II 

115TH CONGRESS 

1ST SESSION S. 191 

To improve patient choice by allowing States to adopt market-based alternatives to the Affordable Care Act that increase access to affordable 

health insurance and reduce costs while ensuring important consumer 

protections and improving patient care. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 23, 2017 

Mr. CASSIDY (for himself, Ms. COLLINS, Mrs. CAPITO, and Mr. ISAKSON) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To improve patient choice by allowing States to adopt market-based alternatives to the Affordable Care Act that 

increase access to affordable health insurance and reduce 

costs while ensuring important consumer protections and 

improving patient care. 

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 ‘‘Patient Freedom Act of 2017’’. 

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

7 this Act is as follows: 


SSpencer on DSK4SPTVN1PROD with BILLS
2 

•S 191 IS

Sec. 1. Short title; table of contents. 

TITLE I—HEALTH REFORM 

Sec. 100. Definitions. 

Subtitle A—Insurance Market Reform 

Sec. 101. Ending the ‘‘one size fits all’’ ACA approach; continuing consumer 

protection policies by covering adult children, protecting individuals with preexisting conditions, and not applying lifetime or 

annual limits. 

Sec. 102. State health insurance options. 

Sec. 103. State alternative option. 

Sec. 104. Computation of monthly Roth HSA deposit amount for deposit qualifying residents. 

Sec. 105. State options for improved access to health insurance coverage in 

each State. 

Sec. 106. State flexibility in ensuring orderly health insurance market outside 

of an Exchange. 

Sec. 107. Expanded access and patient protections. 

Sec. 108. Application of health savings accounts in relation to Medicaid. 

Subtitle B—Provider Price Transparency 

Sec. 121. Ensuring access to emergency services without excessive charges for 

out-of-network services. 

TITLE II—REFORM OF TAX PROVISIONS RELATING TO HEALTH 

CARE 

Subtitle A—Health Savings Accounts 

Sec. 201. Transition to non-deductible HSAs. 

Sec. 202. Treatment of direct primary care. 

Sec. 203. Treatment of HSA after death of account beneficiary. 

Subtitle B—Health Care Tax Credits 

Sec. 211. Limited application of PPACA health premium credit. 

Sec. 212. New Roth HSA credit. 

1 TITLE I—HEALTH REFORM 

2 SEC. 100. DEFINITIONS. 

3 In this title: 

4 (1) PATIENT-GRANT ELECTING STATE.—The 

5 term ‘‘patient-grant electing State’’ means an elect6 ing State that specifies under section 103(a)(3)(B) 

7 that it will carry out section 103(b) itself (and not 


SSpencer on DSK4SPTVN1PROD with BILLS
3 

•S 191 IS

1 to have section 103(b) carried out by means of the 

2 credit under section 36C of the Internal Revenue 

3 Code of 1986). 

4 (2) BUDGET NEUTRAL.—The term ‘‘budget 

5 neutral’’ with respect to expenditures provided for in 

6 this Act, means the same amount of expenditures as 

7 are provided for under the Patient Protection and 

8 Affordable Care Act (Public Law 111–148). 

9 (3) CHIP.—The term ‘‘CHIP’’ means the Chil10 dren’s Health Insurance Program established under 

11 title XXI of the Social Security Act (42 U.S.C. 1396 

12 et seq.). 

13 (4) CREDITABLE COVERAGE.—The term ‘‘cred14 itable coverage’’ has the meaning given such term in 

15 section 2704(c)(1) of the Public Health Service Act 

16 (42 U.S.C. 300gg–3(c)(1)), as in effect as of the day 

17 before the date of the enactment of this Act. 

18 (5) DEFAULT HEALTH INSURANCE COV19 ERAGE.—The term ‘‘default health insurance cov20 erage’’ has the meaning given such term in section 

21 107(c)(2). 

22 (6) DEPOSIT QUALIFYING RESIDENT.—The 

23 term ‘‘deposit qualifying resident’’ has the meaning 

24 given such term in section 103(b)(2). 


SSpencer on DSK4SPTVN1PROD with BILLS
4 

•S 191 IS

1 (7) ELECTING STATE.—The term ‘‘electing 

2 State’’ means a State that elects under section 

3 102(a)(2) the alternative option described in section 

4 103. 

5 (8) HEALTH INSURANCE COVERAGE.—The term 

6 ‘‘health insurance coverage’’ has the meaning given 

7 such term in section 2791(b)(1) of the Public Health 

8 Service Act (42 U.S.C. 300gg–91(b)(1)). 

9 (9) HEALTH SAVINGS DEPOSIT.—The term 

10 ‘‘health savings deposit’’ means a deposit made into 

11 a Roth HSA pursuant to section 103. 

12 (10) MEDICAID.—The term ‘‘Medicaid’’ means 

13 the program under title XIX of the Social Security 

14 Act (42 U.S.C. 1396 et seq.). 

15 (11) MEDICARE.—The term ‘‘Medicare’’ means 

16 the program under part A or B of title XVIII of the 

17 Social Security Act (42 U.S.C. 1395 et seq.). 

18 (12) PPACA.—The term ‘‘PPACA’’ means the 

19 Patient Protection and Affordable Care Act (Public 

20 Law 111–148), as in effect on the day before the 

21 date of the enactment of this Act, unless otherwise 

22 specified. 

23 (13) QUALIFIED HEALTH PLAN COVERAGE.— 

24 The term ‘‘qualified health plan coverage’’ means, 

25 with respect to residents of a State, health insurance 


SSpencer on DSK4SPTVN1PROD with BILLS
5 

•S 191 IS

1 coverage that meets applicable standards under 

2 State law, which standards need not be the same as 

3 that previously required of qualified health plans 

4 under title I of PPACA, and includes a high deduct5 ible health plan (as defined in section 223(c)(2) of 

6 the Internal Revenue Code of 1986) and includes 

7 coverage under a group health plan. 

8 (14) QUALIFIED RESIDENT.—The term ‘‘quali9 fied resident’’ means, with respect to a State for a 

10 month, an individual who is a resident of the State 

11 as of the first day of the month and is a citizen or 

12 national of the United States or otherwise lawfully 

13 residing in the State under color of law. 

14 (15) ROTH HEALTH SAVINGS ACCOUNT; ROTH

15 HSA.—The terms ‘‘Roth health savings account’’ and 

16 ‘‘Roth HSA’’ mean a Roth HSA established under 

17 section 530A of the Internal Revenue Code of 1986. 

18 (16) SECRETARY.—The term ‘‘Secretary’’ 

19 means the Secretary of Health and Human Services. 

20 (17) STATE.—The term ‘‘State’’ means the 50 

21 States and the District of Columbia. 

22 (18) UNINSURED.—The term ‘‘uninsured’’ 

23 means, with respect to an individual, that the indi24 vidual does not have creditable coverage. 


SSpencer on DSK4SPTVN1PROD with BILLS
6 

•S 191 IS

1 Subtitle A—Insurance Market 

2 Reform 

3 SEC. 101. ENDING THE ‘‘ONE SIZE FITS ALL’’ ACA AP4 PROACH; CONTINUING CONSUMER PROTEC5 TION POLICIES BY COVERING ADULT CHIL6 DREN, PROTECTING INDIVIDUALS WITH PRE7 EXISTING CONDITIONS, AND NOT APPLYING 

8 LIFETIME OR ANNUAL LIMITS. 

9 (a) IN GENERAL.—Subject to subsections (b) and (c), 

10 title I of the Patient Protection and Affordable Care Act 

11 (including the amendments made by such title) shall not 

12 apply (and the provisions of law amended by such title 

13 are restored as if such title had not been enacted) in the 

14 case of any State that does not have in effect the election 

15 described in section 102(a)(1). 

16 (b) CONTINUATION OF POLICIES FOR EXTENSION OF

17 DEPENDENT COVERAGE FOR ADULT CHILDREN AND

18 PROHIBITION OF LIFETIME AND ANNUAL COVERAGE

19 LIMITS; PRESERVATION OF BLACK LUNG BENEFITS.— 

20 (1) PUBLIC HEALTH SERVICE ACT PROVI21 SIONS.—Notwithstanding subsection (a), the fol22 lowing sections of the Public Health Service Act, 

23 that were added or amended by subtitles A and C 

24 of title I of PPACA, shall continue to apply to group 


SSpencer on DSK4SPTVN1PROD with BILLS
7 

•S 191 IS

1 health plans and to health insurance coverage of2 fered in the individual and group market: 

3 (A) NO LIFETIME OR ANNUAL LIMITS.— 

4 Section 2711 (relating to no lifetime or annual 

5 limits), except in the case of limited benefit in6 surance. 

7 (B) DEPENDENT COVERAGE THROUGH

8 AGE 26.—Section 2714 (relating to extension of 

9 dependent coverage). 

10 (C) PROHIBITING PRE-EXISTING CONDI11 TION EXCLUSIONS.—Section 2704 (relating to 

12 prohibition on preexisting conditions). 

13 (D) PROHIBITING DISCRIMINATION BASED

14 ON HEALTH STATUS.—Section 2705 (relating to 

15 prohibiting discrimination against individual 

16 participants and beneficiaries based on health 

17 status), subject to subsection (c). 

18 (E) PRESERVATION OF PREVENTIVE SERV19 ICE COVERAGE.—Section 2713 (relating to cov20 erage of preventive health services), if employ21 ers do not contribute to the individual’s Roth 

22 HSA. 

23 (2) PRESERVATION OF NON-DISCRIMINATION IN

24 HEALTH CARE.—Subsection (a) shall not apply with 


SSpencer on DSK4SPTVN1PROD with BILLS
8 

•S 191 IS

1 respect to section 1557 of title I of the Patient Pro2 tection and Affordable Care Act (42 U.S.C. 18116). 

3 (3) PRESERVATION OF COVERAGE OF MENTAL

4 HEALTH SERVICES, AND APPLICABILITY OF MENTAL

5 HEALTH PARITY.—For serious mental illness, seri6 ous emotional disturbance, and substance use dis7 order, subsection (a) shall not apply with respect to 

8 section 1302(b)(1)(E) of title I of the Patient Pro9 tection and Affordable Care Act (relating to cov10 erage of mental health and substance use treatment 

11 at limited cost sharing) (42 U.S.C. 18022(b)(1)(E)). 

12 Section 2726 of the Public Health Service Act shall 

13 apply to qualified health plans in the same manner 

14 and to the same extent as such section applies to 

15 health insurance coverage and group health plans. 

16 (4) PRESERVATION OF BLACK LUNG BENEFITS

17 FOR COAL MINERS.—Subsection (a) shall not apply 

18 with respect to section 1556 of title I of the Patient 

19 Protection and Affordable Care Act (amending the 

20 Black Lung Benefits Act). 

21 (5) PRESERVATION OF STATE INNOVATIONS.— 

22 Subsection (a) shall not apply with respect to section 

23 1332 of title I of the Patient Protection and Afford24 able Care Act (42 U.S.C. 18052). 


SSpencer on DSK4SPTVN1PROD with BILLS
9 

•S 191 IS

1 (c) CONTINUATION OF FEDERAL EXCHANGES.—Sub2 section (a) shall not apply with respect to Federal Ex3 changes established pursuant to section 1321(c) of the Pa4 tient Protection and Affordable Care Act (42 U.S.C. 

5 18041(c)) and such Exchanges shall continue to operate 

6 as provided for by the Secretary. 

