such child is not covered as a dependent 

9 under insurance (other than permitted in10 surance) of a parent. 

11 ‘‘(B) EXCEPTIONS FOR DISABILITY OR

12 DEATH OF CHILD.—If the child becomes dis13 abled within the meaning of section 72(m)(7) or 

14 dies— 

15 ‘‘(i) subparagraph (A) shall not apply 

16 to any subsequent payment or distribution, 

17 and 

18 ‘‘(ii) the taxpayer may rollover the 

19 amount in such account to an individual 

20 retirement plan of the taxpayer, to any 

21 health savings account of the taxpayer, or 

22 to any child health savings account of any 

23 other child of the taxpayer. 

24 ‘‘(C) HEALTH INSURANCE MAY BE PUR25 CHASED FROM ACCOUNT.—Subparagraph (B) 


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1 of subsection (d)(2) shall not apply to any 

2 health savings account originally established as 

3 a child health savings account. 

4 ‘‘(6) REGULATIONS.—The Secretary shall pre5 scribe such regulations as may be necessary to carry 

6 out the purposes of this subsection, including rules 

7 for determining application of this subsection in the 

8 case of legal guardians and in the case of parents 

9 of a child who file separately, are separated, or are 

10 not married.’’. 

11 (b) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2013. 

14 TITLE II—HEALTH INSURANCE 

15 PROVISIONS 

16 SEC. 201. COOPERATIVE GOVERNING OF INDIVIDUAL AND 

17 GROUP HEALTH INSURANCE COVERAGE. 

18 (a) IN GENERAL.—Title XXVII of the Public Health 

19 Service Act (42 U.S.C. 300gg et seq.) is amended by add20 ing at the end the following new part: 

21 ‘‘PART D—COOPERATIVE GOVERNING OF INDI22 VIDUAL AND GROUP HEALTH INSURANCE 

23 COVERAGE 

24 ‘‘SEC. 2795. DEFINITIONS. 

25 ‘‘In this part: 


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1 ‘‘(1) PRIMARY STATE.—The term ‘primary 

2 State’ means, with respect to individual or group 

3 health insurance coverage offered by a health insur4 ance issuer, the State designated by the issuer as 

5 the State whose covered laws shall govern the health 

6 insurance issuer in the sale of such coverage under 

7 this part. An issuer, with respect to a particular pol8 icy, may only designate one such State as its pri9 mary State with respect to all such coverage it of10 fers. Such an issuer may not change the designated 

11 primary State with respect to individual or group 

12 health insurance coverage once the policy is issued, 

13 except that such a change may be made upon re14 newal of the policy. With respect to such designated 

15 State, the issuer is deemed to be doing business in 

16 that State. 

17 ‘‘(2) SECONDARY STATE.—The term ‘secondary 

18 State’ means, with respect to individual or group 

19 health insurance coverage offered by a health insur20 ance issuer, any State that is not the primary State. 

21 In the case of a health insurance issuer that is sell22 ing a policy in, or to a resident of, a secondary 

23 State, the issuer is deemed to be doing business in 

24 that secondary State. 


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1 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

2 ‘health insurance issuer’ has the meaning given such 

3 term in section 2791(b)(2), except that such an 

4 issuer must be licensed in the primary State and be 

5 qualified to sell individual health insurance coverage 

6 in that State. 

7 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV8 ERAGE.—The term ‘individual health insurance cov9 erage’ means health insurance coverage offered in 

10 the individual market, as defined in section 

11 2791(e)(1). 

12 ‘‘(5) GROUP HEALTH INSURANCE COVERAGE.— 

13 The term ‘group health insurance coverage’ has the 

14 meaning given such term in 2791(b)(4). 

15 ‘‘(6) APPLICABLE STATE AUTHORITY.—The 

16 term ‘applicable State authority’ means, with respect 

17 to a health insurance issuer in a State, the State in18 surance commissioner or official or officials des19 ignated by the State to enforce the requirements of 

20 this title for the State with respect to the issuer. 

21 ‘‘(7) HAZARDOUS FINANCIAL CONDITION.—The 

22 term ‘hazardous financial condition’ means that, 

23 based on its present or reasonably anticipated finan24 cial condition, a health insurance issuer is unlikely 

25 to be able— 


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1 ‘‘(A) to meet obligations to policyholders 

2 with respect to known claims and reasonably 

3 anticipated claims; or 

4 ‘‘(B) to pay other obligations in the normal 

5 course of business. 