7 SEC. 102. STATE HEALTH INSURANCE OPTIONS. 

8 (a) IN GENERAL.—Each State may elect, through 

9 written notice to the Secretary after the date of the enact10 ment of this Act and in accordance with this title, 1 of 

11 the following 3 options in relation to the implementation 

12 of title I of the Patient Protection and Affordable Care 

13 Act after the date of enactment of this Act: 

14 (1) CONTINUING IMPLEMENTATION OF

15 PPACA.—The State continuing— 

16 (A) the Federal premium and cost-sharing 

17 subsidies for coverage offered under title I of 

18 PPACA (and the amendments made thereby), 

19 reduced for qualified residents of such State for 

20 any year by the amount (if any) by which such 

21 subsidies would exceed the amount of contribu22 tions that would have been made under section 

23 103(b) to all such residents for such year if the 

24 State had elected the option under paragraph 

25 (3); and 


SSpencer on DSK4SPTVN1PROD with BILLS
10 

•S 191 IS

1 (B) all other requirements under such title. 

2 (2) ESTABLISHING NEW STATE AND MARKET3 BASED ALTERNATIVE, WITH ALTERNATIVE PER BEN4 EFICIARY FEDERAL DEPOSIT SYSTEM.—The State 

5 implementing the alternative option described in sec6 tion 103, which includes— 

7 (A) the waiver of most requirements im8 posed under such title I; and 

9 (B) the provision of a new, Roth HSA- and 

10 market-based deposit system for individuals 

11 who do not otherwise qualify for Federal or 

12 State subsidies for health benefits coverage. 

13 (3) REJECTION OF PPACA.—The State rejecting 

14 title I of PPACA (and the amendments made there15 by), except as otherwise required in this title. 

16 If a State fails to make an election described in this sub17 section during the 1-year period beginning on the date of 

18 enactment of this Act, the State shall be deemed to have 

19 made the election described in paragraph (2). A State 

20 may, through written notice to the Secretary, change an 

21 election previously made under this subsection. 

22 (b) RELATION TO CURRENT MEDICAID ACA COV23 ERAGE OPTION.—Nothing in this section shall be con24 strued to change the option of a State with respect to the 

25 implementation of Medicaid ACA coverage under section 


SSpencer on DSK4SPTVN1PROD with BILLS
11 

•S 191 IS

1 1902(a)(10)(A)(i)(VIII) of the Social Security Act (42 

2 U.S.C. 1396a(a)(10)(A)(i)(VIII)), except that a State that 

3 elects not to provide medical assistance to individuals 

4 under such section may make such individuals deposit 

5 qualifying residents under this title. 

6 SEC. 103. STATE ALTERNATIVE OPTION. 

7 (a) IN GENERAL.—In the case of a State that elects 

8 under section 102(a)(2) the alternative option under this 

9 section, subject to subsection (d) and section 107, the fol10 lowing shall apply: 

11 (1) ELIMINATION OF INDIVIDUAL AND EM12 PLOYER SHARED RESPONSIBILITY FOR HEALTH

13 CARE TAX REQUIREMENTS FOR RESIDENTS AND EM14 PLOYEES IN STATE.—The individual and employer 

15 health care responsibilities under the amendments 

16 made by title I of PPACA (including under sections 

17 5000A and 4980H of the Internal Revenue Code of 

18 1986) shall no longer apply pursuant to section 101 

19 with respect to individuals who are residents of such 

20 State and with respect to individuals who are em21 ployed in such State, respectively. 

22 (2) MODIFICATION OF INSURANCE REQUIRE23 MENTS.—Except as specifically provided in this title, 

24 the requirements under title I of PPACA (including 

25 amendments made by such title) relating to health 


SSpencer on DSK4SPTVN1PROD with BILLS
12 

•S 191 IS

1 insurance coverage offered in the State shall not 

2 apply except to the extent specified by the State. 

3 (3) NEW DEPOSIT SYSTEM THROUGH FUNDING

4 ROTH HSAS.— 

5 (A) IN GENERAL.—Deposit qualifying resi6 dents (as defined in subsection (b)(2)) who are 

7 residing in the State are eligible for a deposit 

8 to a Roth HSA that may be used for premiums 

9 and cost-sharing for health insurance coverage 

10 in accordance with subsection (b). 

11 (B) STATE SPECIFICATION OF MANNER OF

12 CARRYING OUT ROTH HSA DEPOSIT SYSTEM

13 (PATIENT-GRANT ELECTING STATE).—In mak14 ing the election under this subsection, a State 

15 shall specify whether the State will carry out 

16 subsection (b) or if such subsection shall be car17 ried out by means of the credit under section 

18 36C of the Internal Revenue Code of 1986. 

19 (4) ADDITIONAL AMOUNTS FOR POPULATION

20 HEALTH INITIATIVES FOR STATE ADMINISTERED

21 ROTH HSA DEPOSIT SYSTEM.—A patient-grant elect22 ing State (as defined in section 100(1)) is entitled 

23 to receive additional funding under subsection (c) for 

24 population health initiatives. 


SSpencer on DSK4SPTVN1PROD with BILLS
13 

•S 191 IS

1 (b) DEPOSIT THROUGH PAYMENT INTO ROTH HSA 

2 FOR DEPOSIT QUALIFYING RESIDENTS.— 

3 (1) IN GENERAL.—The subsidies described in 

4 subsection (a)(3) for an electing State shall be fur5 nished for each deposit qualifying resident through 

6 the deposit of a contribution into a Roth HSA of the 

7 individual in the amount determined under section 

8 104. For purposes of the Internal Revenue Code of 

9 1986, the amount of any contribution to a Roth 

10 HSA made under this paragraph shall be included 

11 in the gross income of the individual for whose ben12 efit the Roth HSA was established. 

13 (2) DEPOSIT QUALIFYING RESIDENT DE14 FINED.—In this title, the term ‘‘deposit qualifying 

15 resident’’ means, with respect to a State and a 

16 month, an individual— 

17 (A) who is a qualified resident (as defined 

18 in section 100(14)) of the State as of the first 

19 day of the month (or such other day in the 

20 month as the Secretary may specify); 

21 (B) with respect to whom a Roth HSA has 

22 been established, which Roth HSA may have 

23 been established by the State in carrying out 

24 this section; 


SSpencer on DSK4SPTVN1PROD with BILLS
14 

•S 191 IS

1 (C) who is enrolled in qualified health plan 

2 coverage (as defined in section 100(13)), which 

3 enrollment may have been effected by the State 

4 in carrying out this section; and 

5 (D) who is not eligible for coverage under 

6 Medicare, is not enrolled for benefits under 

7 Medicaid or CHIP, and is not enrolled for bene8 fits under chapter 55 of title 10, United States 

9 Code (relating to TRICARE), or title 39 of 

10 such Code (relating to veterans’ benefits) or 

11 chapter 89 of title 5 of such Code (relating to 

12 the Federal Employees Health Benefits Pro13 gram). 

14 (3) PAYMENT ADMINISTRATION.— 

15 (A) STATE.—In the case of an electing 

16 State that elects to carry out this subsection 

17 through the State, the Secretary shall provide 

18 for payment to the State in amounts and in a 

19 time and manner sufficient to permit the State 

20 to make timely monthly contributions to Roth 

21 HSAs under this subsection. The Secretary may 

22 provide for payment to the State using the pay23 ment methodology described in subsection (d) of 

24 section 1903 of the Social Security Act for pay25 ments under subsection (a) of such section (apVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
15 

•S 191 IS

1 plied without regard to any State matching re2 quirement) and may condition such payments 

3 upon the provision of such information as the 

4 Secretary may require to ensure the proper pay5 ments under this subsection. As a condition of 

6 receiving payment under this section, a State 

7 shall submit such information, in such form, 

8 and manner, as the Secretary shall specify, in9 cluding information necessary to make the com10 putations of amounts under this section. 

11 (B) FEDERAL.—In the case of a State 

12 electing to carry out this subsection other than 

13 through the State, subsidies described in sub14 section (a)(3) shall be provided through a re15 fundable tax credit under section 36C of the In16 ternal Revenue Code of 1986. 

17 (4) CONSTRUCTION.—Nothing in this sub18 section shall be construed— 

19 (A) to prevent an individual from affirma20 tively electing not to have a Roth HSA estab21 lished on the individual’s behalf and not to be 

22 enrolled in health insurance coverage; 

23 (B) subject to subparagraph (A), to pre24 vent a State from establishing a Roth HSA for 


SSpencer on DSK4SPTVN1PROD with BILLS
16 

•S 191 IS

1 each deposit qualifying resident who does not 

2 otherwise have a Roth HSA; 

3 (C) subject to subparagraph (A), to pre4 vent a State from establishing a mechanism 

5 whereby individuals who would be deposit quali6 fying residents but for paragraph (2)(C) are en7 rolled in health insurance coverage; and 

8 (D) to prevent a State from changing its 

9 State Medicaid plan to eliminate coverage under 

10 section 1902(a)(10)(A)(i)(VIII) of the Social 

11 Security Act (42 U.S.C. 

12 1396a(a)(10)(A)(i)(VIII)), in order that indi13 viduals otherwise covered under such section 

14 may qualify for subsidies under this section. 

15 (c) POPULATION HEALTH INITIATIVE FUNDING.— 

16 (1) IN GENERAL.—In the case of an electing 

17 State for a year, the State is entitled to receive pay18 ment from the Secretary after the end of such year 

19 in an amount equal to 2 percent of the actual aggre20 gate amount deposited under subsection (b) into 

21 Roth HSAs for residents of the State for the year. 

22 (2) USE OF FUNDS.—Amounts paid to a State 

23 under paragraph (1) may only be used for popu24 lation health initiatives (as defined by the Sec25 retary). 


SSpencer on DSK4SPTVN1PROD with BILLS
17 

•S 191 IS

1 (3) ENTITLEMENT.—Paragraph (1) constitutes 

2 budget authority in advance of appropriations Acts 

3 and represents the obligation of the Federal Govern4 ment to provide for the payment to States of 

5 amounts provided under such paragraph. 

6 (d) REQUIRING RULES FOR COMPUTING USUAL, 

7 CUSTOMARY, AND REASONABLE (UCR) PRICES.—As a 

8 condition for a State’s election of the alternative option 

9 under this section, the State must provide, through its de10 partment of insurance or equivalent agency, for establish11 ment of rules to carry out section 1867(j)(1)(A)(ii) of the 

12 Social Security Act, as added by section 121(a)(2). 

13 SEC. 104. COMPUTATION OF MONTHLY ROTH HSA DEPOSIT 

14 AMOUNT FOR DEPOSIT QUALIFYING RESI15 DENTS. 

16 (a) COMPUTATION.— 

17 (1) IN GENERAL.—The Secretary shall develop 

18 a standardized methodology to determine consistent 

19 with this section a monthly Roth HSA deposit 

20 amount for deposit qualifying residents in each State 

21 for months in each year. Subject to paragraphs (3) 

and (4), such amount shall be equal to 1 22 ⁄12 of the 

23 average per capita annual amount computed under 

24 subsection (b) for the State for the year, as adjusted 

25 for the deposit qualifying resident involved— 


SSpencer on DSK4SPTVN1PROD with BILLS
18 

•S 191 IS

1 (A) for age and geographic area under 

2 subsection (c); and 

3 (B) for income under subsection (d). 

4 (2) NO VARIATION BASED ON HOW DEPOSIT

5 AMOUNT DISTRIBUTED.—Such amount shall be the 

6 same for a deposit qualifying individual without re7 gard to whether the contribution to the individual’s 

8 Roth HSA is made by a State under this section or 

9 by the Federal Government through the operation of 

10 section 36C of the Internal Revenue Code of 1986. 

11 (3) PATIENT-GRANT ELECTING STATE HAS

12 FLEXIBILITY TO MAINTAIN LEVEL OF BENEFITS FOR

13 CURRENT ACA BENEFICIARIES.—A patient-grant 

14 electing State may elect to increase the amount of 

15 the deposit for all deposit qualifying individuals 

16 under this section to the amounts that the Secretary 

17 estimates would have been paid with respect to such 

18 individuals under section 36B of the Internal Rev19 enue Code of 1986 and section 1402 of PPACA if 

20 those sections had remained in effect in the State 

21 with respect to such individuals. Such election shall 

22 be made for a year and shall continue from year to 

23 year until the State elects to terminate such election. 

24 The Secretary shall, in conjunction with the Actu25 ary, ensure such changes to the amount of deposit 


SSpencer on DSK4SPTVN1PROD with BILLS
19 

•S 191 IS

1 for qualifying individuals shall remain budget neu2 tral. 

3 (4) SPECIAL RULE FOR PARTIAL DEPOSIT FOR

4 LOW-INCOME INDIVIDUALS WITH EMPLOYER-SPON5 SORED INSURANCE (ESI).—In the case of an indi6 vidual who is covered under a group health plan and 

7 with respect to such coverage there is a contribution 

8 by an employer which is excluded from the individ9 ual’s gross income under the Internal Revenue Code 

10 of 1986, insofar as the individual is a deposit quali11 fying resident, the amount of the deposit with re12 spect to the individual shall be reduced, in a manner 

13 specified by the Secretary in consultation with the 

14 Secretary of the Treasury and taking into account 

15 the income of the individual’s household, by an 

16 amount that is approximately equivalent to the esti17 mated amount of the reduction in the amount of in18 come tax resulting from such exclusion (and any re19 duction in taxes imposed by chapter 21 or chapter 

20 2 of such Code by reason of any exclusion of such 

21 contributions from wages and self employment in22 come). 

23 (b) COMPUTATION OF UNADJUSTED AVERAGE PER

24 CAPITA ANNUAL AMOUNT.— 


SSpencer on DSK4SPTVN1PROD with BILLS
20 

•S 191 IS

1 (1) FOR STATES THAT CONTINUE PPACA MED2 ICAID COVERAGE.— 

3 (A) IN GENERAL.—In the case of a State 

4 that provides medical assistance under section 

5 1902(a)(10)(A)(i)(VIII) of the Social Security 

6 Act (42 U.S.C. 1396b(a)(10)(A)(i)(VIII)) dur7 ing a year, subject to paragraphs (3) and (4), 

8 the Secretary shall compute an average per cap9 ita annual amount for the State for the year 

10 equal to— 

11 (i) the amount specified in subpara12 graph (B), divided by 

13 (ii) the average monthly number of 

14 deposit qualifying residents of the State in 

15 the year. 

16 (B) AMOUNT BASED ON PPACA PROJECTED

17 FEDERAL EXPENDITURES.—The amount speci18 fied in this subparagraph for a State for a year 

19 is 95 percent of the Secretary’s estimate of the 

20 total payments that would have been made (as21 suming the existence of a State established Ex22 change in the State) under section 36B of the 

23 Internal Revenue Code of 1986 and under sec24 tion 1402 of PPACA with respect to all quali25 fied residents in the State in the year (or taxVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
21 

•S 191 IS

1 able year ending with such year, if applicable). 

2 The Secretary shall, in conjunction with the Ac3 tuary, ensure such changes to the amount of 

4 deposit for qualifying individuals shall remain 

5 budget neutral. 

6 (2) FOR STATES THAT DO NOT PROVIDE PPACA

7 MEDICAID COVERAGE.— 

8 (A) IN GENERAL.—In the case of a State 

9 not described in paragraph (1) for a year, sub10 ject to paragraphs (3) and (4), the Secretary 

11 shall compute an average per capita annual 

12 amount for the State for the year equal to— 

13 (i) the amount specified in subpara14 graph (B) for the State and year, divided 

15 by 

16 (ii) the average monthly number of 

17 deposit qualifying residents of the State in 

18 the year. 

19 (B) AMOUNT BASED ON PPACA AND MED20 ICAID PROJECTED FEDERAL EXPENDITURES.— 

21 The amount specified in this subparagraph for 

22 a State for a year is equal to the sum of— 

23 (i) 95 percent of the Secretary’s esti24 mate of the total payments that would 

25 have been made (assuming the existence of 


SSpencer on DSK4SPTVN1PROD with BILLS
22 

•S 191 IS

1 a State-established Exchange in the State) 

2 under section 36B of the Internal Revenue 

3 Code of 1986 and under section 1402 of 

4 PPACA with respect to all qualified resi5 dents in the year (or taxable year ending 

6 with such year, if applicable); and 

7 (ii) the Secretary’s estimate of the 

8 total payments that would have been made 

9 to the State under title XIX of the Social 

10 Security Act for individuals eligible to be 

11 covered under section 

12 1902(a)(10)(A)(i)(VIII) of the Social Secu13 rity Act assuming the election of a State to 

14 provide Medicaid coverage under such sec15 tion and assuming the applicable Federal 

16 medical assistance percentage were 95 per17 cent with respect to such individuals. 

18 (3) BUDGET NEUTRAL ADJUSTMENT IN PAY19 MENTS TO TAKE INTO ACCOUNT ELECTION OF HIGH20 ER DEPOSITS TO MAINTAIN ACA SUBSIDY LEVELS.— 

21 If a State makes the election described in subsection 

22 (a)(3) with respect to providing higher deposit 

23 amounts for certain individuals described in such 

24 subsection, then the Secretary shall adjust the averVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
23 

•S 191 IS

1 age per capita annual amount under paragraph (1) 

2 or (2), as applicable to the State, by— 

3 (A) reducing the amount described in 

4 paragraph (1)(B) (or, if applicable, paragraph 

5 (2)(B)(i)) by an amount equal to 95 percent of 

6 the aggregate increased deposit level attrib7 utable to subsection (a)(3); and 

8 (B) not counting such an individual as a 

9 qualifying resident for purposes of paragraph 

10 (1)(A)(ii) (or, if applicable, paragraph 

11 (2)(A)(ii)). 

12 The Secretary shall, in conjunction with the Actu13 ary, ensure changes, as outlined in this subsection, 

14 to the amount of deposit for qualifying individuals 

15 shall remain budget neutral. 

16 (4) ADJUSTMENT FOR COSTS OF PARTIAL DE17 POSITS FOR LOW-INCOME ESI INDIVIDUALS.—The 

18 Secretary shall adjust the average per capita annual 

19 amount under paragraph (1) or (2), as applicable to 

20 the State, by— 

21 (A) reducing the amount described in 

22 paragraph (1)(B) (or, if applicable, paragraph 

23 (2)(B)(i)) by an amount equal to 95 percent of 

24 the amount of payments under this section that 


SSpencer on DSK4SPTVN1PROD with BILLS
24 

•S 191 IS

1 are attributable to individuals described in sub2 section (a)(4); and 

3 (B) not counting any individual described 

4 in subsection (a)(4) as a qualifying resident for 

5 purposes of paragraph (1)(A)(ii) (or, if applica6 ble, paragraph (2)(A)(ii)). 

7 (c) ADJUSTMENT FOR AGE, GEOGRAPHIC AREA, AND

8 INCOME DISTRIBUTION WITHIN STATE.— 

9 (1) IN GENERAL.—The Secretary shall apply 

10 such adjustments to the per capita amount com11 puted under subsection (b) as is designed to take 

12 into account, in a budget neutral manner and based 

13 on the costs estimated under paragraph (2), actu14 arial differences in health care costs attributable to 

15 individuals in different age categories and different 

16 geographic locations of primary residences in the 

17 State and the reductions based on income under 

18 subsection (d). No such adjustment shall be made 

19 based on sex. 

20 (2) DATA ON AVERAGE COSTS OF SERVICES.— 

21 Not later than December 15 before the beginning of 

22 each year, the Agency for Healthcare Research and 

23 Quality shall estimate the average cost of health 

24 care for such year for individuals under 65 years of 

25 age and may estimate how such average varies for 


SSpencer on DSK4SPTVN1PROD with BILLS
25 

•S 191 IS

1 different populations of individuals under age 65. 

2 The adjustments under paragraph (1) for age cat3 egories for a year shall be based on such estimates 

4 made. Not later than such date, the Secretary shall 

5 prescribe tables for purposes of making adjustments 

6 based on age under paragraph (1) based on such de7 termination which shall apply for taxable years be8 ginning in the succeeding calendar year. 

9 (d) INCOME-RELATED PHASE-OUT.— 

10 (1) IN GENERAL.—The per capita amount as 

11 computed under subsection (b) and adjusted and ap12 plied to a deposit qualifying individual under sub13 section (c) shall be multiplied by a phase-out per14 centage equal to 100 percent reduced by 1 percent15 age point for each $1,000 (or fraction thereof) by 

16 which the taxpayer’s modified adjusted gross income 

17 for the taxable year exceeds $90,000 (or, in the case 

18 of a joint return, $150,000), multiplied, for a tax19 able year ending in a year beginning after December 

20 31, 2015, by the cost-of-living adjustment for the 

21 year as described in section 1(f)(3) of the Internal 

22 Revenue Code of 1986, but substituting ‘‘2015’’ for 

23 ‘‘1992’’ in subparagraph (B) of such section. 

24 (2) ZERO PER CAPITA AMOUNT FOR MARRIED

25 FILING SEPARATELY.—The per capita amount under 


SSpencer on DSK4SPTVN1PROD with BILLS
26 

•S 191 IS

1 this section shall be zero in the case of a married 

2 couple filing separately. 

3 SEC. 105. STATE OPTIONS FOR IMPROVED ACCESS TO 

4 HEALTH INSURANCE COVERAGE IN EACH 

5 STATE. 

6 (a) STATE OPTIONS TO IMPROVE ACCESS.— 

7 (1) IN GENERAL.—Each State may carry out 

8 any of the functions described in this section in 

9 order to improve the access of residents of the State 

10 to health insurance coverage. 

11 (2) REPURPOSING STATE EXCHANGES.—A 

12 State may use or adapt an Exchange that the State 

13 has established under title I of PPACA to carry out 

14 any such function. 

15 (3) REPURPOSING FEDERAL EXCHANGE.—The 

16 Federal Government shall make available to States 

17 current capabilities of the Federal Exchange, includ18 ing the Federal Data Services Hub and Agent 

19 Broker Portal, to the extent requested by a State for 

20 activities related to enrollment of citizens of the 

21 State into health insurance coverage. 

22 (b) TRANSPARENCY PORTAL.—Each State may es23 tablish and operate an open and transparent marketplace 

24 mechanism whereby qualified residents of the State can 

25 readily compare, through the use of the Internet, the beneVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
27 

•S 191 IS

1 fits and prices between different health insurance coverage 

2 options made available to them. 