6 ‘‘(8) COVERED LAWS.— 

7 ‘‘(A) IN GENERAL.—The term ‘covered 

8 laws’ means the laws, rules, regulations, agree9 ments, and orders governing the insurance busi10 ness pertaining to— 

11 ‘‘(i) individual or group health insur12 ance coverage issued by a health insurance 

13 issuer; 

14 ‘‘(ii) the offer, sale, rating (including 

15 medical underwriting), renewal, and 

16 issuance of individual or group health in17 surance coverage to an individual; 

18 ‘‘(iii) the provision to an individual in 

19 relation to individual or group health in20 surance coverage of health care and insur21 ance related services; 

22 ‘‘(iv) the provision to an individual in 

23 relation to individual or group health in24 surance coverage of management, operVerDate Mar 15 2010 20:19 Jul 19, 2013 Jkt 029200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H2688.IH H2688

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1 ations, and investment activities of a 

2 health insurance issuer; and 

3 ‘‘(v) the provision to an individual in 

4 relation to individual or group health in5 surance coverage of loss control and claims 

6 administration for a health insurance 

7 issuer with respect to liability for which 

8 the issuer provides insurance. 

9 ‘‘(B) EXCEPTION.—Such term does not in10 clude any law, rule, regulation, agreement, or 

11 order governing the use of care or cost manage12 ment techniques, including any requirement re13 lated to provider contracting, network access or 

14 adequacy, health care data collection, or quality 

15 assurance. 

16 ‘‘(9) STATE.—The term ‘State’ means the 50 

17 States and includes the District of Columbia, Puerto 

18 Rico, the Virgin Islands, Guam, American Samoa, 

19 and the Northern Mariana Islands. 

20 ‘‘(10) UNFAIR CLAIMS SETTLEMENT PRAC21 TICES.—The term ‘unfair claims settlement prac22 tices’ means only the following practices: 

23 ‘‘(A) Knowingly misrepresenting to claim24 ants and insured individuals relevant facts or 

25 policy provisions relating to coverage at issue. 


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1 ‘‘(B) Failing to acknowledge with reason2 able promptness pertinent communications with 

3 respect to claims arising under policies. 

4 ‘‘(C) Failing to adopt and implement rea5 sonable standards for the prompt investigation 

6 and settlement of claims arising under policies. 

7 ‘‘(D) Failing to effectuate prompt, fair, 

8 and equitable settlement of claims submitted in 

9 which liability has become reasonably clear. 

10 ‘‘(E) Refusing to pay claims without con11 ducting a reasonable investigation. 

12 ‘‘(F) Failing to affirm or deny coverage of 

13 claims within a reasonable period of time after 

14 having completed an investigation related to 

15 those claims. 

16 ‘‘(G) A pattern or practice of compelling 

17 insured individuals or their beneficiaries to in18 stitute suits to recover amounts due under its 

19 policies by offering substantially less than the 

20 amounts ultimately recovered in suits brought 

21 by them. 

22 ‘‘(H) A pattern or practice of attempting 

23 to settle or settling claims for less than the 

24 amount that a reasonable person would believe 

25 the insured individual or his or her beneficiary 


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1 was entitled by reference to written or printed 

2 advertising material accompanying or made 

3 part of an application. 

4 ‘‘(I) Attempting to settle or settling claims 

5 on the basis of an application that was materi6 ally altered without notice to, or knowledge or 

7 consent of, the insured. 

8 ‘‘(J) Failing to provide forms necessary to 

9 present claims within 15 calendar days of a re10 quest with reasonable explanations regarding 

11 their use. 

12 ‘‘(K) Attempting to cancel a policy in less 

13 time than that prescribed in the policy or by the 

14 law of the primary State. 

15 ‘‘(11) FRAUD AND ABUSE.—The term ‘fraud 

16 and abuse’ means an act or omission committed by 

17 a person who, knowingly and with intent to defraud, 

18 commits, or conceals any material information con19 cerning, one or more of the following: 

20 ‘‘(A) Presenting, causing to be presented 

21 or preparing with knowledge or belief that it 

22 will be presented to or by an insurer, a rein23 surer, broker or its agent, false information as 

24 part of, in support of or concerning a fact ma25 terial to one or more of the following: 


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1 ‘‘(i) An application for the issuance or 

2 renewal of an insurance policy or reinsur3 ance contract. 