3 (c) ENROLLMENT, SUBJECT TO INDIVIDUAL OPT4 OUT.—A State may provide for the enrollment of qualified 

5 residents of the State who are uninsured in default health 

6 insurance coverage offered under section 107(c) and es7 tablishing a Roth HSA for such residents who do not have 

8 a Roth HSA unless the resident has affirmatively elected 

9 not to be so enrolled and not to have a Roth HSA, respec10 tively. Any such enrollment under this paragraph shall be 

11 coordinated with the annual open enrollment periods pro12 vided under section 107(b). 

13 (d) RISK MITIGATION MECHANISMS AND REINSUR14 ANCE AND RISK-CORRIDOR PROGRAMS.— 

15 (1) IN GENERAL.—Notwithstanding any other 

16 provision of this title or section 223(c)(2) of the In17 ternal Revenue Code of 1986, a State may estab18 lish— 

19 (A) mechanisms for risk mitigation or risk 

20 adjustment in order to limit volatility in the 

21 premiums based on health experience to class22 average premiums; and 

23 (B) a reinsurance and risk-corridor pro24 gram that involves no Federal funds with reVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
28 

•S 191 IS

1 spect to coverage both in the individual market 

2 and in the small group market. 

3 (2) BASIS FOR RISK ADJUSTMENT.—Mecha4 nisms and programs under paragraph (1) may be 

5 based on the health status score of each individual 

6 enrolled in health insurance coverage in the indi7 vidual market and not solely based on the aggregate 

8 risk of the risk pool with respect to each plan of 

9 health insurance coverage. 

10 (e) MODIFIED HEALTH STATUS INSURANCE MECHA11 NISM.— 

12 (1) IN GENERAL.—A State may establish a 

13 mechanism for providing modified health status in14 surance in the State to encourage health plans to 

15 implement adequate benefit designs and services for 

16 a chronically ill individual. 

17 (2) REQUIREMENTS.—A mechanism under 

18 paragraph (1) may implement the following require19 ments: 

20 (A) During the first open enrollment pe21 riod after the date of enactment of this Act, an 

22 individual health plan shall provide coverage for 

23 health benefits as defined in the health plan for 

24 a period of 12 months. 


SSpencer on DSK4SPTVN1PROD with BILLS
29 

•S 191 IS

1 (B) If an individual enrolls in a new health 

2 plan during the open enrollment period at the 

3 end of the first 12 months of coverage under 

4 subparagraph (A), the plan in which the indi5 vidual was enrolled prior to such period shall be 

6 responsible for financing 75 percent of the 

7 health benefits administered to the individual 

8 under any other health plan in which the indi9 vidual enrolls for the initial 3-month period of 

10 coverage under such other plan. 

11 (C) During the 3-month period described 

12 in subparagraph (B), the plan in which the in13 dividual was enrolled prior to such period shall 

14 receive 75 percent of the premiums paid for the 

15 individual’s coverage under the other health 

16 plan. 

17 (D) During the third open enrollment pe18 riod after the date of enactment of this Act, 

19 and during all subsequent open enrollment peri20 ods, a health plan that has enrollees terminate 

21 their coverage in order to enroll in other health 

22 plans shall be responsible for financing 75 per23 cent of the health benefits administered to such 

24 enrollees under the other plans and shall receive 

25 75 percent of the premiums paid for such enVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
30 

•S 191 IS

1 rollees’ coverage under such other health plans 

2 for the first 3 months of coverage in the new 

3 plan year. 

4 SEC. 106. STATE FLEXIBILITY IN ENSURING ORDERLY 

5 HEALTH INSURANCE MARKET OUTSIDE OF 

6 AN EXCHANGE. 

7 (a) IN GENERAL.—With respect to health insurance 

8 coverage offered in a State, the State may, in consultation 

9 with the Secretary, take such steps, such as limiting the 

10 availability of general open enrollment periods, imposing 

11 delays in the effectiveness for coverage, permitting dif12 ferentials in premiums based on age and other factors, as 

13 the State determines necessary in order to ensure an or14 derly market for health insurance coverage in the State 

15 that is not offered through an Exchange. Such steps may 

16 include the establishment of an initial open enrollment pe17 riod during which qualified residents may enroll in health 

18 insurance coverage without the imposition of any under19 writing as the State determines to be appropriate in ensur20 ing initial access to such coverage. 

21 (b) FLEXIBILITY IN IMPOSING ADDITIONAL RE22 QUIREMENTS.—Nothing in this section shall be construed 

23 as preventing a State from continuing to apply, to health 

24 insurance coverage issued in the State, requirements 

25 under the provisions of title XXVII of the Public Health 


SSpencer on DSK4SPTVN1PROD with BILLS
31 

•S 191 IS

1 Service Act (as amended by subtitles A and C of title I 

2 of PPACA), that are not continued under section 101(b). 

3 (c) STATE FLEXIBILITY WITH RESPECT TO EX4 CHANGES.—A State may waive such provisions of part 2 

5 of subtitle D of title I of PPACA, in relation to the estab6 lishment of an Exchange in such State, as the State deter7 mines appropriate in order for the State to implement and 

8 administer a market-based system for the availability of 

9 health insurance coverage throughout the State. 

10 SEC. 107. EXPANDED ACCESS AND PATIENT PROTECTIONS. 

11 (a) IN GENERAL.—As a condition for the election of 

12 the alternative option under section 103 in a State, the 

13 State must meet the requirements of this section. 

14 (b) ANNUAL AND OTHER OPEN ENROLLMENT PERI15 ODS.— 

16 (1) IN GENERAL.—The State shall require, in 

17 connection with the offering of health insurance cov18 erage in the individual market in the State, that 

19 there are uniform annual and other open enrollment 

20 periods (such as those for changes in life events, 

21 changes in State residency, and involuntary changes 

22 in eligibility for coverage under a group health plan) 

23 in order to permit qualified residents to enroll in 

24 qualified health plan coverage in a manner that pro25 motes continuity of coverage. Such periods shall be 


SSpencer on DSK4SPTVN1PROD with BILLS
32 

•S 191 IS

1 consistent with the open enrollment periods estab2 lished under title I of PPACA, as in effect on the 

3 day before the date of the enactment of this Act. 

4 (2) INITIAL OPEN ENROLLMENT PERIOD.—In 

5 addition, the State shall establish an initial open en6 rollment period during which qualified residents may 

7 enroll in qualified health plan coverage without the 

8 imposition of any underwriting described in sub9 section (d)(1)(B). Such period shall be a period of 

10 not less than 45 days and shall provide for enroll11 ment to become effective on January 1 of the year 

12 specified by the State in which such State election 

13 first becomes effective. 

14 (c) OFFERING OF DEFAULT HEALTH INSURANCE

15 COVERAGE.— 

16 (1) ENROLLMENT, SUBJECT TO INDIVIDUAL

17 OPT-OUT.—Subject to paragraph (4), a State may 

18 elect to provide for the enrollment of residents of the 

19 State who are uninsured in default health insurance 

20 coverage (as defined in paragraph (2)) and estab21 lishing a Roth HSA for such residents who do not 

22 have a Roth HSA unless the resident has affirma23 tively elected not to be so enrolled and not to have 

24 such an account, respectively. If a State makes such 


SSpencer on DSK4SPTVN1PROD with BILLS
33 

•S 191 IS

1 an election, the State shall permit eligible residents 

2 to enroll in such coverage on a continuous basis. 

3 (2) DEFAULT HEALTH INSURANCE COVERAGE

4 DEFINED.—In this subsection, the term ‘‘default 

5 health insurance coverage’’ means, with respect to a 

6 State, health insurance coverage that— 

7 (A) is a high deductible health plan (within 

8 the meaning of section 223(c)(2) of the Internal 

9 Revenue Code of 1986) with prescription drug 

10 coverage limited to a Tier 1 formulary benefit 

11 (as commonly understood) for a limited number 

12 of chronic conditions (commonly referred to as 

13 tier I pharmacy benefit); 

14 (B) meets such requirements as may apply 

15 to qualify for the payment of plan premiums 

16 from a health savings account under section 

17 223 of such Code (such as age-related pre18 miums and limitation on imposition of pre19 existing condition exclusions); 

20 (C) has a provider network for covered 

21 benefits that is adequate (as determined con22 sistent with the guidelines issued by the Sec23 retary relating to provider access requirements 

24 for Medicare Advantage organizations under 

25 section 1852(d) of the Social Security Act (42 


SSpencer on DSK4SPTVN1PROD with BILLS
34 

•S 191 IS

1 U.S.C. 1395w–22(d))) to ensure access to 

2 health benefits under such plan; 

3 (D) provides for coverage of childhood im4 munizations without cost sharing requirements 

5 to the extent such immunizations have in effect 

6 a recommendation from the Advisory Com7 mittee on Immunization Practices of the Cen8 ters for Disease Control and Prevention with 

9 respect to the individual involved; and 

10 (E) meets such other requirements as the 

11 State may specify. 

12 (3) ROTH HSA.—In this subsection, the term 

13 ‘‘Roth HSA’’ shall have the meaning given such 

14 term by section 530A(c) of the Internal Revenue 

15 Code of 1986. 

16 (4) SIMPLE PROCESS FOR INDIVIDUALS TO OPT17 OUT.—As a condition of a State providing for the 

18 enrollment function described in paragraph (1), the 

19 State shall establish an easy-to-use and transparent 

20 means by which individuals may elect not to be en21 rolled in default health insurance coverage or to 

22 have a Roth HSA established on the individual’s be23 half, or both. 

24 (d) CONSEQUENCES RESPECTING CONTINUOUS COV25 ERAGE.— 


SSpencer on DSK4SPTVN1PROD with BILLS
35 

•S 191 IS

1 (1) CONSEQUENCES FOR NOT MAINTAINING

2 CONTINUOUS COVERAGE.— 

3 (A) AVOIDANCE OF CONSEQUENCES BY

4 MAINTAINING CONTINUOUS COVERAGE.— 

5 (i) IN GENERAL.—All qualified resi6 dents of a State are eligible during the ini7 tial open enrollment period provided under 

8 subsection (b)(2) to enroll in qualified 

9 health plan coverage and, thereafter, to 

10 maintain continuous coverage in order to 

11 avoid the adverse consequences described 

12 in the succeeding provisions of this para13 graph. 

14 (ii) SPECIAL ENROLLMENT PERI15 ODS.—The State may provide for special 

16 enrollment periods based on birth, becom17 ing 26 years of age, and independence 

18 from family coverage, during which certain 

19 individuals will be eligible to enroll in 

20 qualified health plan coverage for purposes 

21 of this subsection. 

22 (B) UNDERWRITING PERMITTED.—In the 

23 case of a qualified resident of the State who 

24 fails to maintain continuous creditable coverage 


SSpencer on DSK4SPTVN1PROD with BILLS
36 

•S 191 IS

1 (not including any breaks in coverage of less 

2 than 63 days), the State shall— 

3 (i) permit health insurance issuers for 

4 the period specified in subparagraph (C) to 

5 medically underwrite (through denial of 

6 health insurance coverage, application of 

7 preexisting condition limitations, differen8 tial premiums, or otherwise) the issuance 

9 of health insurance coverage, other than 

10 with respect to the issuance of default 

11 health insurance coverage under subsection 

12 (c); and 

13 (ii) require health insurance issuers, 

14 during the subsequent 2-year period in the 

15 case of issuance of health insurance cov16 erage other than such default health insur17 ance coverage, to impose a monthly late 

18 enrollment penalty in the amount specified 

19 in subparagraph (D)(i) and to remit the 

20 amount of such penalty collected to the 

21 Federal Treasury in accordance with sub22 paragraph (D)(ii). 

23 (C) PERIOD FOR APPLICATION OF UNDER24 WRITING.—For purposes of subparagraph 

25 (B)(i), the period specified in this subparagraph 


SSpencer on DSK4SPTVN1PROD with BILLS
37 

•S 191 IS

1 is, with respect to an uninsured individual as of 

2 a date, a period (not to exceed 18 months) 

3 equivalent to the number of months in the pre4 vious 18-month period in which the individual 

5 did not have continuous creditable coverage de6 scribed in subparagraph (B). 

7 (D) MONTHLY LATE ENROLLMENT PEN8 ALTY AMOUNT.— 

9 (i) IN GENERAL.—The monthly late 

10 enrollment penalty amount specified in this 

11 clause for a month is equal to the lesser of 

12 10 percent or the product of— 

13 (I) 1 percent of the monthly pre14 mium amount for default health in15 surance coverage with respect to the 

16 individual and month; and 

17 (II) the number of months dur18 ing the 2-year period (preceding the 

19 18-month period described in subpara20 graph (B)(i)) in which the resident 

21 failed to maintain the continuous cov22 erage described in paragraph (1)(D). 

23 (ii) PAYMENT OF PENALTY AMOUNT

24 TO FEDERAL TREASURY.—The amount of 

25 the monthly late enrollment penalty colVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
38 

•S 191 IS

1 lected under this subparagraph shall be 

2 paid to the Treasury of the United States 

3 in a form and manner specified by the Sec4 retary of the Treasury. 

5 (2) CHANGES IN ENROLLMENT PERMITTED

6 WITHOUT MEDICAL UNDERWRITING DURING ANNUAL

7 OPEN ENROLLMENT PERIODS FOR THOSE MAINTAIN8 ING CONTINUOUS COVERAGE.— 

9 (A) DURING SECOND OPEN ENROLLMENT

10 PERIOD.—In the case of a qualified resident 

11 who maintains continuous coverage (not includ12 ing any breaks in coverage of less than 63 

13 days) during the period after the initial open 

14 enrollment period under subsection (b)(2) and 

15 through the second annual open enrollment pe16 riod established by the State consistent with 

17 subsection (b)(1), the State shall require health 

18 insurance issuers to permit such residents dur19 ing such second annual open enrollment period 

20 to change the qualified health plan coverage in 

21 which the individual is enrolled without medical 

22 underwriting. 

23 (B) DURING THIRD AND SUBSEQUENT

24 OPEN ENROLLMENT PERIODS.—In the case of a 

25 qualified resident who maintains continuous 


SSpencer on DSK4SPTVN1PROD with BILLS
39 

•S 191 IS

1 coverage for a period of 18 months or longer 

2 (not including any breaks in coverage of less 

3 than 63 days) as of the initial date of a third 

4 or subsequent annual open enrollment period 

5 established by the State under subsection 

6 (b)(1), the State shall require health insurance 

7 issuers to permit such residents during such an 

8 open enrollment period to change the qualified 

9 health plan coverage in which the individual is 

10 enrolled without medical underwriting. 

11 SEC. 108. APPLICATION OF HEALTH SAVINGS ACCOUNTS IN 

12 RELATION TO MEDICAID. 

13 (a) IN GENERAL.—Title XIX of the Social Security 

14 Act (42 U.S.C. 1396 et seq.) is amended by adding at 

15 the end the following new section: 

16 ‘‘SEC. 1947. PROVISIONS RELATING TO HEALTH SAVINGS 

17 ACCOUNTS. 

18 ‘‘(a) DISREGARDING ROTH HSA IN DETERMINING

19 ASSETS AND INCOME FOR MEDICAID ELIGIBILITY DE20 TERMINATIONS OTHER THAN FOR LONG-TERM CARE

21 SERVICES.—The assets in a health savings account under 

22 section 223 of the Internal Revenue Code of 1986, and 

23 any income from such assets in such account, shall be dis24 regarded for purposes of determining eligibility for and 

25 amount of medical assistance under this title, other than 


SSpencer on DSK4SPTVN1PROD with BILLS
40 

•S 191 IS

1 for purposes of determining eligibility for and the amount 

2 of medical assistance for long-term care services (de3 scribed in section 1917(c)(1)(C)(i)). 

4 ‘‘(b) NOTIFICATIONS OF TREASURY OF MEDICAID

5 ELIGIBILITY.—In order to meet the requirements of this 

6 subsection (for purposes of section 1902(a)(78)), a State 

7 shall provide such notice to the Secretary of the Treasury, 

8 in such form and manner as the Secretary shall specify, 

9 as may be necessary to identify individuals who are eligible 

10 for, and receiving, medical assistance under this title in 

11 a month in order to carry out section 223 of the Internal 

12 Revenue Code of 1986.’’. 

13 (b) IMPLEMENTATION OF NOTIFICATION REQUIRE14 MENT THROUGH STATE PLAN.—Section 1902(a) of the 

15 Social Security Act (42 U.S.C. 1396a(a)) is amended by 

16 inserting after paragraph (77) the following new para17 graph: 

18 ‘‘(78) provide for notice in accordance with sec19 tion 1947(b) to the Secretary of the Treasury of the 

20 identity of individuals who are eligible for and re21 ceiving medical assistance under this title;’’. 

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

23 this section shall apply to eligibility determinations with 

24 respect to medical assistance for periods beginning on or 

25 after January 1, 2018. 


SSpencer on DSK4SPTVN1PROD with BILLS
41 

•S 191 IS

1 Subtitle B—Provider Price 

2 Transparency 

3 SEC. 121. ENSURING ACCESS TO EMERGENCY SERVICES 

4 WITHOUT EXCESSIVE CHARGES FOR OUT-OF5 NETWORK SERVICES. 

6 (a) IN GENERAL.—Section 1867 of the Social Secu7 rity Act (42 U.S.C. 1395dd) is amended— 

8 (1) in subsection (d), by adding at the end the 

9 following new paragraph: 

10 ‘‘(5) ENFORCEMENT WITH RESPECT TO EXCES11 SIVE CHARGES.—A hospital, physician, or other enti12 ty that violates the requirements of subsection (j)(1) 

13 with respect to the furnishing of items and services 

14 is subject to a civil money penalty of not more than 

15 $25,000 for each such violation. The provisions of 

16 section 1128A (other than subsections (a) and (b)) 

17 shall apply to a civil money penalty under this para18 graph in the same manner as such provisions apply 

19 with respect to a penalty or proceeding under section 

20 1128A(a).’’; and 

21 (2) by adding at the end the following new sub22 section: 

23 ‘‘(j) PROTECTIONS AGAINST EXCESSIVE OUT-OF24 NETWORK CHARGES FOR EMERGENCY SERVICES.— 


SSpencer on DSK4SPTVN1PROD with BILLS
42 

•S 191 IS

1 ‘‘(1) IN GENERAL.—In the absence of State 

2 regulations, if items or services to screen or treat an 

3 emergency medical condition are furnished under 

4 this section in a participating hospital with respect 

5 to an individual and the individual has not, directly 

6 or through a health insurance issuer, group health 

7 plan, or other third party, negotiated a payment rate 

8 for such items and services, subject to paragraph 

9 (2), the charges imposed for such items and services 

10 may not be in excess of the following: 

11 ‘‘(A) PHYSICIANS’ AND OTHER PROFES12 SIONAL SERVICES.—For physicians’ services or 

13 services of a health care provider which con14 stitute medical care (as defined under section 

15 213(d) of the Internal Revenue Code of 1986, 

16 as in effect before the date of the enactment of 

17 this subsection) (and including drugs and 

18 biologicals furnished in conjunction with and 

19 billed as part of such services), the lesser of— 

20 ‘‘(i) the cash price for such services 

21 posted pursuant to section 121(b) of the 

22 Patient Freedom Act of 2017; or 

23 ‘‘(ii) 85 percent of the usual, cus24 tomary, and reasonable (UCR) charge for 

25 such services, as determined under rules 


SSpencer on DSK4SPTVN1PROD with BILLS
43 

•S 191 IS

1 established by the department of insurance 

2 for the State in which the services are fur3 nished. 

4 ‘‘(B) HOSPITAL SERVICES.—For inpatient 

5 and outpatient hospital services for which pay6 ment rates are established under this title (and 

7 including drugs and biologicals furnished in 

8 conjunction with and billed as part of such 

9 services), the lesser of— 

10 ‘‘(i) the cash price for such services 

11 posted pursuant to section 121(b) of the 

12 Patient Freedom Act of 2017; or 

13 ‘‘(ii) 110 percent of the payment rate 

14 applicable to such services in the case of 

15 an individual entitled to benefits under 

16 part A and enrolled under part B. 

17 ‘‘(C) DRUGS AND BIOLOGICALS.—For 

18 drugs and other pharmaceuticals furnished to 

19 which a previous subparagraph does not apply, 

20 the lesser of— 

21 ‘‘(i) twice the acquisition cost to the 

22 hospital or other provider for the dose in23 volved; or 

24 ‘‘(ii) the acquisition cost to the hos25 pital or other provider plus $250. 


SSpencer on DSK4SPTVN1PROD with BILLS
44 

•S 191 IS

1 The dollar amount in clause (ii) shall be in2 creased from year to year (beginning with the 

3 year after the first year in which this subsection 

4 applies) by the same percentage as the percent5 age increase in the consumer price index for all 

6 urban consumers (all items; U.S. city average) 

7 for the year involved (as determined by the Sec8 retary). Any such dollar amount as so increased 

9 that is not a multiple of $5 shall be rounded to 

10 the nearest multiple of $5 (or, if a multiple of 

11 $2.50, to the next highest multiple of $5). 

12 ‘‘(D) OTHER ITEMS AND SERVICES.—For 

13 any other items or services, the lesser of— 

14 ‘‘(i) the cash price for such items and 

15 services posted pursuant to section 121(b) 

16 of the Patient Freedom Act of 2017; or 

17 ‘‘(ii) 110 percent of the payment basis 

18 that would be applicable to payment for 

19 such items and services under this title in 

20 the case of an individual entitled to bene21 fits under part A and enrolled under part 

22 B. 

23 ‘‘(2) SPECIAL RULE FOR ITEMS AND SERVICES

24 FURNISHED AS A BUNDLE.—In the case of items 

25 and services for which there is a single price for a 


SSpencer on DSK4SPTVN1PROD with BILLS
45 

•S 191 IS

1 group or bundle of such items and services, the max2 imum charge permitted under paragraph (1) may 

3 not exceed the lesser of— 

4 ‘‘(A) the price charged for such bundled 

5 services; or 

6 ‘‘(B) the aggregate of the maximum 

7 charges permitted under paragraph (1) with re8 spect to items and services included in such 

9 bundle.’’. 

10 (b) REFERENCE TO PRICE DISCLOSURE PROVI11 SION.— 

12 (1) IN GENERAL.—Persons providing medical 

13 care (as defined in section 213(d) of the Internal 

14 Revenue Code of 1986, as in effect before the date 

15 of the enactment of this Act) are required to post 

16 prices under this subsection. 