4 ‘‘(ii) The rating of an insurance policy 

5 or reinsurance contract. 

6 ‘‘(iii) A claim for payment or benefit 

7 pursuant to an insurance policy or reinsur8 ance contract. 

9 ‘‘(iv) Premiums paid on an insurance 

10 policy or reinsurance contract. 

11 ‘‘(v) Payments made in accordance 

12 with the terms of an insurance policy or 

13 reinsurance contract. 

14 ‘‘(vi) A document filed with the com15 missioner or the chief insurance regulatory 

16 official of another jurisdiction. 

17 ‘‘(vii) The financial condition of an in18 surer or reinsurer. 

19 ‘‘(viii) The formation, acquisition, 

20 merger, reconsolidation, dissolution or 

21 withdrawal from one or more lines of in22 surance or reinsurance in all or part of a 

23 State by an insurer or reinsurer. 

24 ‘‘(ix) The issuance of written evidence 

25 of insurance. 


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1 ‘‘(x) The reinstatement of an insur2 ance policy. 

3 ‘‘(B) Solicitation or acceptance of new or 

4 renewal insurance risks on behalf of an insurer 

5 reinsurer or other person engaged in the busi6 ness of insurance by a person who knows or 

7 should know that the insurer or other person 

8 responsible for the risk is insolvent at the time 

9 of the transaction. 

10 ‘‘(C) Transaction of the business of insur11 ance in violation of laws requiring a license, cer12 tificate of authority or other legal authority for 

13 the transaction of the business of insurance. 

14 ‘‘(D) Attempt to commit, aiding or abet15 ting in the commission of, or conspiracy to com16 mit the acts or omissions specified in this para17 graph. 

18 ‘‘SEC. 2796. APPLICATION OF LAW. 

19 ‘‘(a) IN GENERAL.—The covered laws of the primary 

20 State shall apply to individual and group health insurance 

21 coverage offered by a health insurance issuer in the pri22 mary State and in any secondary State, but only if the 

23 coverage and issuer comply with the conditions of this sec24 tion with respect to the offering of coverage in any secVerDate Mar 15 2010 20:19 Jul 19, 2013 Jkt 029200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H2688.IH H2688

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1 ondary State and only if the covered laws of the primary 

2 State— 

3 ‘‘(1) do not apply any age limitations with re4 spect to who may purchase such coverage that is a 

5 high deductible health plan; and 

6 ‘‘(2) do not require such coverage that is a high 

7 deductible health plan to provide for any specific 

8 type of coverage. 

9 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC10 ONDARY STATE.—Except as provided in this section, a 

11 health insurance issuer with respect to its offer, sale, rat12 ing (including medical underwriting), renewal, and 

13 issuance of individual or group health insurance coverage 

14 in any secondary State is exempt from any covered laws 

15 of the secondary State (and any rules, regulations, agree16 ments, or orders sought or issued by such State under or 

17 related to such covered laws) to the extent that such laws 

18 would— 

19 ‘‘(1) make unlawful, or regulate, directly or in20 directly, the operation of the health insurance issuer 

21 operating in the secondary State, except that any 

22 secondary State may require such an issuer— 

23 ‘‘(A) to pay, on a nondiscriminatory basis, 

24 applicable premium and other taxes (including 

25 high risk pool assessments) which are levied on 


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1 insurers and surplus lines insurers, brokers, or 

2 policyholders under the laws of the State; 

3 ‘‘(B) to register with and designate the 

4 State insurance commissioner as its agent solely 

5 for the purpose of receiving service of legal doc6 uments or process; 

7 ‘‘(C) to submit to an examination of its fi8 nancial condition by the State insurance com9 missioner in any State in which the issuer is 

10 doing business to determine the issuer’s finan11 cial condition, if— 

12 ‘‘(i) the State insurance commissioner 

13 of the primary State has not done an ex14 amination within the period recommended 

15 by the National Association of Insurance 

16 Commissioners; and 

17 ‘‘(ii) any such examination is con18 ducted in accordance with the examiners’ 

19 handbook of the National Association of 

20 Insurance Commissioners and is coordi21 nated to avoid unjustified duplication and 

22 unjustified repetition; 