17 (2) FORM OF DISCLOSURE.—The disclosure of 

18 prices under this subsection shall be in a form and 

19 manner specified by the Secretary, in consultation 

20 with the Secretary of the Treasury, and shall be de21 signed— 

22 (A) to establish a single price for related 

23 items and services in a manner similar to the 

24 manner in which pricing and payment for such 

25 items and services is provided under the MediVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00045 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
46 

•S 191 IS

1 care program under title XVIII of the Social 

2 Security Act (42 U.S.C. 1395 et seq.); and 

3 (B) to make it easy for consumers to com4 pare the prices for similar items and services 

5 furnished by different providers. 

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

7 this section shall apply to charges imposed for items and 

8 services furnished on or after January 1, 2018. 

9 TITLE II—REFORM OF TAX PRO10 VISIONS RELATING TO 

11 HEALTH CARE 

12 Subtitle A—Health Savings 

13 Accounts 

14 SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS. 

15 (a) NON-DEDUCTIBLE HSAS.—Subchapter F of 

16 chapter 1 of the Internal Revenue Code of 1986 is amend17 ed by adding at the end the following new part: 

18 ‘‘PART IX—HEALTH SAVINGS ACCOUNTS 

‘‘Sec. 530A. Roth HSAs. 

19 ‘‘SEC. 530A. ROTH HSAS. 

20 ‘‘(a) IN GENERAL.—With the exception of the taxes 

21 imposed by section 511 (relating to imposition of tax on 

22 unrelated business income of charitable organizations), a 

23 Roth HSA shall be exempt from taxation under this subVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
47 

•S 191 IS

1 title. No deduction shall be allowed for any contribution 

2 to a Roth HSA. 

3 ‘‘(b) DOLLAR LIMITATION.— 

4 ‘‘(1) IN GENERAL.—The aggregate amount of 

5 contributions for any taxable year to all Roth HSAs 

6 maintained for the benefit of an individual shall not 

7 exceed the sum of the monthly limitations for any 

8 month during such taxable year that the individual 

9 is an eligible individual. 

10 ‘‘(2) MONTHLY LIMITATION.—The monthly limitation for any month is 1 11 ⁄12 of— 

12 ‘‘(A) in the case of an eligible individual 

13 who has self-only creditable coverage as of the 

14 first day of such month, $5,000, and 

15 ‘‘(B) in the case of an eligible individual 

16 who has family creditable coverage as of the 

17 first day of such month, the amount in effect 

18 under subparagraph (A) for the taxable year 

19 multiplied by the number of individuals (includ20 ing the eligible individual) covered under such 

21 family creditable coverage as of such day. 

22 ‘‘(3) ADDITIONAL CONTRIBUTIONS FOR INDI23 VIDUALS 55 OR OLDER.—In the case of an individual 

24 who has attained age 55 before the close of the tax25 able year, the applicable limitation under subparaVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00047 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
48 

•S 191 IS

1 graphs (A) and (B) of paragraph (2) shall be in2 creased by $1,000. 

3 ‘‘(4) COORDINATION WITH OTHER CONTRIBU4 TIONS.—The limitation which would (but for this 

5 paragraph) apply under this subsection to an indi6 vidual for any taxable year shall be reduced (but not 

7 below zero) by the sum of— 

8 ‘‘(A) the aggregate amount paid for such 

9 taxable year to Archer MSAs of such individual, 

10 and 

11 ‘‘(B) the aggregate amount contributed to 

12 Roth HSAs of such individual for such taxable 

13 year under section 408(d)(9). 

14 Subparagraph (A) shall not apply with respect to 

15 any individual to whom paragraph (5) applies. 

16 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVID17 UALS.—In the case of individuals who are married 

18 to each other, if either spouse has family coverage— 

19 ‘‘(A) both spouses shall be treated as hav20 ing only such family coverage (and if such 

21 spouses each have family coverage under dif22 ferent plans, as having the family coverage with 

23 the lowest annual deductible), and 

24 ‘‘(B) the limitation under paragraph (1) 

25 (after the application of subparagraph (A) and 


SSpencer on DSK4SPTVN1PROD with BILLS
49 

•S 191 IS

1 without regard to any additional contribution 

2 amount under paragraph (3))— 

3 ‘‘(i) shall be reduced by the aggregate 

4 amount paid to Archer MSAs of such 

5 spouses for the taxable year, and 

6 ‘‘(ii) after such reduction, shall be di7 vided equally between them unless they 

8 agree on a different division. 

9 ‘‘(6) DENIAL OF DEDUCTION TO DEPEND10 ENTS.—No contribution may be made to a Roth 

11 HSA under this section by any individual with re12 spect to whom a deduction under section 151 is al13 lowable to another taxpayer for a taxable year begin14 ning in the calendar year in which such individual’s 

15 taxable year begins. 

16 ‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 

17 limitation under this subsection for any month with 

18 respect to an individual shall be zero for the first 

19 month such individual is entitled to benefits under 

20 title XVIII of the Social Security Act and for each 

21 month thereafter. 

22 ‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE23 COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN24 NING OF THE YEAR.— 


SSpencer on DSK4SPTVN1PROD with BILLS
50 

•S 191 IS

1 ‘‘(A) IN GENERAL.—For purposes of com2 puting the limitation under paragraph (1) for 

3 any taxable year, an individual who is an eligi4 ble individual during the last month of such 

5 taxable year shall be treated— 

6 ‘‘(i) as having been an eligible indi7 vidual during each of the months in such 

8 taxable year, and 

9 ‘‘(ii) as having been enrolled, during 

10 each of the months such individual is 

11 treated as an eligible individual solely by 

12 reason of clause (i), in the same health 

13 plan in which the individual was enrolled 

14 for the last month of such taxable year. 

15 ‘‘(B) FAILURE TO MAINTAIN CREDITABLE

16 COVERAGE.— 

17 ‘‘(i) IN GENERAL.—If, at any time 

18 during the testing period, the individual is 

19 not an eligible individual, then— 

20 ‘‘(I) the gross income of the indi21 vidual for the taxable year in which 

22 occurs the first month in the testing 

23 period for which such individual is not 

24 an eligible individual shall be in25 creased by the aggregate amount of 


SSpencer on DSK4SPTVN1PROD with BILLS
51 

•S 191 IS

1 all contributions to the Roth HSA of 

2 the individual which could not have 

3 been made but for subparagraph (A), 

4 and 

5 ‘‘(II) the tax imposed by this 

6 chapter for any taxable year on the 

7 individual shall be increased by 10 

8 percent of the amount of such in9 crease. 

10 ‘‘(ii) EXCEPTION FOR DISABILITY OR

11 DEATH.—Clause (i) shall not apply if the 

12 individual ceased to be an eligible indi13 vidual by reason of the death of the indi14 vidual or the individual becoming disabled 

15 (within the meaning of section 72(m)(7)). 

16 ‘‘(iii) TESTING PERIOD.—The term 

17 ‘testing period’ means the period beginning 

18 with the last month of the taxable year re19 ferred to in subparagraph (A) and ending 

20 on the last day of the 12th month fol21 lowing such month. 

22 ‘‘(9) LIMITATION NOT TO APPLY TO CERTAIN

23 CONTRIBUTIONS MADE UNDER PATIENT FREEDOM

24 ACT.—Any contributions made under 103(b) of the 

25 Patient Freedom Act of 2017 or as provided in secVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00051 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
52 

•S 191 IS

1 tion 36C shall not be taken into account for pur2 poses of determining whether the limitation under 

3 paragraph (1) has been met. 

4 ‘‘(c) ROTH HSA.—For purposes of this title— 

5 ‘‘(1) IN GENERAL.—The term ‘Roth HSA’ or 

6 ‘Roth health savings account’ means a trust created 

7 or organized in the United States as a Roth HSA 

8 exclusively for the purpose of paying the qualified 

9 medical expenses of the account beneficiary, but only 

10 if the written governing instrument creating the 

11 trust meets the following requirements: 

12 ‘‘(A) Except in the case of a rollover con13 tribution described in subsection (e)(5) or sec14 tion 220(f)(5) or 223(f)(5), no contribution will 

15 be accepted— 

16 ‘‘(i) unless it is in cash, or 

17 ‘‘(ii) to the extent such contribution, 

18 when added to previous contributions to 

19 the trust for the calendar year, exceeds the 

20 sum of— 

21 ‘‘(I) the dollar amount in effect 

22 under subsection (b)(2)(B), and 

23 ‘‘(II) the dollar amount in effect 

24 under subsection (b)(3). 


SSpencer on DSK4SPTVN1PROD with BILLS
53 

•S 191 IS

1 ‘‘(B) The trustee is a bank (as defined in 

2 section 408(n)), an insurance company (as de3 fined in section 816), or another person who 

4 demonstrates to the satisfaction of the Sec5 retary that the manner in which such person 

6 will administer the trust will be consistent with 

7 the requirements of this section. 

8 ‘‘(C) No part of the trust assets will be in9 vested in life insurance contracts. 

10 ‘‘(D) The assets of the trust will not be 

11 commingled with other property except in a 

12 common trust fund or common investment 

13 fund. 

14 ‘‘(E) The interest of an individual in the 

15 balance in his account is nonforfeitable. 

16 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—For 

17 purposes of this section— 

18 ‘‘(A) IN GENERAL.—The term ‘qualified 

19 medical expenses’ means, with respect to an ac20 count beneficiary, amounts paid by such bene21 ficiary for medical care (as defined in section 

22 213(d) as in effect on the day before the date 

23 of the enactment of the Patient Freedom Act of 

24 2017) for such individual, the spouse of such 

25 individual, and any dependent (as defined in 


SSpencer on DSK4SPTVN1PROD with BILLS
54 

•S 191 IS

1 section 152, determined without regard to sub2 sections (b)(1), (b)(2), and (d)(1)(B) thereof) 

3 of such individual, but only to the extent such 

4 amounts are not compensated for by insurance 

5 or otherwise. 

6 ‘‘(B) LIMITATION ON HEALTH INSURANCE

7 PURCHASED FROM ACCOUNT.—Such term shall 

8 not include any payment for health benefits cov9 erage that is not creditable coverage (within the 

10 meaning of title XXVII of the Public Health 

11 Service Act). 

12 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

13 shall not apply to any expense for coverage 

14 under— 

15 ‘‘(i) a health plan during any period 

16 of continuation coverage required under 

17 any Federal law, 

18 ‘‘(ii) a qualified long-term care insur19 ance contract (as defined in section 

20 7702B(b)), 

21 ‘‘(iii) a health plan during a period in 

22 which the individual is receiving unemploy23 ment compensation under any Federal or 

24 State law, or 


SSpencer on DSK4SPTVN1PROD with BILLS
55 

•S 191 IS

1 ‘‘(iv) in the case of an account bene2 ficiary who has attained the age specified 

3 in section 1811 of the Social Security Act, 

4 any health insurance other than a medi5 care supplemental policy (as defined in sec6 tion 1882 of the Social Security Act). 

7 ‘‘(3) ACCOUNT BENEFICIARY.—The term ‘ac8 count beneficiary’ means the individual on whose be9 half the Roth HSA was established. 

10 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 

11 to the following rules shall apply for purposes of this 

12 section: 

13 ‘‘(A) Section 219(f)(3) (relating to time 

14 when contributions deemed made). 

15 ‘‘(B) Section 219(f)(5) (relating to em16 ployer payments). 

17 ‘‘(C) Section 408(g) (relating to commu18 nity property laws). 

19 ‘‘(D) Section 408(h) (relating to custodial 

20 accounts). 

21 ‘‘(5) ACCOUNT TERMINATIONS.—Rules similar 

22 to the rules of paragraphs (2) and (4) of section 

23 408(e) shall apply to Roth HSAs, and any amount 

24 treated as distributed under such rules shall be 


SSpencer on DSK4SPTVN1PROD with BILLS
56 

•S 191 IS

1 treated as not used to pay qualified medical ex2 penses. 

3 ‘‘(d) ELIGIBLE INDIVIDUAL.—For purposes of this 

4 section, the term ‘eligible individual’ means, with respect 

5 to any month, any individual who is covered under cred6 itable coverage (within the meaning of title XXVII of the 

7 Public Health Service Act) as of the 1st day of such 

8 month. 

9 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

10 ‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL

11 EXPENSES.—Any amount paid or distributed out of 

12 a Roth HSA which is used exclusively to pay quali13 fied medical expenses of any account beneficiary 

14 shall not be includible in gross income in the manner 

15 provided in section 72. 

16 ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR

17 QUALIFIED MEDICAL EXPENSES.—Any amount paid 

18 or distributed out of a Roth HSA which is not used 

19 exclusively to pay the qualified medical expenses of 

20 the account beneficiary shall be included in the gross 

21 income of such beneficiary. 

22 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE23 FORE DUE DATE OF RETURN.— 

24 ‘‘(A) IN GENERAL.—If any excess con25 tribution is contributed for a taxable year to 


SSpencer on DSK4SPTVN1PROD with BILLS
57 

•S 191 IS

1 any Roth HSA of an individual, paragraph (2) 

2 shall not apply to distributions from the Roth 

3 HSAs of such individual (to the extent such dis4 tributions do not exceed the aggregate excess 

5 contributions to all such accounts of such indi6 vidual for such year) if— 

7 ‘‘(i) such distribution is received by 

8 the individual on or before the last day 

9 prescribed by law (including extensions of 

10 time) for filing such individual’s return for 

11 such taxable year, and 

12 ‘‘(ii) such distribution is accompanied 

13 by the amount of net income attributable 

14 to such excess contribution. 

15 Any net income described in clause (ii) shall be 

16 included in the gross income of the individual 

17 for the taxable year in which it is received. 

18 ‘‘(B) EXCESS CONTRIBUTION.—For pur19 poses of subparagraph (A), the term ‘excess 

20 contribution’ means any contribution (other 

21 than a rollover contribution described in para22 graph (5) or section 220(f)(5) or 223(f)(5)) 

23 which exceeds the contribution limitation with 

24 respect to the individual for the taxable year. 


SSpencer on DSK4SPTVN1PROD with BILLS
58 

•S 191 IS

1 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

2 USED FOR QUALIFIED MEDICAL EXPENSES.— 

3 ‘‘(A) IN GENERAL.—The tax imposed by 

4 this chapter on the account beneficiary for any 

5 taxable year in which there is a payment or dis6 tribution from a Roth HSA of such beneficiary 

7 which is includible in gross income under para8 graph (2) shall be increased by 10 percent of 

9 the amount which is so includible. 

10 ‘‘(B) EXCEPTION FOR DISABILITY OR

11 DEATH.—Subparagraph (A) shall not apply if 

12 the payment or distribution is made after the 

13 account beneficiary becomes disabled within the 

14 meaning of section 72(m)(7) or dies. 

15 ‘‘(C) EXCEPTION FOR DISTRIBUTIONS

16 AFTER MEDICARE ELIGIBILITY.—Subparagraph 

17 (A) shall not apply to any payment or distribu18 tion after the date on which the account bene19 ficiary attains the age specified in section 1811 

20 of the Social Security Act. 

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

22 described in this paragraph as a rollover contribu23 tion if it meets the requirements of subparagraphs 

24 (A) and (B). 


SSpencer on DSK4SPTVN1PROD with BILLS
59 

•S 191 IS

1 ‘‘(A) IN GENERAL.—Paragraph (2) shall 

2 not apply to any amount paid or distributed 

3 from a health savings account (as defined in 

4 section 223) or a Roth HSA to the account 

5 beneficiary to the extent the amount received is 

6 paid into a Roth HSA for the benefit of such 

7 beneficiary not later than the 60th day after 

8 the day on which the beneficiary receives the 

9 payment or distribution. 

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

11 not apply to any amount described in subpara12 graph (A) received by an individual from a 

13 health savings account or a Roth HSA if, at 

14 any time during the 1-year period ending on the 

15 day of such receipt, such individual received any 

16 other amount described in subparagraph (A) 

17 from a health savings account or Roth HSA 

18 which was not includible in the individual’s 

19 gross income because of the application of this 

20 paragraph. 

21 ‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI22 VORCE.—The transfer of an individual’s interest in 

23 a Roth HSA to an individual’s spouse or former 

24 spouse under a divorce or separation instrument de25 scribed in subparagraph (A) of section 71(b)(2) shall 


SSpencer on DSK4SPTVN1PROD with BILLS
60 

•S 191 IS

1 not be considered a taxable transfer made by such 

2 individual notwithstanding any other provision of 

3 this subtitle, and such interest shall, after such 

4 transfer, be treated as a Roth HSA with respect to 

5 which such spouse is the account beneficiary. 

6 ‘‘(7) TREATMENT AFTER DEATH OF ACCOUNT

7 BENEFICIARY.—If an individual acquires an account 

8 beneficiary’s interest in a health savings account by 

9 reason of the death of the account beneficiary, such 

10 health savings account shall be treated as if the indi11 vidual were the account beneficiary. 

12 ‘‘(f) COST-OF-LIVING ADJUSTMENT.— 

13 ‘‘(1) IN GENERAL.—In the case of any calendar 

14 year beginning after 2017, the $5,000 dollar amount 

15 in subsection (b)(2) shall be increased by an amount 

16 equal to— 

17 ‘‘(A) such dollar amount, multiplied by 

18 ‘‘(B) the cost-of-living adjustment deter19 mined under section 1(f)(3) for the calendar 

20 year, determined— 

21 ‘‘(i) by substituting ‘calendar year 

22 2016’ for ‘calendar year 1992’ in subpara23 graph (B) thereof, and 

24 ‘‘(ii) by substituting ‘CPI medical care 

25 component’ for ‘CPI’. 


SSpencer on DSK4SPTVN1PROD with BILLS
61 

•S 191 IS

1 ‘‘(2) CPI MEDICAL CARE COMPONENT.—For 

2 purposes of this paragraph, the term ‘CPI medical 

3 care component’ means the medical care component 

4 for the Consumer Price Index for All Urban Con5 sumers published by the Department of Labor. 

6 ‘‘(3) ROUNDING.—If the amount of any in7 crease under the preceding sentence is not a mul8 tiple of $50, such increase shall be rounded to the 

9 next lowest multiple of $50. 

10 ‘‘(g) REPORTS.—The Secretary may require— 

11 ‘‘(1) the trustee of a Roth HSA to make such 

12 reports regarding such account to the Secretary and 

13 to the account beneficiary with respect to contribu14 tions, distributions, the return of excess contribu15 tions, and such other matters as the Secretary deter16 mines appropriate, and 

17 ‘‘(2) any person who provides an individual with 

18 creditable coverage to make such reports to the Sec19 retary and to the account beneficiary with respect to 

20 such plan as the Secretary determines appropriate. 

21 The reports required by this subsection shall be filed at 

22 such time and in such manner and furnished to such indi23 viduals at such time and in such manner as may be re24 quired by the Secretary.’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
62 

•S 191 IS

1 (b) LIMIT ON CONTRIBUTIONS TO DEDUCTIBLE

2 HEALTH SAVINGS ACCOUNTS.—Section 223 of such Code 

3 is amended by adding at the end the following new sub4 section: 

5 ‘‘(i) LIMITED CONTRIBUTIONS AFTER 2016.— 

6 ‘‘(1) IN GENERAL.—No contribution may be ac7 cepted by a health savings account after the date of 

8 the enactment of this subsection. 

9 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

10 apply to a rollover contribution described in sub11 section (f)(5).’’. 

12 (c) CONFORMING AMENDMENTS.— 

13 (1) Section 26(b)(2) of the Internal Revenue 

14 Code of 1986 is amended— 

15 (A) in subparagraph (S), by striking ‘‘and 

16 408(d)(9)(D)(i)(II)’’ and inserting 

17 ‘‘408(d)(9)(D)(i)(II), and 

18 530A(b)(8)(B)(i)(II)’’, and 

19 (B) in subparagraph (U), by inserting 

20 ‘‘and section 530A(e)(4)’’ before the comma at 

21 the end. 

22 (2) Section 35(g)(3) of such Code is amended— 

23 (A) by striking ‘‘or from’’ and inserting ‘‘, 

24 from’’, and 


SSpencer on DSK4SPTVN1PROD with BILLS
63 

•S 191 IS

1 (B) by inserting ‘‘or from a Roth HSA (as 

2 defined in section 530A(c))’’ after ‘‘223(d))’’. 

3 (3) Section 220(f)(5)(A) of such Code is 

4 amended by inserting ‘‘or a Roth HSA (as defined 

5 in section 530A(c))’’ after ‘‘223(d))’’. 

6 (4) Section 223(f)(5)(A) of such Code is 

7 amended by inserting ‘‘or a Roth HSA (as defined 

8 in section 530A(c))’’ after ‘‘paid into a health sav9 ings account’’. 

10 (5) Section 408(d)(9) of such Code is amended 

11 by adding at the end the following new subpara12 graph: 

13 ‘‘(F) APPLICATION TO ROTH HSAS.—Rules 

14 similar to the rules of the preceding subpara15 graphs of this paragraph shall apply with re16 spect to eligible individuals (as defined in sec17 tion 530A(d)) making contributions to Roth 

18 HSAs, except that subparagraph (C) shall be 

19 applied by substituting ‘section 530A(b)’ for 

20 ‘section 223(b)’.’’. 

21 (6) Section 848(e)(1)(B)(v) of such Code is 

22 amended by inserting ‘‘or a Roth HSA (as defined 

23 in section 530A(c))’’ after ‘‘223(d))’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
64 

•S 191 IS

1 (7) Section 877A(e)(2) of such Code is amend2 ed by inserting ‘‘a Roth HSA (as defined in section 

3 530A(c),’’ after ‘‘223),’’. 

4 (8) Section 4973 of such Code is amended— 

5 (A) in subsection (a), by striking ‘‘or’’ at 

6 the end of paragraph (5), by inserting ‘‘or’’ at 

7 the end of paragraph (6), and by inserting after 

8 paragraph (6) the following new paragraph: 

9 ‘‘(7) a Roth HSA (within the meaning of sec10 tion 530A),’’, and 

11 (B) by adding at the end the following new 

12 subsection: 

13 ‘‘(j) EXCESS CONTRIBUTION TO ROTH HSAS.—For 

14 purposes of this section, in the case of Roth HSA (within 

15 the meaning of section 530A(c)), the term ‘excess con16 tributions’ means the sum of— 

17 ‘‘(1) the aggregate amount contributed for the 

18 taxable year to the accounts (other than a rollover 

19 contribution described in section 220(f)(5), 

20 223(f)(5), or 530A(e)(5)), and 

21 ‘‘(2) the amount determined under this sub22 section for the preceding taxable year, reduced by 

23 the sum of— 


SSpencer on DSK4SPTVN1PROD with BILLS
65 

•S 191 IS

1 ‘‘(A) the distributions out of the accounts 

2 which were included in gross income under sec3 tion 530A(e)(2), and 

4 ‘‘(B) the excess (if any) of— 

5 ‘‘(i) the maximum amount allowable 

6 as a contribution under section 530A(b) 

7 for the taxable year, over 

8 ‘‘(ii) the amount contributed to the 

9 accounts for the taxable year. 