23 ‘‘(D) to comply with a lawful order 

24 issued— 


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1 ‘‘(i) in a delinquency proceeding com2 menced by the State insurance commis3 sioner if there has been a finding of finan4 cial impairment under subparagraph (C); 

5 or 

6 ‘‘(ii) in a voluntary dissolution pro7 ceeding; 

8 ‘‘(E) to comply with an injunction issued 

9 by a court of competent jurisdiction, upon a pe10 tition by the State insurance commissioner al11 leging that the issuer is in hazardous financial 

12 condition; 

13 ‘‘(F) to participate, on a nondiscriminatory 

14 basis, in any insurance insolvency guaranty as15 sociation or similar association to which a 

16 health insurance issuer in the State is required 

17 to belong; 

18 ‘‘(G) to comply with any State law regard19 ing fraud and abuse (as defined in section 

20 2795(10)), except that if the State seeks an in21 junction regarding the conduct described in this 

22 subparagraph, such injunction must be obtained 

23 from a court of competent jurisdiction; 


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1 ‘‘(H) to comply with any State law regard2 ing unfair claims settlement practices (as de3 fined in section 2795(9)); or 

4 ‘‘(I) to comply with the applicable require5 ments for independent review under section 

6 2798 with respect to coverage offered in the 

7 State; 

8 ‘‘(2) require any individual or group health in9 surance coverage issued by the issuer to be counter10 signed by an insurance agent or broker residing in 

11 that secondary State; 

12 ‘‘(3) apply any age limitations with respect to 

13 who may purchase such coverage that is a high de14 ductible health plan; 

15 ‘‘(4) require such coverage that is a high de16 ductible health plan to provide for any specific type 

17 of coverage; or 

18 ‘‘(5) otherwise discriminate against the issuer 

19 issuing insurance in both the primary State and in 

20 any secondary State. 

21 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A 

22 health insurance issuer shall provide the following notice, 

23 in 12-point bold type, in any insurance coverage offered 

24 in a secondary State under this part by such a health in25 surance issuer and at renewal of the policy, with the 5 


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1 blank spaces therein being appropriately filled with the 

2 name of the health insurance issuer, the name of primary 

3 State, the name of the secondary State, the name of the 

4 secondary State, and the name of the secondary State, re5 spectively, for the coverage concerned: ‘Notice: This policy 

6 is issued by llll and is governed by the laws and 

7 regulations of the State of llll, and it has met all 

8 the laws of that State as determined by that State’s De9 partment of Insurance. This policy may be less expensive 

10 than others because it is not subject to all of the insurance 

11 laws and regulations of the State of lllll, includ12 ing coverage of some services or benefits mandated by the 

13 law of the State of lllll. Additionally, this policy 

14 is not subject to all of the consumer protection laws or 

15 restrictions on rate changes of the State of lllll. 

16 As with all insurance products, before purchasing this pol17 icy, you should carefully review the policy and determine 

18 what health care services the policy covers and what bene19 fits it provides, including any exclusions, limitations, or 

20 conditions for such services or benefits.’. 

21 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

22 AND PREMIUM INCREASES.— 

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion, a health insurance issuer that provides indi25 vidual or group health insurance coverage to an indiVerDate Mar 15 2010 20:19 Jul 19, 2013 Jkt 029200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\H2688.IH H2688

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1 vidual under this part in a primary or secondary 

2 State may not upon renewal— 

3 ‘‘(A) move or reclassify the individual in4 sured under the health insurance coverage from 

5 the class such individual is in at the time of 

6 issue of the contract based on the health status7 related factors of the individual; or 

8 ‘‘(B) increase the premiums assessed the 

9 individual for such coverage based on a health 

10 status-related factor or change of a health sta11 tus-related factor or the past or prospective 

12 claim experience of the insured individual. 

13 ‘‘(2) CONSTRUCTION.—Nothing in paragraph 

14 (1) shall be construed to prohibit a health insurance 

15 issuer— 

16 ‘‘(A) from terminating or discontinuing 

17 coverage or a class of coverage in accordance 

18 with subsections (b) and (c) of section 2742; 

19 ‘‘(B) from raising premium rates for all 

20 policyholders within a class based on claims ex21 perience; 

22 ‘‘(C) from changing premiums or offering 

23 discounted premiums to individuals who engage 

24 in wellness activities at intervals prescribed by 


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1 the issuer, if such premium changes or incen2 tives— 

3 ‘‘(i) are disclosed to the consumer in 

4 the insurance contract; 

5 ‘‘(ii) are based on specific wellness ac6 tivities that are not applicable to all indi7 viduals; and 

8 ‘‘(iii) are not obtainable by all individ9 uals to whom coverage is offered; 

10 ‘‘(D) from reinstating lapsed coverage; or 

11 ‘‘(E) from retroactively adjusting the rates 

12 charged an insured individual if the initial rates 

13 were set based on material misrepresentation by 

14 the individual at the time of issue. 

15 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY

16 STATE.—A health insurance issuer may not offer for sale 

17 individual or group health insurance coverage in a sec18 ondary State unless that coverage is currently offered for 

19 sale in the primary State. 

20 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR

21 HEALTH INSURANCE ISSUERS.—Any State may require 

22 that a person acting, or offering to act, as an agent or 

23 broker for a health insurance issuer with respect to the 

24 offering of individual or group health insurance coverage 

25 obtain a license from that State, with commissions or 


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1 other compensation subject to the provisions of the laws 

2 of that State, except that a State may not impose any 

3 qualification or requirement which discriminates against 

4 a nonresident agent or broker. 

5 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN6 SURANCE COMMISSIONER.—Each health insurance issuer 

7 issuing individual or group health insurance coverage in 

8 both primary and secondary States shall submit— 

9 ‘‘(1) to the insurance commissioner of each 

10 State in which it intends to offer such coverage, be11 fore it may offer individual or group health insur12 ance coverage in such State— 

13 ‘‘(A) a copy of the plan of operation or fea14 sibility study or any similar statement of the 

15 policy being offered and its coverage (which 

16 shall include the name of its primary State and 

17 its principal place of business); 

18 ‘‘(B) written notice of any change in its 

19 designation of its primary State; and 

20 ‘‘(C) written notice from the issuer of the 

21 issuer’s compliance with all the laws of the pri22 mary State; and 

23 ‘‘(2) to the insurance commissioner of each sec24 ondary State in which it offers individual or group 

25 health insurance coverage, a copy of the issuer’s 


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1 quarterly financial statement submitted to the pri2 mary State, which statement shall be certified by an 

3 independent public accountant and contain a state4 ment of opinion on loss and loss adjustment expense 

5 reserves made by— 

6 ‘‘(A) a member of the American Academy 

7 of Actuaries; or 

8 ‘‘(B) a qualified loss reserve specialist. 

9 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 

10 Nothing in this section shall be construed to affect the 

11 authority of any Federal or State court to enjoin— 

12 ‘‘(1) the solicitation or sale of individual or 

13 group health insurance coverage by a health insur14 ance issuer to any person or group who is not eligi15 ble for such insurance; or 

16 ‘‘(2) the solicitation or sale of individual or 

17 group health insurance coverage that violates the re18 quirements of the law of a secondary State which 

19 are described in subparagraphs (A) through (H) of 

20 section 2796(b)(1). 

21 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD22 MINISTRATIVE ACTION.—Nothing in this section shall be 

23 construed to affect the authority of any State to enjoin 

24 conduct in violation of that State’s laws described in sec25 tion 2796(b)(1). 


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1 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 

2 ‘‘(1) IN GENERAL.—Subject to the provisions of 

3 subsection (b)(1)(G) (relating to injunctions) and 

4 paragraph (2), nothing in this section shall be con5 strued to affect the authority of any State to make 

6 use of any of its powers to enforce the laws of such 

7 State with respect to which a health insurance issuer 

8 is not exempt under subsection (b). 

9 ‘‘(2) COURTS OF COMPETENT JURISDICTION.— 

10 If a State seeks an injunction regarding the conduct 

11 described in paragraphs (1) and (2) of subsection 

12 (h), such injunction must be obtained from a Fed13 eral or State court of competent jurisdiction. 

14 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 

15 section shall affect the authority of any State to bring ac16 tion in any Federal or State court. 

17 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 

18 this section shall be construed to affect the applicability 

19 of State laws generally applicable to persons or corpora20 tions. 

21 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

22 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

23 health insurance issuer is offering coverage in a primary 

24 State that does not accommodate residents of secondary 

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1 dents of a secondary State, and the issuer is offering cov2 erage under this part in such secondary State which has 

3 not adopted a qualified high risk pool as its acceptable 

4 alternative mechanism (as defined in section 2744(c)(2)), 

5 the issuer shall, with respect to any individual or group 

6 health insurance coverage offered in a secondary State 

7 under this part, comply with the guaranteed availability 

8 requirements for eligible individuals in section 2741. 

9 ‘‘(n) NO MANDATED BENEFIT COVERAGE REQUIRE10 MENTS.—Notwithstanding any other provision of law, a 

11 health insurance issuer offering individual or group health 

12 insurance coverage in a primary State and in any sec13 ondary State in accordance with this part (and any cov14 erage so offered) shall not be subject to any Federal law 

15 that would otherwise— 

16 ‘‘(1) apply any age limitations with respect to 

17 who may purchase such coverage that is a high de18 ductible health plan; or 

19 ‘‘(2) require such coverage that is a high de20 ductible health plan to provide for any specific type 

21 of coverage. 


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1 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 

2 BEFORE ISSUER MAY SELL INTO SECONDARY 

3 STATES. 

4 ‘‘A health insurance issuer may not offer, sell, or 

5 issue individual or group health insurance coverage in a 

6 secondary State if the State insurance commissioner does 

7 not use a risk-based capital formula for the determination 

8 of capital and surplus requirements for all health insur9 ance issuers. 

10 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE11 DURES. 

12 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur13 ance issuer may not offer, sell, or issue individual or group 

14 health insurance coverage in a secondary State under the 

15 provisions of this title unless— 

16 ‘‘(1) both the secondary State and the primary 

17 State have legislation or regulations in place estab18 lishing an independent review process for individuals 

19 who are covered by individual health insurance cov20 erage or group health insurance offered by a health 

21 insurance issuer, respectively, or 

22 ‘‘(2) in any case in which the requirements of 

23 subparagraph (A) are not met with respect to the ei24 ther of such States, the issuer provides an inde25 pendent review mechanism substantially identical (as 

26 determined by the applicable State authority of such 


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1 State) to that prescribed in the ‘Health Carrier Ex2 ternal Review Model Act’ of the National Association 

3 of Insurance Commissioners for all individuals who 

4 purchase insurance coverage under the terms of this 

5 part, except that, under such mechanism, the review 

6 is conducted by an independent medical reviewer, or 

7 a panel of such reviewers, with respect to whom the 

8 requirements of subsection (b) are met. 

9 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

10 REVIEWERS.—In the case of any independent review 

11 mechanism referred to in subsection (a)(2): 

12 ‘‘(1) IN GENERAL.—In referring a denial of a 

13 claim to an independent medical reviewer, or to any 

14 panel of such reviewers, to conduct independent 

15 medical review, the issuer shall ensure that— 

16 ‘‘(A) each independent medical reviewer 

17 meets the qualifications described in paragraphs 

18 (2) and (3); 

19 ‘‘(B) with respect to each review, each re20 viewer meets the requirements of paragraph (4) 

21 and the reviewer, or at least 1 reviewer on the 

22 panel, meets the requirements described in 

23 paragraph (5); and 


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1 ‘‘(C) compensation provided by the issuer 

2 to each reviewer is consistent with paragraph 

3 (6). 

4 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde5 pendent medical reviewer shall be a physician 

6 (allopathic or osteopathic) or health care profes7 sional who— 

8 ‘‘(A) is appropriately credentialed or li9 censed in 1 or more States to deliver health 

10 care services; and 

11 ‘‘(B) typically treats the condition, makes 

12 the diagnosis, or provides the type of treatment 

13 under review. 

14 ‘‘(3) INDEPENDENCE.— 

15 ‘‘(A) IN GENERAL.—Subject to subpara16 graph (B), each independent medical reviewer 

17 in a case shall— 

18 ‘‘(i) not be a related party (as defined 

19 in paragraph (7)); 

20 ‘‘(ii) not have a material familial, fi21 nancial, or professional relationship with 

22 such a party; and 

23 ‘‘(iii) not otherwise have a conflict of 

24 interest with such a party (as determined 

25 under regulations). 


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1 ‘‘(B) EXCEPTION.—Nothing in subpara2 graph (A) shall be construed to— 

3 ‘‘(i) prohibit an individual, solely on 

4 the basis of affiliation with the issuer, 

5 from serving as an independent medical re6 viewer if— 

7 ‘‘(I) a non-affiliated individual is 

8 not reasonably available; 

9 ‘‘(II) the affiliated individual is 

10 not involved in the provision of items 

11 or services in the case under review; 

12 ‘‘(III) the fact of such an affili13 ation is disclosed to the issuer and the 

14 enrollee (or authorized representative) 

15 and neither party objects; and 

16 ‘‘(IV) the affiliated individual is 

17 not an employee of the issuer and 

18 does not provide services exclusively or 

19 primarily to or on behalf of the issuer; 

20 ‘‘(ii) prohibit an individual who has 

21 staff privileges at the institution where the 

22 treatment involved takes place from serv23 ing as an independent medical reviewer 

24 merely on the basis of such affiliation if 

25 the affiliation is disclosed to the issuer and 


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1 the enrollee (or authorized representative), 

2 and neither party objects; or 

3 ‘‘(iii) prohibit receipt of compensation 

4 by an independent medical reviewer from 

5 an entity if the compensation is provided 

6 consistent with paragraph (6). 

7 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

8 IN SAME FIELD.— 

9 ‘‘(A) IN GENERAL.—In a case involving 

10 treatment, or the provision of items or serv11 ices— 

12 ‘‘(i) by a physician, a reviewer shall be 

13 a practicing physician (allopathic or osteo14 pathic) of the same or similar specialty, as 

15 a physician who, acting within the appro16 priate scope of practice within the State in 

17 which the service is provided or rendered, 

18 typically treats the condition, makes the 

19 diagnosis, or provides the type of treat20 ment under review; or 

21 ‘‘(ii) by a non-physician health care 

22 professional, the reviewer, or at least 1 

23 member of the review panel, shall be a 

24 practicing non-physician health care pro25 fessional of the same or similar specialty 


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1 as the non-physician health care profes2 sional who, acting within the appropriate 

3 scope of practice within the State in which 

4 the service is provided or rendered, typi5 cally treats the condition, makes the diag6 nosis, or provides the type of treatment 

7 under review. 

8 ‘‘(B) PRACTICING DEFINED.—For pur9 poses of this paragraph, the term ‘practicing’ 

10 means, with respect to an individual who is a 

11 physician or other health care professional, that 

12 the individual provides health care services to 

13 individual patients on average at least 2 days 

14 per week. 

15 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

16 external review relating to a child, a reviewer shall 

17 have expertise under paragraph (2) in pediatrics. 

18 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA19 TION.—Compensation provided by the issuer to an 

20 independent medical reviewer in connection with a 

21 review under this section shall— 

22 ‘‘(A) not exceed a reasonable level; and 

23 ‘‘(B) not be contingent on the decision ren24 dered by the reviewer. 


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1 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

2 of this section, the term ‘related party’ means, with 

3 respect to a denial of a claim under a coverage relat4 ing to an enrollee, any of the following: 

5 ‘‘(A) The issuer involved, or any fiduciary, 

6 officer, director, or employee of the issuer. 

7 ‘‘(B) The enrollee (or authorized represent8 ative). 

9 ‘‘(C) The health care professional that pro10 vides the items or services involved in the de11 nial. 

12 ‘‘(D) The institution at which the items or 

13 services (or treatment) involved in the denial 

14 are provided. 

15 ‘‘(E) The manufacturer of any drug or 

16 other item that is included in the items or serv17 ices involved in the denial. 

18 ‘‘(F) Any other party determined under 

19 any regulations to have a substantial interest in 

20 the denial involved. 

21 ‘‘(8) DEFINITIONS.—For purposes of this sub22 section: 

23 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

24 means, with respect to health insurance cov25 erage offered by a health insurance issuer, an 


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1 individual enrolled with the issuer to receive 

2 such coverage. 

3 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

4 term ‘health care professional’ means an indi5 vidual who is licensed, accredited, or certified 

6 under State law to provide specified health care 

7 services and who is operating within the scope 

8 of such licensure, accreditation, or certification. 

9 ‘‘SEC. 2799. ENFORCEMENT. 

10 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

11 respect to specific individual or group health insurance 

12 coverage the primary State for such coverage has sole ju13 risdiction to enforce the primary State’s covered laws in 

14 the primary State and any secondary State. 

15 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

16 subsection (a) shall be construed to affect the authority 

17 of a secondary State to enforce its laws as set forth in 

18 the exception specified in section 2796(b)(1). 

19 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

20 initiated by the applicable secondary State authority, the 

21 court of competent jurisdiction shall apply the covered 

22 laws of the primary State. 

23 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

24 of individual health insurance coverage offered in a sec25 ondary State, or group health insurance coverage offered 


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1 by a health insurance issuer in a secondary State, that 

2 fails to comply with the covered laws of the primary State, 

3 the applicable State authority of the secondary State may 

4 notify the applicable State authority of the primary 

5 State.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 subsection (a) shall apply to health insurance coverage of8 fered, issued, or sold after the date that is one year after 

9 the date of the enactment of this Act. 

10 (c) GAO ONGOING STUDY AND REPORTS.— 

11 (1) STUDY.—The Comptroller General of the 

12 United States shall conduct an ongoing study con13 cerning the effect of the amendment made by sub14 section (a) on— 

15 (A) the number of uninsured and under-in16 sured; 

17 (B) the availability and cost of health in18 surance policies for individuals with pre-existing 

19 medical conditions; 

20 (C) the availability and cost of health in21 surance policies generally; 

22 (D) the elimination or reduction of dif23 ferent types of benefits under health insurance 

24 policies offered in different States; and 


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1 (E) cases of fraud or abuse relating to 

2 health insurance coverage offered under such 

3 amendment and the resolution of such cases. 

4 (2) ANNUAL REPORTS.—The Comptroller Gen5 eral shall submit to Congress an annual report, after 

6 the end of each of the 5 years following the effective 

7 date of the amendment made by subsection (a), on 

8 the ongoing study conducted under paragraph (1). 

9 SEC. 202. REAUTHORIZATION OF THE PREEXISTING CONDI10 TION INSURANCE PLAN (PCIP) PROGRAM. 

11 (a) IN GENERAL.—The PCIP program is hereby re12 authorized through December 31, 2016, and shall con13 tinue in effect subject to the provisions of this section. 

14 (b) ELIMINATION OF REQUIREMENT FOR NONCOV15 ERAGE FOR 6 MONTHS TO BE ELIGIBLE INDIVIDUAL.— 

16 The condition under paragraph (2) of section 1101(d) of 

17 the Patient Protection and Affordable Care Act (42 

18 U.S.C. 18001(d)) shall not apply to the reauthorized 

19 PCIP program. 

20 (c) FUNDING.— 

21 (1) INITIAL FUNDING.—Initial funding for the 

22 reauthorized PCIP program shall be derived from 

23 the following: 

24 (A) Funding that was available in the Pa25 tient-Centered Outcomes Research Institute 


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1 Trust Fund under section 9511 of the Internal 

2 Revenue Code of 1986 on the day before the 

3 date of the enactment of this Act. 

4 (B) Any unobligated funds in the Preven5 tion and Public Health Fund (under section 

6 4002 of Public Law 111–148, 42 U.S.C. 300u– 

7 11) attributable to fiscal year 2013 as of the 

8 day before the date of the enactment of this 

9 Act. 

10 (2) SUBSEQUENT FUNDING.—Subsequent fund11 ing for the reauthorized PCIP program shall be de12 rived from any funds that would otherwise be made 

13 available to such Prevention and Public Health 

14 Fund for fiscal years 2014 through 2016. 

15 (3) TRANSFER.—Funding under the previous 

16 paragraphs shall be transferred to an account within 

17 the Department of Health and Human Services that 

18 provided funding, as of the day before the date of 

19 the enactment of this Act, to carry out the PCIP 

20 program. 

21 (d) DEFINITIONS.—In this section: 

22 (1) The term ‘‘PCIP program’’ means the Pre23 existing Condition Insurance Plan (PCIP) Program 

24 established as of the day before the date of the enVerDate Mar 15 2010 20:19 Jul 19, 2013 Jkt 029200 PO 00000 Frm 00057 Fmt 6652 Sfmt 6201 E:\BILLS\H2688.IH H2688

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1 actment of this Act under section 1101 of Public 

2 Law 111–148 (42 U.S.C. 18001). 

3 (2) The term ‘‘reauthorized PCIP program’’ 

4 means the PCIP program as reauthorized under this 

5 section. 

Æ 


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