10 For purposes of this subsection, any contribution which 

11 is distributed out of the Roth HSA in a distribution to 

12 which section 530A(e)(3) applies shall be treated as an 

13 amount not contributed.’’. 

14 (9) Section 4975(c) of such Code is amended by 

15 adding at the end the following new paragraph: 

16 ‘‘(7) SPECIAL RULE FOR ROTH HSAS.—An indi17 vidual for whose benefit a Roth HSA (within the 

18 meaning of section 530A(c)) is established shall be 

19 exempt from the tax imposed by this section with re20 spect to any transaction concerning such account 

21 (which would otherwise be taxable under this sec22 tion) if, with respect to such transaction, the ac23 count ceases to be a Roth HSA by reason of the ap24 plication of section 530A(c)(5) to such account.’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
66 

•S 191 IS

1 (10) Section 6051(a)(12) of such Code is 

2 amended by inserting ‘‘and to any Roth HSA (as de3 fined in section 530A(c))’’ after ‘‘223(d))’’. 

4 (11) Section 6693(a)(2) of such Code is amend5 ed by striking ‘‘and’’ at the end of subparagraph 

6 (E), by striking the period at the end of subpara7 graph (F) and inserting ‘‘, and’’, and by adding at 

8 the end the following new subparagraph: 

9 ‘‘(G) section 530A(g) (relating to Roth 

10 HSAs).’’. 

11 (d) CLERICAL AMENDMENT.—The table of parts for 

12 subchapter F of chapter 1 of such Code is amended by 

13 adding at the end the following new item: 

‘‘PART IX. ROTH HEALTH SAVINGS ACCOUNTS’’. 

14 (e) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2016. 

17 SEC. 202. TREATMENT OF DIRECT PRIMARY CARE. 

18 (a) HSAS.— 

19 (1) ROTH HSA.—Section 530A(c)(2)(A) of the 

20 Internal Revenue Code of 1986, as added by this 

21 Act, is amended by adding at the end the following: 

22 ‘‘Such term shall include the payment of a monthly 

23 or other prepaid amount for the furnishing (or ac24 cess to the furnishing) by a physician or group of 


SSpencer on DSK4SPTVN1PROD with BILLS
67 

•S 191 IS

1 physicians of physician professional services (and an2 cillary services).’’. 

3 (2) HSA.—Section 223(d)(2)(A) of such Code 

4 is amended by adding at the end the following: 

5 ‘‘Such term shall include the payment of a monthly 

6 or other prepaid amount for the furnishing (or ac7 cess to the furnishing) by a physician or group of 

8 physicians of physician professional services (and an9 cillary services).’’. 

10 (b) NOT TREATED AS HEALTH INSURANCE COV11 ERAGE.— 

12 (1) IN GENERAL.—For purposes of title XXVII 

13 of the Public Health Service Act, subtitle B of title 

14 I of the Employee Retirement Income Security Act 

15 of 1974, PPACA, and this Act, the offering of direct 

16 primary care shall not be treated as the offering of 

17 health insurance coverage and shall not be subject to 

18 regulations as such coverage under such Acts. 

19 (2) DIRECT PRIMARY CARE DEFINED.—In this 

20 subsection, the term ‘‘direct primary care’’ means 

21 the furnishing (or access to the furnishing) by a 

22 physician or group of physicians of physician profes23 sional services (and ancillary services) in return for 

24 payment of a monthly or other prepaid amount. 


SSpencer on DSK4SPTVN1PROD with BILLS
68 

•S 191 IS

1 SEC. 203. TREATMENT OF HSA AFTER DEATH OF ACCOUNT 

2 BENEFICIARY. 

3 (a) IN GENERAL.—Section 223(e)(8) of the Internal 

4 Revenue Code of 1986, as redesignated by section 

5 201(c)(3) of this Act, is amended to read as follows: 

6 ‘‘(8) TREATMENT AFTER DEATH OF ACCOUNT

7 BENEFICIARY.—If an individual acquires an account 

8 beneficiary’s interest in a health savings account by 

9 reason of the death of the account beneficiary, such 

10 health savings account shall be treated as if the indi11 vidual were the account beneficiary.’’. 

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

13 this section shall apply with respect to interests acquired 

14 after the date of the enactment of this Act. 

15 Subtitle B—Health Care Tax 

16 Credits 

17 SEC. 211. LIMITED APPLICATION OF PPACA HEALTH PRE18 MIUM CREDIT. 

19 (a) IN GENERAL.—Section 36B(c)(1) of the Internal 

20 Revenue Code of 1986 is amended by adding at the end 

21 the following: 

22 ‘‘(E) SPECIAL RULE FOR RESIDENTS OF

23 STATES CONTINUING PPACA IMPLEMENTA24 TION.—No credit shall be allowed under this 

25 section to any individual who is not a qualified 

26 resident (as defined in section 100(15) of the 


SSpencer on DSK4SPTVN1PROD with BILLS
69 

•S 191 IS

1 Patient Freedom Act of 2017) of a State that 

2 has elected the option under section 102(a)(1) 

3 of such Act in relation to the implementation of 

4 title I of the Patient Protection and Affordable 

5 Care Act.’’. 

6 (b) LIMITATION ON AMOUNT OF CREDIT.—Section 

7 36B(b) of the Internal Revenue Code of 1986 is amended 

8 by adding at the end the following new paragraph: 

9 ‘‘(4) LIMITATION ON AMOUNT OF CREDIT.—In 

10 the case of any taxable year beginning in a calendar 

11 year which begins after the date of the enactment of 

12 this paragraph, the Secretary shall reduce the 

13 amount determined under this subsection (deter14 mined before the application of this paragraph) for 

15 each qualified resident (as defined in section 100 of 

16 the Patient Freedom Act of 2017) of a State that 

17 makes an election under section 102(a)(1) of such 

18 Act by an amount equal to— 

19 ‘‘(A) the amount of the reduction described 

20 in section 102(a)(1)(A) of such Act for such 

21 year (calculated by only taking into account 

22 credit allowed under this section), divided by 

23 ‘‘(B) the total number of such qualified 

24 residents of such State estimated by the SecVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00069 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
70 

•S 191 IS

1 retary to claim the credit allowed under sub2 section (a) for such year.’’. 

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

4 this section shall apply to taxable years beginning after 

5 January 1, 2018. 

6 SEC. 212. NEW ROTH HSA CREDIT. 

7 (a) IN GENERAL.—Subpart C of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by inserting after section 36B the fol10 lowing new section: 

11 ‘‘SEC. 36C. ROTH HSA CREDIT. 

12 ‘‘(a) IN GENERAL.—In the case of a qualifying indi13 vidual, there shall be allowed as a credit against the tax 

14 imposed by this subtitle for any taxable year, an amount 

15 equal to the Roth HSA credit amount of the individual 

16 for the taxable year. 

17 ‘‘(b) QUALIFYING INDIVIDUAL.—For purposes of this 

18 section, the term ‘qualifying individual’ means, with re19 spect to any month, any individual who for such month 

20 is a deposit qualifying resident (as defined in section 

21 103(b)(2) of the Patient Freedom Act of 2017) of a State 

22 described in section 102(a)(2) of such Act that elects to 

23 have section 103(b) of such Act carried out by way of the 

24 credit determined under this section. 


SSpencer on DSK4SPTVN1PROD with BILLS
71 

•S 191 IS

1 ‘‘(c) ROTH HSA CREDIT AMOUNT.—For purposes of 

2 this section, the term ‘Roth HSA credit amount’ means, 

3 with respect to any taxable year, the sum of the Roth HSA 

4 deposit amounts determined under section 104 of the Pa5 tient Freedom Act of 2017 with respect to the individual 

6 for all months ending during the taxable year. 

7 ‘‘(d) SPECIAL RULES.—For purposes of this sec8 tion— 

9 ‘‘(1) RECONCILIATION OF CREDIT AND AD10 VANCE CREDIT.— 

11 ‘‘(A) EXCESS ADVANCE PAYMENTS.—If the 

12 advance payments to an individual for a taxable 

13 year under subsection (e) exceed the credit al14 lowed by this section with respect to such indi15 vidual for such taxable year, the tax imposed by 

16 this chapter for the taxable year shall be in17 creased by the amount of such excess. 

18 ‘‘(B) ADVANCE PAYMENT SHORTFALL.—If 

19 the credit allowed by this section (determined 

20 without regard to this subparagraph) with re21 spect to an individual for a taxable year exceeds 

22 the advance payments to such individual for 

23 such taxable year under subsection (e), the Sec24 retary shall, in lieu of a credit allowed against 

25 the tax imposed by this subtitle, make a payVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00071 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
72 

•S 191 IS

1 ment on behalf of such individual to such indi2 vidual’s health savings account in an amount 

3 equal to such excess. 

4 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE5 TURN.—If the taxpayer is married (within the mean6 ing of section 7703) at the close of the taxable year, 

7 the credit shall be allowed under this section only if 

8 the taxpayer and the taxpayer’s spouse file a joint 

9 return for the taxable year. 

10 ‘‘(e) ADVANCE PAYMENT PROGRAM.— 

11 ‘‘(1) IN GENERAL.—The Secretary of the 

12 Treasury, in consultation with the Secretary of 

13 Health and Human Services, shall establish a pro14 gram— 

15 ‘‘(A) to make advance determinations with 

16 respect to the eligibility of individuals for the 

17 credit allowed under this section, and 

18 ‘‘(B) to make advance payments of the 

19 credit allowed under this section directly to the 

20 Roth HSA of any such individual so eligible. 

21 ‘‘(2) PROGRAM REQUIREMENTS.—Such pro22 gram shall be established under rules similar to the 

23 rules of section 1412 of the Patient Protection and 

24 Affordable Care Act, except that advance determina25 tions and advance payments shall be made on reVerDate Sep 11 2014 01:19 Jan 31, 2017 Jkt 069200 PO 00000 Frm 00072 Fmt 6652 Sfmt 6201 E:\BILLS\S191.IS S191

SSpencer on DSK4SPTVN1PROD with BILLS
73 

•S 191 IS

1 quest of the individual with respect to whom the de2 termination is to be made and taking into account 

3 the enrollment process (including any opt-out elec4 tion under such process) established under section 

5 105(c) of the Patient Freedom Act of 2017. 

6 ‘‘(3) TREATMENT AS INCOME.—The amount of 

7 any credit allowed under this section shall be in8 cluded in gross income.’’. 

9 (b) CLERICAL AMENDMENT.—The table of sections 

10 for such subpart is amended by inserting after the item 

11 relating to section 36B the following new item: 

‘‘Sec. 36C. Roth HSA credit.’’. 

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

13 this section shall apply to taxable years beginning after 

14 January 1, 2018. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS