115TH CONGRESS 

1ST SESSION H. R. 1628 

AN ACT 

To provide for reconciliation pursuant to title II of the 

concurrent resolution on the budget for fiscal year 2017. 

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

2 This Act may be cited as the ‘‘American Health Care 

3 Act of 2017’’. 

4 SEC. 2. TABLE OF CONTENTS. 

5 The table of contents of this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

TITLE I—ENERGY AND COMMERCE 

Subtitle A—Patient Access to Public Health Programs 

Sec. 101. The Prevention and Public Health Fund. 

Sec. 102. Community health center program. 

Sec. 103. Federal payments to States. 

Subtitle B—Medicaid Program Enhancement 

Sec. 111. Repeal of Medicaid provisions. 

Sec. 112. Repeal of Medicaid expansion. 

Sec. 113. Elimination of DSH cuts. 

Sec. 114. Reducing State Medicaid costs. 

Sec. 115. Safety net funding for non-expansion States. 

Sec. 116. Providing incentives for increased frequency of eligibility redeterminations. 

Sec. 117. Permitting States to apply a work requirement for nondisabled, nonelderly, nonpregnant adults under Medicaid. 

Subtitle C—Per Capita Allotment for Medical Assistance 

Sec. 121. Per capita allotment for medical assistance. 

Subtitle D—Patient Relief and Health Insurance Market Stability 

Sec. 131. Repeal of cost-sharing subsidy. 

Sec. 132. Patient and State Stability Fund. 

Sec. 133. Continuous health insurance coverage incentive. 

Sec. 134. Increasing coverage options. 

Sec. 135. Change in permissible age variation in health insurance premium 

rates. 

Subtitle E—Implementation Funding 

Sec. 141. American Health Care Implementation Fund. 

TITLE II—COMMITTEE ON WAYS AND MEANS 

Subtitle A—Repeal and Replace of Health-Related Tax Policy 

Sec. 201. Recapture excess advance payments of premium tax credits. 

Sec. 202. Additional modifications to premium tax credit. 

Sec. 203. Small business tax credit. 

Sec. 204. Individual mandate. 
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Sec. 205. Employer mandate. 

Sec. 206. Repeal of the tax on employee health insurance premiums and health 

plan benefits. 

Sec. 207. Repeal of tax on over-the-counter medications. 

Sec. 208. Repeal of increase of tax on health savings accounts. 

Sec. 209. Repeal of limitations on contributions to flexible spending accounts. 

Sec. 210. Repeal of medical device excise tax. 

Sec. 211. Repeal of elimination of deduction for expenses allocable to medicare 

part D subsidy. 

Sec. 212. Reduction of income threshold for determining medical care deduction. 

Sec. 213. Repeal of Medicare tax increase. 

Sec. 214. Refundable tax credit for health insurance coverage. 

Sec. 215. Maximum contribution limit to health savings account increased to 

amount of deductible and out-of-pocket limitation. 

Sec. 216. Allow both spouses to make catch-up contributions to the same health 

savings account. 

Sec. 217. Special rule for certain medical expenses incurred before establishment of health savings account. 

Subtitle B—Repeal of Certain Consumer Taxes 

Sec. 221. Repeal of tax on prescription medications. 

Sec. 222. Repeal of health insurance tax. 

Subtitle C—Repeal of Tanning Tax 

Sec. 231. Repeal of tanning tax. 

Subtitle D—Remuneration From Certain Insurers 

Sec. 241. Remuneration from certain insurers. 

Subtitle E—Repeal of Net Investment Income Tax 

Sec. 251. Repeal of net investment income tax. 

1 TITLE I—ENERGY AND 

2 COMMERCE 

3 Subtitle A—Patient Access to 

4 Public Health Programs 

5 SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND. 

6 (a) IN GENERAL.—Subsection (b) of section 4002 of 

7 the Patient Protection and Affordable Care Act (42 

8 U.S.C. 300u–11), as amended by section 5009 of the 21st 

9 Century Cures Act, is amended— 
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1 (1) in paragraph (2), by adding ‘‘and’’ at the 

2 end; 

3 (2) in paragraph (3)— 

4 (A) by striking ‘‘each of fiscal years 2018 

5 and 2019’’ and inserting ‘‘fiscal year 2018’’; 

6 and 

7 (B) by striking the semicolon at the end 

8 and inserting a period; and 

9 (3) by striking paragraphs (4) through (8). 

10 (b) RESCISSION OF UNOBLIGATED FUNDS.—Of the 

11 funds made available by such section 4002, the unobli12 gated balance at the end of fiscal year 2018 is rescinded. 

13 SEC. 102. COMMUNITY HEALTH CENTER PROGRAM. 

14 Effective as if included in the enactment of the Medi15 care Access and CHIP Reauthorization Act of 2015 (Pub16 lic Law 114–10, 129 Stat. 87), paragraph (1) of section 

17 221(a) of such Act is amended by inserting ‘‘, and an ad18 ditional $422,000,000 for fiscal year 2017’’ after ‘‘2017’’. 

19 SEC. 103. FEDERAL PAYMENTS TO STATES. 

20 (a) IN GENERAL.—Notwithstanding section 504(a), 

21 1902(a)(23), 1903(a), 2002, 2005(a)(4), 2102(a)(7), or 

22 2105(a)(1) of the Social Security Act (42 U.S.C. 704(a), 

23 1396a(a)(23), 1396b(a), 1397a, 1397d(a)(4), 

24 1397bb(a)(7), 1397ee(a)(1)), or the terms of any Med25 icaid waiver in effect on the date of enactment of this Act 
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1 that is approved under section 1115 or 1915 of the Social 

2 Security Act (42 U.S.C. 1315, 1396n), for the 1-year pe3 riod beginning on the date of the enactment of this Act, 

4 no Federal funds provided from a program referred to in 

5 this subsection that is considered direct spending for any 

6 year may be made available to a State for payments to 

7 a prohibited entity, whether made directly to the prohib8 ited entity or through a managed care organization under 

9 contract with the State. 

10 (b) DEFINITIONS.—In this section: 

11 (1) PROHIBITED ENTITY.—The term ‘‘prohib12 ited entity’’ means an entity, including its affiliates, 

13 subsidiaries, successors, and clinics— 

14 (A) that, as of the date of enactment of 

15 this Act— 

16 (i) is an organization described in sec17 tion 501(c)(3) of the Internal Revenue 

18 Code of 1986 and exempt from tax under 

19 section 501(a) of such Code; 

20 (ii) is an essential community provider 

21 described in section 156.235 of title 45, 

22 Code of Federal Regulations (as in effect 

23 on the date of enactment of this Act), that 

24 is primarily engaged in family planning 
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1 services, reproductive health, and related 

2 medical care; and 

3 (iii) provides for abortions, other than 

4 an abortion— 

5 (I) if the pregnancy is the result 

6 of an act of rape or incest; or 

7 (II) in the case where a woman 

8 suffers from a physical disorder, phys9 ical injury, or physical illness that 

10 would, as certified by a physician, 

11 place the woman in danger of death 

12 unless an abortion is performed, in13 cluding a life-endangering physical 

14 condition caused by or arising from 

15 the pregnancy itself; and 

16 (B) for which the total amount of Federal 

17 and State expenditures under the Medicaid pro18 gram under title XIX of the Social Security Act 

19 in fiscal year 2014 made directly to the entity 

20 and to any affiliates, subsidiaries, successors, or 

21 clinics of the entity, or made to the entity and 

22 to any affiliates, subsidiaries, successors, or 

23 clinics of the entity as part of a nationwide 

24 health care provider network, exceeded 

25 $350,000,000. 
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1 (2) DIRECT SPENDING.—The term ‘‘direct 

2 spending’’ has the meaning given that term under 

3 section 250(c) of the Balanced Budget and Emer4 gency Deficit Control Act of 1985 (2 U.S.C. 900(c)). 

5 Subtitle B—Medicaid Program 

6 Enhancement 

7 SEC. 111. REPEAL OF MEDICAID PROVISIONS. 

8 The Social Security Act is amended— 

9 (1) in section 1902 (42 U.S.C. 1396a)— 

10 (A) in subsection (a)(47)(B), by inserting 

11 ‘‘and provided that any such election shall cease 

12 to be effective on January 1, 2020, and no such 

13 election shall be made after that date’’ before 

14 the semicolon at the end; and 

15 (B) in subsection (l)(2)(C), by inserting 

16 ‘‘and ending December 31, 2019,’’ after ‘‘Janu17 ary 1, 2014,’’; 

18 (2) in section 1915(k)(2) (42 U.S.C. 

19 1396n(k)(2)), by striking ‘‘during the period de20 scribed in paragraph (1)’’ and inserting ‘‘on or after 

21 the date referred to in paragraph (1) and before 

22 January 1, 2020’’; and 

23 (3) in section 1920(e) (42 U.S.C. 1396r–1(e)), 

24 by striking ‘‘under clause (i)(VIII), clause (i)(IX), or 

25 clause (ii)(XX) of subsection (a)(10)(A)’’ and insert-
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1 ing ‘‘under clause (i)(VIII) or clause (ii)(XX) of sec2 tion 1902(a)(10)(A) before January 1, 2020, section 

3 1902(a)(10)(A)(i)(IX),’’. 

4 SEC. 112. REPEAL OF MEDICAID EXPANSION. 

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

6 Act (42 U.S.C. 1396 et seq.) is amended— 

7 (1) in section 1902 (42 U.S.C. 1396a)— 

8 (A) in subsection (a)(10)(A)— 

9 (i) in clause (i)(VIII), by inserting 

10 ‘‘and ending December 31, 2019,’’ after 

11 ‘‘2014,’’; 

12 (ii) in clause (ii)(XX), by inserting 

13 ‘‘and ending December 31, 2017,’’ after 

14 ‘‘2014,’’; and 

15 (iii) in clause (ii), by adding at the 

16 end the following new subclause: 

17 ‘‘(XXIII) beginning January 1, 

18 2020— 

19 ‘‘(aa) who are expansion enrollees 

20 (as defined in subsection (nn)(1)); or 

21 ‘‘(bb) who are grandfathered ex22 pansion enrollees (as defined in sub23 section (nn)(2));’’; and 

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

25 subsection: 
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1 ‘‘(nn) EXPANSION ENROLLEES.—In this title: 

2 ‘‘(1) IN GENERAL.—The term ‘expansion en3 rollee’ means an individual— 

4 ‘‘(A) who is under 65 years of age; 

5 ‘‘(B) who is not pregnant; 

6 ‘‘(C) who is not entitled to, or enrolled for, 

7 benefits under part A of title XVIII, or enrolled 

8 for benefits under part B of title XVIII; 

9 ‘‘(D) who is not described in any of sub10 clauses (I) through (VII) of subsection 

11 (a)(10)(A)(i); and 

12 ‘‘(E) whose income (as determined under 

13 subsection (e)(14)) does not exceed 133 percent 

14 of the poverty line (as defined in section 

15 2110(c)(5)) applicable to a family of the size in16 volved. 

17 ‘‘(2) GRANDFATHERED EXPANSION ENROLL18 EES.—The term ‘grandfathered expansion enrollee’ 

19 means an expansion enrollee who— 

20 ‘‘(A) was enrolled under the State plan 

21 under this title (or under a waiver of such plan) 

22 as of December 31, 2019; and 

23 ‘‘(B) does not have a break in eligibility 

24 for medical assistance under such State plan 
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1 (or waiver) for more than one month after such 

2 date. 

3 ‘‘(3) APPLICATION OF RELATED PROVISIONS.— 

4 Any reference in subsection (a)(10)(G), (k), or (gg) 

5 of this section or in section 1903, 1905(a), 1920(e), 

6 or 1937(a)(1)(B) to individuals described in sub7 clause (VIII) of subsection (a)(10)(A)(i) shall be 

8 deemed to include a reference to expansion enrollees 

9 (including grandfathered expansion enrollees).’’; and 

10 (2) in section 1905 (42 U.S.C. 1396d)— 

11 (A) in subsection (y)(1), in the matter pre12 ceding subparagraph (A)— 

13 (i) by inserting ‘‘and that has elected 

14 to cover newly eligible individuals before 

15 March 1, 2017’’ after ‘‘that is one of the 

16 50 States or the District of Columbia’’; 

17 and 

18 (ii) by inserting after ‘‘subclause 

19 (VIII) of section 1902(a)(10)(A)(i)’’ the 

20 following: ‘‘who, for periods after Decem21 ber 31, 2019, are grandfathered expansion 

22 enrollees (as defined in section 

23 1902(nn)(2))’’; and 

24 (B) in subsection (z)(2)— 
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1 (i) in subparagraph (A), by inserting 

2 after ‘‘section 1937’’ the following: ‘‘and, 

3 for periods after December 31, 2019, who 

4 are grandfathered expansion enrollees (as 

5 defined in section 1902(nn)(2))’’; and 

6 (ii) in subparagraph (B)(ii)— 

7 (I) in subclause (III), by adding 

8 ‘‘and’’ at the end; and 

9 (II) by striking subclauses (IV), 

10 (V), and (VI) and inserting the fol11 lowing new subclause: 

12 ‘‘(IV) 2017 and each subsequent year is 80 

13 percent.’’. 

14 (b) SUNSET OF ESSENTIAL HEALTH BENEFITS RE15 QUIREMENT.—Section 1937(b)(5) of the Social Security 

16 Act (42 U.S.C. 1396u–7(b)(5)) is amended by adding at 

17 the end the following: ‘‘This paragraph shall not apply 

18 after December 31, 2019.’’. 

19 SEC. 113. ELIMINATION OF DSH CUTS. 

20 Section 1923(f) of the Social Security Act (42 U.S.C. 

21 1396r–4(f)) is amended— 

22 (1) in paragraph (7)— 

23 (A) in subparagraph (A)— 

24 (i) in clause (i)— 
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1 (I) in the matter preceding sub2 clause (I), by striking ‘‘2025’’ and in3 serting ‘‘2019’’; and 

4 (ii) in clause (ii)— 

5 (I) in subclause (I), by adding 

6 ‘‘and’’ at the end; 

7 (II) in subclause (II), by striking 

8 the semicolon at the end and inserting 

9 a period; and 

10 (III) by striking subclauses (III) 

11 through (VIII); and 

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

13 subparagraph: 

14 ‘‘(C) EXEMPTION FROM REDUCTION FOR

15 NON-EXPANSION STATES.— 

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

17 State that is a non-expansion State for a 

18 fiscal year, subparagraph (A)(i) shall not 

19 apply to the DSH allotment for such State 

20 and fiscal year. 

21 ‘‘(ii) NO CHANGE IN REDUCTION FOR

22 EXPANSION STATES.—In the case of a 

23 State that is an expansion State for a fis24 cal year, the DSH allotment for such State 
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1 and fiscal year shall be determined as if 

2 clause (i) did not apply. 

3 ‘‘(iii) NON-EXPANSION AND EXPAN4 SION STATE DEFINED.— 

5 ‘‘(I) The term ‘expansion State’ 

6 means with respect to a fiscal year, a 

7 State that, as of July 1 of the pre8 ceding fiscal year, provides for eligi9 bility under clause (i)(VIII) or 

10 (ii)(XX) of section 1902(a)(10)(A) for 

11 medical assistance under this title (or 

12 a waiver of the State plan approved 

13 under section 1115). 

14 ‘‘(II) The term ‘non-expansion 

15 State’ means, with respect to a fiscal 

16 year, a State that is not an expansion 

17 State.’’; and 

18 (2) in paragraph (8), by striking ‘‘fiscal year 

19 2025’’ and inserting ‘‘fiscal year 2019’’. 

20 SEC. 114. REDUCING STATE MEDICAID COSTS. 

21 (a) LETTING STATES DISENROLL HIGH DOLLAR

22 LOTTERY WINNERS.— 

23 (1) IN GENERAL.—Section 1902 of the Social 

24 Security Act (42 U.S.C. 1396a) is amended— 
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1 (A) in subsection (a)(17), by striking 

2 ‘‘(e)(14), (e)(14)’’ and inserting ‘‘(e)(14), 

3 (e)(15)’’; and 

4 (B) in subsection (e)— 

5 (i) in paragraph (14) (relating to 

6 modified adjusted gross income), by adding 

7 at the end the following new subparagraph: 

8 ‘‘(J) TREATMENT OF CERTAIN LOTTERY

9 WINNINGS AND INCOME RECEIVED AS A LUMP

10 SUM.— 

11 ‘‘(i) IN GENERAL.—In the case of an 

12 individual who is the recipient of qualified 

13 lottery winnings (pursuant to lotteries oc14 curring on or after January 1, 2020) or 

15 qualified lump sum income (received on or 

16 after such date) and whose eligibility for 

17 medical assistance is determined based on 

18 the application of modified adjusted gross 

19 income under subparagraph (A), a State 

20 shall, in determining such eligibility, in21 clude such winnings or income (as applica22 ble) as income received— 

23 ‘‘(I) in the month in which such 

24 winnings or income (as applicable) is 

25 received if the amount of such 
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1 winnings or income is less than 

2 $80,000; 

3 ‘‘(II) over a period of 2 months 

4 if the amount of such winnings or in5 come (as applicable) is greater than or 

6 equal to $80,000 but less than 

7 $90,000; 

8 ‘‘(III) over a period of 3 months 

9 if the amount of such winnings or in10 come (as applicable) is greater than or 

11 equal to $90,000 but less than 

12 $100,000; and 

13 ‘‘(IV) over a period of 3 months 

14 plus 1 additional month for each in15 crement of $10,000 of such winnings 

16 or income (as applicable) received, not 

17 to exceed a period of 120 months (for 

18 winnings or income of $1,260,000 or 

19 more), if the amount of such winnings 

20 or income is greater than or equal to 

21 $100,000. 

22 ‘‘(ii) COUNTING IN EQUAL INSTALL23 MENTS.—For purposes of subclauses (II), 

24 (III), and (IV) of clause (i), winnings or 

25 income to which such subclause applies 
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1 shall be counted in equal monthly install2 ments over the period of months specified 

3 under such subclause. 

4 ‘‘(iii) HARDSHIP EXEMPTION.—An in5 dividual whose income, by application of 

6 clause (i), exceeds the applicable eligibility 

7 threshold established by the State, may 

8 continue to be eligible for medical assist9 ance to the extent that the State deter10 mines, under procedures established by the 

11 State under the State plan (or in the case 

12 of a waiver of the plan under section 1115, 

13 incorporated in such waiver), or as other14 wise established by such State in accord15 ance with such standards as may be speci16 fied by the Secretary, that the denial of eli17 gibility of the individual would cause an 

18 undue medical or financial hardship as de19 termined on the basis of criteria estab20 lished by the Secretary. 

21 ‘‘(iv) NOTIFICATIONS AND ASSIST22 ANCE REQUIRED IN CASE OF LOSS OF ELI23 GIBILITY.—A State shall, with respect to 

24 an individual who loses eligibility for med25 ical assistance under the State plan (or a 
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1 waiver of such plan) by reason of clause 

2 (i), before the date on which the individual 

3 loses such eligibility, inform the individual 

4 of the date on which the individual would 

5 no longer be considered ineligible by reason 

6 of such clause to receive medical assistance 

7 under the State plan or under any waiver 

8 of such plan and the date on which the in9 dividual would be eligible to reapply to re10 ceive such medical assistance. 

11 ‘‘(v) QUALIFIED LOTTERY WINNINGS

12 DEFINED.—In this subparagraph, the term 

13 ‘qualified lottery winnings’ means winnings 

14 from a sweepstakes, lottery, or pool de15 scribed in paragraph (3) of section 4402 of 

16 the Internal Revenue Code of 1986 or a 

17 lottery operated by a multistate or multi18 jurisdictional lottery association, including 

19 amounts awarded as a lump sum payment. 

20 ‘‘(vi) QUALIFIED LUMP SUM INCOME

21 DEFINED.—In this subparagraph, the term 

22 ‘qualified lump sum income’ means income 

23 that is received as a lump sum from one 

24 of the following sources: 
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1 ‘‘(I) Monetary winnings from 

2 gambling (as defined by the Secretary 

3 and including monetary winnings from 

4 gambling activities described in sec5 tion 1955(b)(4) of title 18, United 

6 States Code). 

7 ‘‘(II) Income received as liquid 

8 assets from the estate (as defined in 

9 section 1917(b)(4)) of a deceased in10 dividual.’’; and 

11 (ii) by striking ‘‘(14) EXCLUSION’’ 

12 and inserting ‘‘(15) EXCLUSION’’. 

13 (2) RULES OF CONSTRUCTION.— 

14 (A) INTERCEPTION OF LOTTERY WINNINGS

15 ALLOWED.—Nothing in the amendment made 

16 by paragraph (1)(B)(i) shall be construed as 

17 preventing a State from intercepting the State 

18 lottery winnings awarded to an individual in the 

19 State to recover amounts paid by the State 

20 under the State Medicaid plan under title XIX 

21 of the Social Security Act for medical assistance 

22 furnished to the individual. 

23 (B) APPLICABILITY LIMITED TO ELIGI24 BILITY OF RECIPIENT OF LOTTERY WINNINGS

25 OR LUMP SUM INCOME.—Nothing in the amend-
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1 ment made by paragraph (1)(B)(i) shall be con2 strued, with respect to a determination of 

3 household income for purposes of a determina4 tion of eligibility for medical assistance under 

5 the State plan under title XIX of the Social Se6 curity Act (42 U.S.C. 1396 et seq.) (or a waiver 

7 of such plan) made by applying modified ad8 justed gross income under subparagraph (A) of 

9 section 1902(e)(14) of such Act (42 U.S.C. 

10 1396a(e)(14)), as limiting the eligibility for 

11 such medical assistance of any individual that is 

12 a member of the household other than the indi13 vidual (or the individual’s spouse) who received 

14 qualified lottery winnings or qualified lump-sum 

15 income (as defined in subparagraph (J) of such 

16 section 1902(e)(14), as added by paragraph 

17 (1)(B)(i) of this subsection). 

18 (b) REPEAL OF RETROACTIVE ELIGIBILITY.— 

19 (1) IN GENERAL.— 

20 (A) STATE PLAN REQUIREMENTS.—Section 

21 1902(a)(34) of the Social Security Act (42 

22 U.S.C. 1396a(a)(34)) is amended by striking 

23 ‘‘in or after the third month before the month 

24 in which he made application’’ and inserting ‘‘in 
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1 or after the month in which the individual made 

2 application’’. 

3 (B) DEFINITION OF MEDICAL ASSIST4 ANCE.—Section 1905(a) of the Social Security 

5 Act (42 U.S.C. 1396d(a)) is amended by strik6 ing ‘‘in or after the third month before the 

7 month in which the recipient makes application 

8 for assistance’’ and inserting ‘‘in or after the 

9 month in which the recipient makes application 

10 for assistance’’. 

11 (2) EFFECTIVE DATE.—The amendments made 

12 by paragraph (1) shall apply to medical assistance 

13 with respect to individuals whose eligibility for such 

14 assistance is based on an application for such assist15 ance made (or deemed to be made) on or after Octo16 ber 1, 2017. 

17 (c) UPDATING ALLOWABLE HOME EQUITY LIMITS IN

18 MEDICAID.— 

19 (1) IN GENERAL.—Section 1917(f)(1) of the 

20 Social Security Act (42 U.S.C. 1396p(f)(1)) is 

21 amended— 

22 (A) in subparagraph (A), by striking ‘‘sub23 paragraphs (B) and (C)’’ and inserting ‘‘sub24 paragraph (B)’’; 

25 (B) by striking subparagraph (B); 
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1 (C) by redesignating subparagraph (C) as 

2 subparagraph (B); and 

3 (D) in subparagraph (B), as so redesig4 nated, by striking ‘‘dollar amounts specified in 

5 this paragraph’’ and inserting ‘‘dollar amount 

6 specified in subparagraph (A)’’. 

7 (2) EFFECTIVE DATE.— 

8 (A) IN GENERAL.—The amendments made 

9 by paragraph (1) shall apply with respect to eli10 gibility determinations made after the date that 

11 is 180 days after the date of the enactment of 

12 this section. 

13 (B) EXCEPTION FOR STATE LEGISLA14 TION.—In the case of a State plan under title 

15 XIX of the Social Security Act that the Sec16 retary of Health and Human Services deter17 mines requires State legislation in order for the 

18 respective plan to meet any requirement im19 posed by amendments made by this subsection, 

20 the respective plan shall not be regarded as fail21 ing to comply with the requirements of such 

22 title solely on the basis of its failure to meet 

23 such an additional requirement before the first 

24 day of the first calendar quarter beginning after 

25 the close of the first regular session of the 
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1 State legislature that begins after the date of 

2 the enactment of this Act. For purposes of the 

3 previous sentence, in the case of a State that 

4 has a 2-year legislative session, each year of the 

5 session shall be considered to be a separate reg6 ular session of the State legislature. 

7 SEC. 115. SAFETY NET FUNDING FOR NON-EXPANSION 

8 STATES. 

9 Title XIX of the Social Security Act is amended by 

10 inserting after section 1923 (42 U.S.C. 1396r–4) the fol11 lowing new section: 

12 ‘‘ADJUSTMENT IN PAYMENT FOR SERVICES OF SAFETY

13 NET PROVIDERS IN NON-EXPANSION STATES

14 ‘‘SEC. 1923A. (a) IN GENERAL.—Subject to the limi15 tations of this section, for each year during the period be16 ginning with fiscal year 2018 and ending with fiscal year 

17 2022, each State that is one of the 50 States or the Dis18 trict of Columbia and that, as of July 1 of the preceding 

19 fiscal year, did not provide for eligibility under clause 

20 (i)(VIII) or (ii)(XX) of section 1902(a)(10)(A) for medical 

21 assistance under this title (or a waiver of the State plan 

22 approved under section 1115) (each such State or District 

23 referred to in this section for the fiscal year as a ‘non24 expansion State’) may adjust the payment amounts other25 wise provided under the State plan under this title (or a 

26 waiver of such plan) to health care providers that provide 
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1 health care services to individuals enrolled under this title 

2 (in this section referred to as ‘eligible providers’) so long 

3 as the payment adjustment to such an eligible provider 

4 does not exceed the provider’s costs in furnishing health 

5 care services (as determined by the Secretary and net of 

6 payments under this title, other than under this section, 

7 and by uninsured patients) to individuals who either are 

8 eligible for medical assistance under the State plan (or 

9 under a waiver of such plan) or have no health insurance 

10 or health plan coverage for such services. 

11 ‘‘(b) INCREASE IN APPLICABLE FMAP.—Notwith12 standing section 1905(b), the Federal medical assistance 

13 percentage applicable with respect to expenditures attrib14 utable to a payment adjustment under subsection (a) for 

15 which payment is permitted under subsection (c) shall be 

16 equal to— 

17 ‘‘(1) 100 percent for calendar quarters in fiscal 

18 years 2018, 2019, 2020, and 2021; and 

19 ‘‘(2) 95 percent for calendar quarters in fiscal 

20 year 2022. 

21 ‘‘(c) ANNUAL ALLOTMENT LIMITATION.—Payment 

22 under section 1903(a) shall not be made to a State with 

23 respect to any payment adjustment made under this sec24 tion for all calendar quarters in a fiscal year in excess 

25 of the $2,000,000,000 multiplied by the ratio of— 
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1 ‘‘(1) the population of the State with income 

2 below 138 percent of the poverty line in 2015 (as de3 termined based the table entitled ‘Health Insurance 

4 Coverage Status and Type by Ratio of Income to 

5 Poverty Level in the Past 12 Months by Age’ for the 

6 universe of the civilian noninstitutionalized popu7 lation for whom poverty status is determined based 

8 on the 2015 American Community Survey 1–Year 

9 Estimates, as published by the Bureau of the Cen10 sus), to 

11 ‘‘(2) the sum of the populations under para12 graph (1) for all non-expansion States. 

13 ‘‘(d) DISQUALIFICATION IN CASE OF STATE COV14 ERAGE EXPANSION.—If a State is a non-expansion for a 

15 fiscal year and provides eligibility for medical assistance 

16 described in subsection (a) during the fiscal year, the 

17 State shall no longer be treated as a non-expansion State 

18 under this section for any subsequent fiscal years.’’. 

19 SEC. 116. PROVIDING INCENTIVES FOR INCREASED FRE20 QUENCY OF ELIGIBILITY REDETERMINA21 TIONS. 

22 (a) IN GENERAL.—Section 1902(e)(14) of the Social 

23 Security Act (42 U.S.C. 1396a(e)(14)) (relating to modi24 fied adjusted gross income), as amended by section 
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1 114(a)(1), is further amended by adding at the end the 

2 following: 

3 ‘‘(K) FREQUENCY OF ELIGIBILITY REDE4 TERMINATIONS.—Beginning on October 1, 

5 2017, and notwithstanding subparagraph (H), 

6 in the case of an individual whose eligibility for 

7 medical assistance under the State plan under 

8 this title (or a waiver of such plan) is deter9 mined based on the application of modified ad10 justed gross income under subparagraph (A) 

11 and who is so eligible on the basis of clause 

12 (i)(VIII) or clause (ii)(XX) of subsection 

13 (a)(10)(A), a State shall redetermine such indi14 vidual’s eligibility for such medical assistance 

15 no less frequently than once every 6 months.’’. 

16 (b) INCREASED ADMINISTRATIVE MATCHING PER17 CENTAGE.—For each calendar quarter during the period 

18 beginning on October 1, 2017, and ending on December 

19 31, 2019, the Federal matching percentage otherwise ap20 plicable under section 1903(a) of the Social Security Act 

21 (42 U.S.C. 1396b(a)) with respect to State expenditures 

22 during such quarter that are attributable to meeting the 

23 requirement of section 1902(e)(14) (relating to determina24 tions of eligibility using modified adjusted gross income) 

25 of such Act shall be increased by 5 percentage points with 
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1 respect to State expenditures attributable to activities car2 ried out by the State (and approved by the Secretary) to 

3 increase the frequency of eligibility redeterminations re4 quired by subparagraph (K) of such section (relating to 

5 eligibility redeterminations made on a 6-month basis) (as 

6 added by subsection (a)). 

7 SEC. 117. PERMITTING STATES TO APPLY A WORK RE8 QUIREMENT FOR NONDISABLED, NON9 ELDERLY, NONPREGNANT ADULTS UNDER 

10 MEDICAID. 

11 (a) IN GENERAL.—Section 1902 of the Social Secu12 rity Act (42 U.S.C. 1396a), as previously amended, is fur13 ther amended by adding at the end the following new sub14 section: 

15 ‘‘(oo) WORK REQUIREMENT OPTION FOR NON16 DISABLED, NONELDERLY, NONPREGNANT ADULTS.— 

17 ‘‘(1) IN GENERAL.—Beginning October 1, 

18 2017, subject to paragraph (3), a State may elect to 

19 condition medical assistance to a nondisabled, non20 elderly, nonpregnant individual under this title upon 

21 such an individual’s satisfaction of a work require22 ment (as defined in paragraph (2)). 

23 ‘‘(2) WORK REQUIREMENT DEFINED.—In this 

24 section, the term ‘work requirement’ means, with re25 spect to an individual, the individual’s participation 
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1 in work activities (as defined in section 407(d)) for 

2 such period of time as determined by the State, and 

3 as directed and administered by the State. 

4 ‘‘(3) REQUIRED EXCEPTIONS.—States admin5 istering a work requirement under this subsection 

6 may not apply such requirement to— 

7 ‘‘(A) a woman during pregnancy through 

8 the end of the month in which the 60-day pe9 riod (beginning on the last day of her preg10 nancy) ends; 

11 ‘‘(B) an individual who is under 19 years 

12 of age; 

13 ‘‘(C) an individual who is the only parent 

14 or caretaker relative in the family of a child 

15 who has not attained 6 years of age or who is 

16 the only parent or caretaker of a child with dis17 abilities; or 

18 ‘‘(D) an individual who is married or a 

19 head of household and has not attained 20 

20 years of age and who— 

21 ‘‘(i) maintains satisfactory attendance 

22 at secondary school or the equivalent; or 

23 ‘‘(ii) participates in education directly 

24 related to employment.’’. 
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1 (b) INCREASE IN MATCHING RATE FOR IMPLEMEN2 TATION.—Section 1903 of the Social Security Act (42 

3 U.S.C. 1396b) is amended by adding at the end the fol4 lowing: 

5 ‘‘(aa) The Federal matching percentage otherwise ap6 plicable under subsection (a) with respect to State admin7 istrative expenditures during a calendar quarter for which 

8 the State receives payment under such subsection shall, 

9 in addition to any other increase to such Federal matching 

10 percentage, be increased for such calendar quarter by 5 

11 percentage points with respect to State expenditures at12 tributable to activities carried out by the State (and ap13 proved by the Secretary) to implement subsection (oo) of 

14 section 1902.’’. 

15 Subtitle C—Per Capita Allotment 

16 for Medical Assistance 

17 SEC. 121. PER CAPITA ALLOTMENT FOR MEDICAL ASSIST18 ANCE. 

19 Title XIX of the Social Security Act is amended— 

20 (1) in section 1903 (42 U.S.C. 1396b)— 

21 (A) in subsection (a), in the matter before 

22 paragraph (1), by inserting ‘‘and section 

23 1903A(a)’’ after ‘‘except as otherwise provided 

24 in this section’’; and 
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1 (B) in subsection (d)(1), by striking ‘‘to 

2 which’’ and inserting ‘‘to which, subject to sec3 tion 1903A(a),’’; and 

4 (2) by inserting after such section 1903 the fol5 lowing new section: 

6 ‘‘SEC. 1903A. PER CAPITA-BASED CAP ON PAYMENTS FOR 

7 MEDICAL ASSISTANCE. 

8 ‘‘(a) APPLICATION OF PER CAPITA CAP ON PAY9 MENTS FOR MEDICAL ASSISTANCE EXPENDITURES.— 

10 ‘‘(1) IN GENERAL.—If a State has excess ag11 gregate medical assistance expenditures (as defined 

12 in paragraph (2)) for a fiscal year (beginning with 

13 fiscal year 2020), the amount of payment to the 

14 State under section 1903(a)(1) for each quarter in 

the following fiscal year shall be reduced by 1 15 ⁄4 of 

16 the excess aggregate medical assistance payments 

17 (as defined in paragraph (3)) for that previous fiscal 

18 year. In this section, the term ‘State’ means only the 

19 50 States and the District of Columbia. 

20 ‘‘(2) EXCESS AGGREGATE MEDICAL ASSISTANCE

21 EXPENDITURES.—In this subsection, the term ‘ex22 cess aggregate medical assistance expenditures’ 

23 means, for a State for a fiscal year, the amount (if 

24 any) by which— 
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1 ‘‘(A) the amount of the adjusted total med2 ical assistance expenditures (as defined in sub3 section (b)(1)) for the State and fiscal year; ex4 ceeds 

5 ‘‘(B) the amount of the target total med6 ical assistance expenditures (as defined in sub7 section (c)) for the State and fiscal year. 

8 ‘‘(3) EXCESS AGGREGATE MEDICAL ASSISTANCE

9 PAYMENTS.—In this subsection, the term ‘excess ag10 gregate medical assistance payments’ means, for a 

11 State for a fiscal year, the product of— 

12 ‘‘(A) the excess aggregate medical assist13 ance expenditures (as defined in paragraph (2)) 

14 for the State for the fiscal year; and 

15 ‘‘(B) the Federal average medical assist16 ance matching percentage (as defined in para17 graph (4)) for the State for the fiscal year. 

18 ‘‘(4) FEDERAL AVERAGE MEDICAL ASSISTANCE

19 MATCHING PERCENTAGE.—In this subsection, the 

20 term ‘Federal average medical assistance matching 

21 percentage’ means, for a State for a fiscal year, the 

22 ratio (expressed as a percentage) of— 

23 ‘‘(A) the amount of the Federal payments 

24 that would be made to the State under section 

25 1903(a)(1) for medical assistance expenditures 
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1 for calendar quarters in the fiscal year if para2 graph (1) did not apply; to 

3 ‘‘(B) the amount of the medical assistance 

4 expenditures for the State and fiscal year. 

5 ‘‘(b) ADJUSTED TOTAL MEDICAL ASSISTANCE EX6 PENDITURES.—Subject to subsection (g), the following 

7 shall apply: 

8 ‘‘(1) IN GENERAL.—In this section, the term 

9 ‘adjusted total medical assistance expenditures’ 

10 means, for a State— 

11 ‘‘(A) for fiscal year 2016, the product of— 

12 ‘‘(i) the amount of the medical assist13 ance expenditures (as defined in paragraph 

14 (2)) for the State and fiscal year, reduced 

15 by the amount of any excluded expendi16 tures (as defined in paragraph (3)) for the 

17 State and fiscal year otherwise included in 

18 such medical assistance expenditures; and 

19 ‘‘(ii) the 1903A FY16 population per20 centage (as defined in paragraph (4)) for 

21 the State; or 

22 ‘‘(B) for fiscal year 2019 or a subsequent 

23 fiscal year, the amount of the medical assist24 ance expenditures (as defined in paragraph (2)) 

25 for the State and fiscal year that is attributable 
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1 to 1903A enrollees, reduced by the amount of 

2 any excluded expenditures (as defined in para3 graph (3)) for the State and fiscal year other4 wise included in such medical assistance ex5 penditures and includes non-DSH supplemental 

6 payments (as defined in subsection 

7 (d)(4)(A)(ii)) and payments described in sub8 section (d)(4)(A)(iii) but shall not be construed 

9 as including any expenditures attributable to 

10 the program under section 1928. In applying 

11 subparagraph (B), non-DSH supplemental pay12 ments (as defined in subsection (d)(4)(A)(ii)) 

13 and payments described in subsection 

14 (d)(4)(A)(iii) shall be treated as fully attrib15 utable to 1903A enrollees. 

16 ‘‘(2) MEDICAL ASSISTANCE EXPENDITURES.— 

17 In this section, the term ‘medical assistance expendi18 tures’ means, for a State and fiscal year, the med19 ical assistance payments as reported by medical 

20 service category on the Form CMS-64 quarterly ex21 pense report (or successor to such a report form, 

22 and including enrollment data and subsequent ad23 justments to any such report, in this section referred 

24 to collectively as a ‘CMS-64 report’) for which pay-
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1 ment is (or may otherwise be) made pursuant to sec2 tion 1903(a)(1). 

3 ‘‘(3) EXCLUDED EXPENDITURES.—In this sec4 tion, the term ‘excluded expenditures’ means, for a 

5 State and fiscal year, expenditures under the State 

6 plan (or under a waiver of such plan) that are at7 tributable to any of the following: 

8 ‘‘(A) DSH.—Payment adjustments made 

9 for disproportionate share hospitals under sec10 tion 1923. 

11 ‘‘(B) MEDICARE COST-SHARING.—Pay12 ments made for medicare cost-sharing (as de13 fined in section 1905(p)(3)). 

14 ‘‘(C) SAFETY NET PROVIDER PAYMENT AD15 JUSTMENTS IN NON-EXPANSION STATES.—Pay16 ment adjustments under subsection (a) of sec17 tion 1923A for which payment is permitted 

18 under subsection (c) of such section. 

19 ‘‘(4) 1903A FY 16 POPULATION PERCENTAGE.— 

20 In this subsection, the term ‘1903A FY16 popu21 lation percentage’ means, for a State, the Sec22 retary’s calculation of the percentage of the actual 

23 medical assistance expenditures, as reported by the 

24 State on the CMS–64 reports for calendar quarters 
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1 in fiscal year 2016, that are attributable to 1903A 

2 enrollees (as defined in subsection (e)(1)). 

3 ‘‘(c) TARGET TOTAL MEDICAL ASSISTANCE EXPEND4 ITURES.— 

5 ‘‘(1) CALCULATION.—In this section, the term 

6 ‘target total medical assistance expenditures’ means, 

7 for a State for a fiscal year and subject to para8 graph (4), the sum of the products, for each of the 

9 1903A enrollee categories (as defined in subsection 

10 (e)(2)), of— 

11 ‘‘(A) the target per capita medical assist12 ance expenditures (as defined in paragraph (2)) 

13 for the enrollee category, State, and fiscal year; 

14 and 

15 ‘‘(B) the number of 1903A enrollees for 

16 such enrollee category, State, and fiscal year, as 

17 determined under subsection (e)(4). 

18 ‘‘(2) TARGET PER CAPITA MEDICAL ASSISTANCE

19 EXPENDITURES.—In this subsection, the term ‘tar20 get per capita medical assistance expenditures’ 

21 means, for a 1903A enrollee category and State— 

22 ‘‘(A) for fiscal year 2020, an amount equal 

23 to— 

24 ‘‘(i) the provisional FY19 target per 

25 capita amount for such enrollee category 
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1 (as calculated under subsection (d)(5)) for 

2 the State; increased by 

3 ‘‘(ii) the applicable annual inflation 

4 factor (as defined in paragraph (3)) for 

5 fiscal year 2020; and 

6 ‘‘(B) for each succeeding fiscal year, an 

7 amount equal to— 

8 ‘‘(i) the target per capita medical as9 sistance expenditures (under subparagraph 

10 (A) or this subparagraph) for the 1903A 

11 enrollee category and State for the pre12 ceding fiscal year, increased by 

13 ‘‘(ii) the applicable annual inflation 

14 factor for that succeeding fiscal year. 

15 ‘‘(3) APPLICABLE ANNUAL INFLATION FAC16 TOR.—In paragraph (2), the term ‘applicable annual 

17 inflation factor’ means, for a fiscal year— 

18 ‘‘(A) for each of the 1903A enrollee cat19 egories described in subparagraphs (C), (D), 

20 and (E) of subsection (e)(2), the percentage in21 crease in the medical care component of the 

22 consumer price index for all urban consumers 

23 (U.S. city average) from September of the pre24 vious fiscal year to September of the fiscal year 

25 involved; and 
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1 ‘‘(B) for each of the 1903A enrollee cat2 egories described in subparagraphs (A) and (B) 

3 of subsection (e)(2), the percentage increase de4 scribed in subparagraph (A) plus 1 percentage 

5 point. 

6 ‘‘(4) DECREASE IN TARGET EXPENDITURES

7 FOR REQUIRED EXPENDITURES BY CERTAIN POLIT8 ICAL SUBDIVISIONS.— 

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

10 that had a DSH allotment under section 

11 1923(f) for fiscal year 2016 that was more than 

12 6 times the national average of such allotments 

13 for all the States for such fiscal year and that 

14 requires political subdivisions within the State 

15 to contribute funds towards medical assistance 

16 or other expenditures under the State plan 

17 under this title (or under a waiver of such plan) 

18 for a fiscal year (beginning with fiscal year 

19 2020), the target total medical assistance ex20 penditures for such State and fiscal year shall 

21 be decreased by the amount that political sub22 divisions in the State are required to contribute 

23 under the plan (or waiver) without reimburse24 ment from the State for such fiscal year, other 
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1 than contributions described in subparagraph 

2 (B). 

3 ‘‘(B) EXCEPTIONS.—The contributions de4 scribed in this subparagraph are the following: 

5 ‘‘(i) Contributions required by a State 

6 from a political subdivision that, as of the 

7 first day of the calendar year in which the 

8 fiscal year involved begins— 

9 ‘‘(I) has a population of more 

10 than 5,000,000, as estimated by the 

11 Bureau of the Census; and 

12 ‘‘(II) imposes a local income tax 

13 upon its residents. 

14 ‘‘(ii) Contributions required by a 

15 State from a political subdivision for ad16 ministrative expenses if the State required 

17 such contributions from such subdivision 

18 without reimbursement from the State as 

19 of January 1, 2017. 

20 ‘‘(d) CALCULATION OF FY19 PROVISIONAL TARGET

21 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.—Sub22 ject to subsection (g), the following shall apply: 

23 ‘‘(1) CALCULATION OF BASE AMOUNTS FOR FIS24 CAL YEAR 2016.—For each State the Secretary shall 
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1 calculate (and provide notice to the State not later 

2 than April 1, 2018, of) the following: 

3 ‘‘(A) The amount of the adjusted total 

4 medical assistance expenditures (as defined in 

5 subsection (b)(1)) for the State for fiscal year 

6 2016. 

7 ‘‘(B) The number of 1903A enrollees for 

8 the State in fiscal year 2016 (as determined 

9 under subsection (e)(4)). 

10 ‘‘(C) The average per capita medical as11 sistance expenditures for the State for fiscal 

12 year 2016 equal to— 

13 ‘‘(i) the amount calculated under sub14 paragraph (A); divided by 

15 ‘‘(ii) the number calculated under sub16 paragraph (B). 

17 ‘‘(2) FISCAL YEAR 2019 AVERAGE PER CAPITA

18 AMOUNT BASED ON INFLATING THE FISCAL YEAR

19 2016 AMOUNT TO FISCAL YEAR 2019 BY CPI-MED20 ICAL.—The Secretary shall calculate a fiscal year 

21 2019 average per capita amount for each State 

22 equal to— 

23 ‘‘(A) the average per capita medical assist24 ance expenditures for the State for fiscal year 
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1 2016 (calculated under paragraph (1)(C)); in2 creased by 

3 ‘‘(B) the percentage increase in the med4 ical care component of the consumer price index 

5 for all urban consumers (U.S. city average) 

6 from September, 2016 to September, 2019. 

7 ‘‘(3) AGGREGATE AND AVERAGE EXPENDI8 TURES PER CAPITA FOR FISCAL YEAR 2019.—The 

9 Secretary shall calculate for each State the fol10 lowing: 

11 ‘‘(A) The amount of the adjusted total 

12 medical assistance expenditures (as defined in 

13 subsection (b)(1)) for the State for fiscal year 

14 2019. 

15 ‘‘(B) The number of 1903A enrollees for 

16 the State in fiscal year 2019 (as determined 

17 under subsection (e)(4)). 

18 ‘‘(4) PER CAPITA EXPENDITURES FOR FISCAL

19 YEAR 2019 FOR EACH 1903A ENROLLEE CATEGORY.— 

20 The Secretary shall calculate (and provide notice to 

21 each State not later than January 1, 2020, of) the 

22 following: 

23 ‘‘(A)(i) For each 1903A enrollee category, 

24 the amount of the adjusted total medical assist25 ance expenditures (as defined in subsection 
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1 (b)(1)) for the State for fiscal year 2019 for in2 dividuals in the enrollee category, calculated by 

3 excluding from medical assistance expenditures 

4 those expenditures attributable to expenditures 

5 described in clause (iii) or non-DSH supple6 mental expenditures (as defined in clause (ii)). 

7 ‘‘(ii) In this paragraph, the term ‘non8 DSH supplemental expenditure’ means a pay9 ment to a provider under the State plan (or 

10 under a waiver of the plan) that— 

11 ‘‘(I) is not made under section 1923; 

12 ‘‘(II) is not made with respect to a 

13 specific item or service for an individual; 

14 ‘‘(III) is in addition to any payments 

15 made to the provider under the plan (or 

16 waiver) for any such item or service; and 

17 ‘‘(IV) complies with the limits for ad18 ditional payments to providers under the 

19 plan (or waiver) imposed pursuant to sec20 tion 1902(a)(30)(A), including the regula21 tions specifying upper payment limits 

22 under the State plan in part 447 of title 

23 42, Code of Federal Regulations (or any 

24 successor regulations). 
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1 ‘‘(iii) An expenditure described in this 

2 clause is an expenditure that meets the criteria 

3 specified in subclauses (I), (II), and (III) of 

4 clause (ii) and is authorized under section 1115 

5 for the purposes of funding a delivery system 

6 reform pool, uncompensated care pool, a des7 ignated state health program, or any other 

8 similar expenditure (as defined by the Sec9 retary). 

10 ‘‘(B) For each 1903A enrollee category, 

11 the number of 1903A enrollees for the State in 

12 fiscal year 2019 in the enrollee category (as de13 termined under subsection (e)(4)). 

14 ‘‘(C) For fiscal year 2016, the State’s non15 DSH supplemental and pool payment percent16 age is equal to the ratio (expressed as a per17 centage) of— 

18 ‘‘(i) the total amount of non-DSH 

19 supplemental expenditures (as defined in 

20 subparagraph (A)(ii)) and payments de21 scribed in subparagraph (A)(iii) for the 

22 State for fiscal year 2016; to 

23 ‘‘(ii) the amount described in sub24 section (b)(1)(A) for the State for fiscal 

25 year 2016. 
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1 ‘‘(D) For each 1903A enrollee category an 

2 average medical assistance expenditures per 

3 capita for the State for fiscal year 2019 for the 

4 enrollee category equal to— 

5 ‘‘(i) the amount calculated under sub6 paragraph (A) for the State, increased by 

7 the non-DSH supplemental and pool pay8 ment percentage for the State (as cal9 culated under subparagraph (C)); divided 

10 by 

11 ‘‘(ii) the number calculated under sub12 paragraph (B) for the State for the en13 rollee category. 

14 ‘‘(5) PROVISIONAL FY19 PER CAPITA TARGET

15 AMOUNT FOR EACH 1903A ENROLLEE CATEGORY.— 

16 Subject to subsection (f)(2), the Secretary shall cal17 culate for each State a provisional FY19 per capita 

18 target amount for each 1903A enrollee category 

19 equal to the average medical assistance expenditures 

20 per capita for the State for fiscal year 2019 (as cal21 culated under paragraph (4)(D)) for such enrollee 

22 category multiplied by the ratio of— 

23 ‘‘(A) the product of— 
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1 ‘‘(i) the fiscal year 2019 average per 

2 capita amount for the State, as calculated 

3 under paragraph (2); and 

4 ‘‘(ii) the number of 1903A enrollees 

5 for the State in fiscal year 2019, as cal6 culated under paragraph (3)(B); to 

7 ‘‘(B) the amount of the adjusted total 

8 medical assistance expenditures for the State 

9 for fiscal year 2019, as calculated under para10 graph (3)(A). 

11 ‘‘(e) 1903A ENROLLEE; 1903A ENROLLEE CAT12 EGORY.—Subject to subsection (g), for purposes of this 

13 section, the following shall apply: 

14 ‘‘(1) 1903A ENROLLEE.—The term ‘1903A en15 rollee’ means, with respect to a State and a month 

16 and subject to subsection (i)(1)(B), any Medicaid 

17 enrollee (as defined in paragraph (3)) for the month, 

18 other than such an enrollee who for such month is 

19 in any of the following categories of excluded indi20 viduals: 

21 ‘‘(A) CHIP.—An individual who is pro22 vided, under this title in the manner described 

23 in section 2101(a)(2), child health assistance 

24 under title XXI. 
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1 ‘‘(B) IHS.—An individual who receives 

2 any medical assistance under this title for serv3 ices for which payment is made under the third 

4 sentence of section 1905(b). 

5 ‘‘(C) BREAST AND CERVICAL CANCER

6 SERVICES ELIGIBLE INDIVIDUAL.—An indi7 vidual who is entitled to medical assistance 

8 under this title only pursuant to section 

9 1902(a)(10)(A)(ii)(XVIII). 

10 ‘‘(D) PARTIAL-BENEFIT ENROLLEES.—An 

11 individual who— 

12 ‘‘(i) is an alien who is entitled to med13 ical assistance under this title only pursu14 ant to section 1903(v)(2); 

15 ‘‘(ii) is entitled to medical assistance 

16 under this title only pursuant to subclause 

17 (XII) or (XXI) of section 

18 1902(a)(10)(A)(ii) (or pursuant to a waiv19 er that provides only comparable benefits); 

20 ‘‘(iii) is a dual eligible individual (as 

21 defined in section 1915(h)(2)(B)) and is 

22 entitled to medical assistance under this 

23 title (or under a waiver) only for some or 

24 all of medicare cost-sharing (as defined in 

25 section 1905(p)(3)); or 
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1 ‘‘(iv) is entitled to medical assistance 

2 under this title and for whom the State is 

3 providing a payment or subsidy to an em4 ployer for coverage of the individual under 

5 a group health plan pursuant to section 

6 1906 or section 1906A (or pursuant to a 

7 waiver that provides only comparable bene8 fits). 

9 ‘‘(2) 1903A ENROLLEE CATEGORY.—The term 

10 ‘1903A enrollee category’ means each of the fol11 lowing: 

12 ‘‘(A) ELDERLY.—A category of 1903A en13 rollees who are 65 years of age or older. 

14 ‘‘(B) BLIND AND DISABLED.—A category 

15 of 1903A enrollees (not described in the pre16 vious subparagraph) who are eligible for med17 ical assistance under this title on the basis of 

18 being blind or disabled. 

19 ‘‘(C) CHILDREN.—A category of 1903A 

20 enrollees (not described in a previous subpara21 graph) who are children under 19 years of age. 

22 ‘‘(D) EXPANSION ENROLLEES.—A cat23 egory of 1903A enrollees (not described in a 

24 previous subparagraph) for whom the amounts 

25 expended for medical assistance are subject to 
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1 an increase or change in the Federal medical 

2 assistance percentage under subsection (y) or 

3 (z)(2), respectively, of section 1905. 

4 ‘‘(E) OTHER NONELDERLY, NONDISABLED, 

5 NON-EXPANSION ADULTS.—A category of 

6 1903A enrollees who are not described in any 

7 previous subparagraph. 

8 ‘‘(3) MEDICAID ENROLLEE.—The term ‘Med9 icaid enrollee’ means, with respect to a State for a 

10 month, an individual who is eligible for medical as11 sistance for items or services under this title and en12 rolled under the State plan (or a waiver of such 

13 plan) under this title for the month. 

14 ‘‘(4) DETERMINATION OF NUMBER OF 1903A

15 ENROLLEES.—The number of 1903A enrollees for a 

16 State and fiscal year, and, if applicable, for a 1903A 

17 enrollee category, is the average monthly number of 

18 Medicaid enrollees for such State and fiscal year 

19 (and, if applicable, in such category) that are re20 ported through the CMS–64 report under (and sub21 ject to audit under) subsection (h). 

22 ‘‘(f) SPECIAL PAYMENT RULES.— 

23 ‘‘(1) APPLICATION IN CASE OF RESEARCH AND

24 DEMONSTRATION PROJECTS AND OTHER WAIVERS.— 

25 In the case of a State with a waiver of the State 
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1 plan approved under section 1115, section 1915, or 

2 another provision of this title, this section shall 

3 apply to medical assistance expenditures and medical 

4 assistance payments under the waiver, in the same 

5 manner as if such expenditures and payments had 

6 been made under a State plan under this title and 

7 the limitations on expenditures under this section 

8 shall supersede any other payment limitations or 

9 provisions (including limitations based on a per cap10 ita limitation) otherwise applicable under such a 

11 waiver. 

12 ‘‘(2) TREATMENT OF STATES EXPANDING COV13 ERAGE AFTER FISCAL YEAR 2016.—In the case of a 

14 State that did not provide for medical assistance for 

15 the 1903A enrollee category described in subsection 

16 (e)(2)(D) during fiscal year 2016 but which provides 

17 for such assistance for such category in a subse18 quent year, the provisional FY19 per capita target 

19 amount for such enrollee category under subsection 

20 (d)(5) shall be equal to the provisional FY19 per 

21 capita target amount for the 1903A enrollee cat22 egory described in subsection (e)(2)(E). 

23 ‘‘(3) IN CASE OF STATE FAILURE TO REPORT

24 NECESSARY DATA.—If a State for any quarter in a 

25 fiscal year (beginning with fiscal year 2019) fails to 
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1 satisfactorily submit data on expenditures and en2 rollees in accordance with subsection (h)(1), for such 

3 fiscal year and any succeeding fiscal year for which 

4 such data are not satisfactorily submitted— 

5 ‘‘(A) the Secretary shall calculate and 

6 apply subsections (a) through (e) with respect 

7 to the State as if all 1903A enrollee categories 

8 for which such expenditure and enrollee data 

9 were not satisfactorily submitted were a single 

10 1903A enrollee category; and 

11 ‘‘(B) the growth factor otherwise applied 

12 under subsection (c)(2)(B) shall be decreased 

13 by 1 percentage point. 

14 ‘‘(g) RECALCULATION OF CERTAIN AMOUNTS FOR

15 DATA ERRORS.—The amounts and percentage calculated 

16 under paragraphs (1) and (4)(C) of subsection (d) for a 

17 State for fiscal year 2016, and the amounts of the ad18 justed total medical assistance expenditures calculated 

19 under subsection (b) and the number of Medicaid enrollees 

20 and 1903A enrollees determined under subsection (e)(4) 

21 for a State for fiscal year 2016, fiscal year 2019, and any 

22 subsequent fiscal year, may be adjusted by the Secretary 

23 based upon an appeal (filed by the State in such a form, 

24 manner, and time, and containing such information relat25 ing to data errors that support such appeal, as the Sec-
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1 retary specifies) that the Secretary determines to be valid, 

2 except that any adjustment by the Secretary under this 

3 subsection for a State may not result in an increase of 

4 the target total medical assistance expenditures exceeding 

5 2 percent. 

6 ‘‘(h) REQUIRED REPORTING AND AUDITING OF

7 CMS–64 DATA; TRANSITIONAL INCREASE IN FEDERAL

8 MATCHING PERCENTAGE FOR CERTAIN ADMINISTRATIVE

9 EXPENSES.— 

10 ‘‘(1) REPORTING.—In addition to the data re11 quired on form Group VIII on the CMS–64 report 

12 form as of January 1, 2017, in each CMS-64 report 

13 required to be submitted (for each quarter beginning 

14 on or after October 1, 2018), the State shall include 

15 data on medical assistance expenditures within such 

16 categories of services and categories of enrollees (in17 cluding each 1903A enrollee category and each cat18 egory of excluded individuals under subsection 

19 (e)(1)) and the numbers of enrollees within each of 

20 such enrollee categories, as the Secretary determines 

21 are necessary (including timely guidance published 

22 as soon as possible after the date of the enactment 

23 of this section) in order to implement this section 

24 and to enable States to comply with the requirement 

25 of this paragraph on a timely basis. 
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1 ‘‘(2) AUDITING.—The Secretary shall conduct 

2 for each State an audit of the number of individuals 

3 and expenditures reported through the CMS–64 re4 port for fiscal year 2016, fiscal year 2019, and each 

5 subsequent fiscal year, which audit may be con6 ducted on a representative sample (as determined by 

7 the Secretary). 

8 ‘‘(3) TEMPORARY INCREASE IN FEDERAL

9 MATCHING PERCENTAGE TO SUPPORT IMPROVED

10 DATA REPORTING SYSTEMS FOR FISCAL YEARS 2018

11 AND 2019.—For amounts expended during calendar 

12 quarters beginning on or after October 1, 2017, and 

13 before October 1, 2019— 

14 ‘‘(A) the Federal matching percentage ap15 plied under section 1903(a)(3)(A)(i) shall be in16 creased by 10 percentage points to 100 percent; 

17 ‘‘(B) the Federal matching percentage ap18 plied under section 1903(a)(3)(B) shall be in19 creased by 25 percentage points to 100 percent; 

20 and 

21 ‘‘(C) the Federal matching percentage ap22 plied under section 1903(a)(7) shall be in23 creased by 10 percentage points to 60 percent 

24 but only with respect to amounts expended that 

25 are attributable to a State’s additional adminis-
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1 trative expenditures to implement the data re2 quirements of paragraph (1). 

3 ‘‘(i) FLEXIBLE BLOCK GRANT OPTION FOR

4 STATES.— 

5 ‘‘(1) IN GENERAL.—In the case of a State that 

6 elects the option of applying this subsection for a 

7 10-fiscal-year period (beginning no earlier than fiscal 

8 year 2020 and, at the State option, for any suc9 ceeding 10-fiscal-year period) and that has a plan 

10 approved by the Secretary under paragraph (2) to 

11 carry out the option for such period— 

12 ‘‘(A) the State shall receive, instead of 

13 amounts otherwise payable to the State under 

14 this title for medical assistance for block grant 

15 individuals within the applicable block grant 

16 category (as defined in paragraph (6)) for the 

17 State during the period in which the election is 

18 in effect, the amount specified in paragraph 

19 (4); 

20 ‘‘(B) the previous provisions of this section 

21 shall be applied as if— 

22 ‘‘(i) block grant individuals within the 

23 applicable block grant category for the 

24 State and period were not section 1903A 

25 enrollees for each 10-fiscal year period for 
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1 which the State elects to apply this sub2 section; and 

3 ‘‘(ii) if such option is not extended at 

4 the end of a 10-fiscal-year-period, the per 

5 capita limitations under such previous pro6 visions shall again apply after such period 

7 and such limitations shall be applied as if 

8 the election under this subsection had 

9 never taken place; 

10 ‘‘(C) the payment under this subsection 

11 may only be used consistent with the State plan 

12 under paragraph (2) for block grant health care 

13 assistance (as defined in paragraph (7)); and 

14 ‘‘(D) with respect to block grant individ15 uals within the applicable block grant category 

16 for the State for which block grant health care 

17 assistance is made available under this sub18 section, such assistance shall be instead of med19 ical assistance otherwise provided to the indi20 vidual under this title. 

21 ‘‘(2) STATE PLAN FOR ADMINISTERING BLOCK

22 GRANT OPTION.— 

23 ‘‘(A) IN GENERAL.—No payment shall be 

24 made under this subsection to a State pursuant 

25 to an election for a 10-fiscal-year period under 
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1 paragraph (1) unless the State has a plan, ap2 proved under subparagraph (B), for such period 

3 that specifies— 

4 ‘‘(i) the applicable block grant cat5 egory with respect to which the State will 

6 apply the option under this subsection for 

7 such period; 

8 ‘‘(ii) the conditions for eligibility of 

9 block grant individuals within such appli10 cable block grant category for block grant 

11 health care assistance under the option, 

12 which shall be instead of other conditions 

13 for eligibility under this title, except that 

14 in the case of a State that has elected the 

15 applicable block grant category described 

16 in— 

17 ‘‘(I) subparagraph (A) of para18 graph (6), the plan must provide for 

19 eligibility for pregnant women and 

20 children required to be provided med21 ical assistance under subsections 

22 (a)(10)(A)(i) and (e)(4) of section 

23 1902; or 

24 ‘‘(II) subparagraph (B) of para25 graph (6), the plan must provide for 
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1 eligibility for pregnant women re2 quired to be provided medical assist3 ance under subsection (a)(10)(A)(i); 

4 and 

5 ‘‘(iii) the types of items and services, 

6 the amount, duration, and scope of such 

7 services, the cost-sharing with respect to 

8 such services, and the method for delivery 

9 of block grant health care assistance under 

10 this subsection, which shall be instead of 

11 the such types, amount, duration, and 

12 scope, cost-sharing, and methods of deliv13 ery for medical assistance otherwise re14 quired under this title, except that the plan 

15 must provide for assistance for— 

16 ‘‘(I) hospital care; 

17 ‘‘(II) surgical care and treat18 ment; 

19 ‘‘(III) medical care and treat20 ment; 

21 ‘‘(IV) obstetrical and prenatal 

22 care and treatment; 

23 ‘‘(V) prescribed drugs, medicines, 

24 and prosthetic devices; 
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1 ‘‘(VI) other medical supplies and 

2 services; and 

3 ‘‘(VII) health care for children 

4 under 18 years of age. 

5 ‘‘(B) REVIEW AND APPROVAL.—A plan de6 scribed in subparagraph (A) shall be deemed 

7 approved by the Secretary unless the Secretary 

8 determines, within 30 days after the date of the 

9 Secretary’s receipt of the plan, that the plan is 

10 incomplete or actuarially unsound and, with re11 spect to such plan and its implementation 

12 under this subsection, the requirements of para13 graphs (1), (10)(B), (17), and (23) of section 

14 1902(a) shall not apply. 

15 ‘‘(3) AMOUNT OF BLOCK GRANT FUNDS.— 

16 ‘‘(A) FOR INITIAL FISCAL YEAR.—The 

17 block grant amount under this paragraph for a 

18 State for the initial fiscal year in the first 10- 

19 fiscal-year period is equal to the sum of the 

20 products (for each applicable block grant cat21 egory for such State and period) of— 

22 ‘‘(i) the target per capita medical as23 sistance expenditures for such State for 

24 such fiscal year (under subsection (c)(2)); 
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1 ‘‘(ii) the number of 1903A enrollees 

2 for such category and State for fiscal year 

3 2019, as determined under subsection 

4 (e)(4); and 

5 ‘‘(iii) the Federal average medical as6 sistance matching percentage (as defined 

7 in subsection (a)(4)) for the State for fis8 cal year 2019. 

9 ‘‘(B) FOR ANY SUBSEQUENT FISCAL

10 YEAR.—The block grant amount under this 

11 paragraph for a State for each succeeding fiscal 

12 year (in any 10-fiscal-year period) is equal to 

13 the block grant amount under subparagraph 

14 (A) (or this subparagraph) for the State for the 

15 previous fiscal year increased by the annual in16 crease in the consumer price index for all urban 

17 consumers (all items; U.S. city average) for the 

18 fiscal year involved. 

19 ‘‘(C) AVAILABILITY OF ROLLOVER

20 FUNDS.—The block grant amount under this 

21 paragraph for a State for a fiscal year shall re22 main available to the State for expenditures 

23 under this subsection for the succeeding fiscal 

24 year but only if an election is in effect under 
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1 this subsection for the State in such succeeding 

2 fiscal year. 

3 ‘‘(4) FEDERAL PAYMENT AND STATE RESPONSI4 BILITY.—The Secretary shall pay to each State with 

5 an election in effect under this subsection for a fiscal 

6 year, from its block grant amount under paragraph 

7 (3) available for such fiscal year, an amount for 

8 each quarter of such fiscal year equal to the en9 hanced FMAP described in the first sentence of sec10 tion 2105(b) of the total amount expended under the 

11 State plan under this subsection during such quar12 ter, and the State is responsible for the balance of 

13 funds to carry out such plan. 

14 ‘‘(5) BLOCK GRANT INDIVIDUAL DEFINED.—In 

15 this subsection, the term ‘block grant individual’ 

16 means, with respect to a State for a 10-fiscal-year 

17 period, an individual who is not disabled (as defined 

18 for purposes of the State plan) and who is within an 

19 applicable block grant category for the State and 

20 such period. 

21 ‘‘(6) APPLICABLE BLOCK GRANT CATEGORY DE22 FINED.—In this subsection, the term ‘applicable 

23 block grant category’ means with respect to a State 

24 for a 10-fiscal-year period, either of the following as 
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1 specified by the State for such period in its plan 

2 under paragraph (2)(A)(i): 

3 ‘‘(A) 2 ENROLLEE CATEGORIES.—Both of 

4 the following 1903A enrollee categories: 

5 ‘‘(i) CHILDREN.—The 1903A enrollee 

6 category specified in subparagraph (C) of 

7 subsection (e)(2). 

8 ‘‘(ii) OTHER NONELDERLY, NON9 DISABLED, NON-EXPANSION ADULTS.—The 

10 1903A enrollee category specified in sub11 paragraph (E) of such subsection. 

12 ‘‘(B) OTHER NONELDERLY, NONDISABLED, 

13 NON-EXPANSION ADULTS.—Only the 1903A en14 rollee category specified in subparagraph (E) of 

15 subsection (e)(2). 

16 ‘‘(7) BLOCK GRANT HEALTH CARE ASSIST17 ANCE.—In this subsection, the term ‘block grant 

18 health care assistance’ means assistance for health19 care-related items and medical services for block 

20 grant individuals within the applicable block grant 

21 category for the State and 10-fiscal-year period in22 volved who are low-income individuals (as defined by 

23 the State). 

24 ‘‘(8) AUDITING.—As a condition of receiving 

25 funds under this subsection, a State shall contract 
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1 with an independent entity to conduct audits of its 

2 expenditures made with respect to activities funded 

3 under this subsection for each fiscal year for which 

4 the State elects to apply this subsection to ensure 

5 that such funds are used consistent with this sub6 section and shall make such audits available to the 

7 Secretary upon the request of the Secretary.’’. 

8 Subtitle D—Patient Relief and 

9 Health Insurance Market Stability 

10 SEC. 131. REPEAL OF COST-SHARING SUBSIDY. 

11 (a) IN GENERAL.—Section 1402 of the Patient Pro12 tection and Affordable Care Act is repealed. 

13 (b) EFFECTIVE DATE.—The repeal made by sub14 section (a) shall apply to cost-sharing reductions (and pay15 ments to issuers for such reductions) for plan years begin16 ning after December 31, 2019. 

17 SEC. 132. PATIENT AND STATE STABILITY FUND. 

18 The Social Security Act (42 U.S.C. 301 et seq.) is 

19 amended by adding at the end the following new title: 

20 ‘‘TITLE XXII—PATIENT AND 

21 STATE STABILITY FUND 

22 ‘‘SEC. 2201. ESTABLISHMENT OF PROGRAM. 

23 ‘‘There is hereby established the ‘Patient and State 

24 Stability Fund’ to be administered by the Secretary of 

25 Health and Human Services, acting through the Adminis-
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1 trator of the Centers for Medicare & Medicaid Services 

2 (in this section referred to as the ‘Administrator’), to pro3 vide funding, in accordance with this title, to the 50 States 

4 and the District of Columbia (each referred to in this sec5 tion as a ‘State’) during the period, subject to section 

6 2204(c), beginning on January 1, 2018, and ending on 

7 December 31, 2026, for the purposes described in section 

8 2202. 

9 ‘‘SEC. 2202. USE OF FUNDS. 

10 ‘‘(a) IN GENERAL.—Subject to subsections (b) and 

11 (c), a State may use the funds allocated to the State under 

12 this title for any of the following purposes: 

13 ‘‘(1) Helping, through the provision of financial 

14 assistance, high-risk individuals who do not have ac15 cess to health insurance coverage offered through an 

16 employer enroll in health insurance coverage in the 

17 individual market in the State, as such market is de18 fined by the State (whether through the establish19 ment of a new mechanism or maintenance of an ex20 isting mechanism for such purpose). 

21 ‘‘(2) Providing incentives to appropriate entities 

22 to enter into arrangements with the State to help 

23 stabilize premiums for health insurance coverage in 

24 the individual market, as such markets are defined 

25 by the State. 
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1 ‘‘(3) Reducing the cost for providing health in2 surance coverage in the individual market and small 

3 group market, as such markets are defined by the 

4 State, to individuals who have, or are projected to 

5 have, a high rate of utilization of health services (as 

6 measured by cost) and to individuals who have high 

7 costs of health insurance coverage due to the low 

8 density population of the State in which they reside. 

9 ‘‘(4) Promoting participation in the individual 

10 market and small group market in the State and in11 creasing health insurance options available through 

12 such market. 

13 ‘‘(5) Promoting access to preventive services; 

14 dental care services (whether preventive or medically 

15 necessary); vision care services (whether preventive 

16 or medically necessary); or any combination of such 

17 services. 

18 ‘‘(6) Maternity coverage and newborn care. 

19 ‘‘(7) Prevention, treatment, or recovery support 

20 services for individuals with mental or substance use 

21 disorders, focused on either or both of the following: 

22 ‘‘(A) Direct inpatient or outpatient clinical 

23 care for treatment of addiction and mental ill24 ness. 
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1 ‘‘(B) Early identification and intervention 

2 for children and young adults with serious men3 tal illness. 

4 ‘‘(8) Providing payments, directly or indirectly, 

5 to health care providers for the provision of such 

6 health care services as are specified by the Adminis7 trator. 

8 ‘‘(9) Providing assistance to reduce out-of-pock9 et costs, such as copayments, coinsurance, pre10 miums, and deductibles, of individuals enrolled in 

11 health insurance coverage in the State. 

12 ‘‘(b) REQUIRED USE OF INCREASE IN ALLOT13 MENT.—A State shall use the additional allocation pro14 vided to the State from the funds appropriated under the 

15 second sentence of section 2204(a) for each year only for 

16 the purposes described in paragraphs (6) and (7) of sub17 section (a). 

18 ‘‘(c) REQUIRED USE OF ADDITIONAL INCREASE TO

19 CERTAIN WAIVER STATES TO PROVIDE FINANCIAL

20 HARDSHIP ASSISTANCE.—A State shall use the additional 

21 allocation provided to the State from the funds appro22 priated under the last sentence of section 2204(a) only 

23 in accordance with such last sentence. 
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1 ‘‘SEC. 2203. STATE ELIGIBILITY AND APPROVAL; DEFAULT 

2 SAFEGUARD. 

3 ‘‘(a) ENCOURAGING STATE OPTIONS FOR ALLOCA4 TIONS.— 

5 ‘‘(1) IN GENERAL.—To be eligible for an alloca6 tion of funds under this title for a year during the 

7 period described in section 2201 for use for one or 

8 more purposes described in section 2202, a State 

9 shall submit to the Administrator an application at 

10 such time (but, in the case of allocations for 2018, 

11 not later than 45 days after the date of the enact12 ment of this title and, in the case of allocations for 

13 a subsequent year, not later than March 31 of the 

14 previous year) and in such form and manner as 

15 specified by the Administrator and containing— 

16 ‘‘(A) a description of how the funds will be 

17 used for such purposes; 

18 ‘‘(B) a certification that the State will 

19 make, from non-Federal funds, expenditures for 

20 such purposes in an amount that is not less 

21 than the State percentage required for the year 

22 under section 2204(e)(1); and 

23 ‘‘(C) such other information as the Admin24 istrator may require. 

25 ‘‘(2) AUTOMATIC APPROVAL.—An application so 

26 submitted is approved unless the Administrator noti-
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1 fies the State submitting the application, not later 

2 than 60 days after the date of the submission of 

3 such application, that the application has been de4 nied for not being in compliance with any require5 ment of this title and of the reason for such denial. 

6 ‘‘(3) ONE-TIME APPLICATION.—If an applica7 tion of a State is approved for a year, with respect 

8 to a purpose described in section 2202, such applica9 tion shall be treated as approved, with respect to 

10 such purpose, for each subsequent year through 

11 2026. 

12 ‘‘(4) TREATMENT AS A STATE HEALTH CARE

13 PROGRAM.—Any program receiving funds from an 

14 allocation for a State under this title, including pur15 suant to subsection (b), shall be considered to be a 

16 ‘State health care program’ for purposes of sections 

17 1128, 1128A, and 1128B. 

18 ‘‘(b) DEFAULT FEDERAL SAFEGUARD.— 

19 ‘‘(1) IN GENERAL.— 

20 ‘‘(A) 2018.—For allocations made under 

21 this title for 2018, in the case of a State that 

22 does not submit an application under subsection 

23 (a) by the 45-day submission date applicable to 

24 such year under subsection (a)(1) and in the 

25 case of a State that does submit such an appli-
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1 cation by such date that is not approved, sub2 ject to section 2204(e), the Administrator, in 

3 consultation with the State insurance commis4 sioner, shall use the allocation that would other5 wise be provided to the State under this title 

6 for such year, in accordance with paragraph 

7 (2), for such State. 

8 ‘‘(B) 2019 THROUGH 2026.—In the case of 

9 a State that does not have in effect an approved 

10 application under this section for 2019 or a 

11 subsequent year beginning during the period 

12 described in section 2201, subject to section 

13 2204(e), the Administrator, in consultation with 

14 the State insurance commissioner, shall use the 

15 allocation that would otherwise be provided to 

16 the State under this title for such year, in ac17 cordance with paragraph (2), for such State. 

18 ‘‘(2) REQUIRED USE FOR MARKET STABILIZA19 TION PAYMENTS TO ISSUERS.—Subject to section 

20 2204(a), an allocation for a State made pursuant to 

21 paragraph (1) for a year shall be used to carry out 

22 the purpose described in section 2202(2) in such 

23 State by providing payments to appropriate entities 

24 described in such section with respect to claims that 

25 exceed $50,000 (or, with respect to allocations made 
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1 under this title for 2020 or a subsequent year dur2 ing the period specified in section 2201, such dollar 

3 amount specified by the Administrator), but do not 

4 exceed $350,000 (or, with respect to allocations 

5 made under this title for 2020 or a subsequent year 

6 during such period, such dollar amount specified by 

7 the Administrator), in an amount equal to 75 per8 cent (or, with respect to allocations made under this 

9 title for 2020 or a subsequent year during such pe10 riod, such percentage specified by the Administrator) 

11 of the amount of such claims. 

12 ‘‘SEC. 2204. ALLOCATIONS. 

13 ‘‘(a) APPROPRIATION.—For the purpose of providing 

14 allocations for States (including pursuant to section 

15 2203(b)) under this title there is appropriated, out of any 

16 money in the Treasury not otherwise appropriated— 

17 ‘‘(1) for 2018, $15,000,000,000; 

18 ‘‘(2) for 2019, $15,000,000,000; 

19 ‘‘(3) for 2020, $10,000,000,000; 

20 ‘‘(4) for 2021, $10,000,000,000; 

21 ‘‘(5) for 2022, $10,000,000,000; 

22 ‘‘(6) for 2023, $10,000,000,000; 

23 ‘‘(7) for 2024, $10,000,000,000; 

24 ‘‘(8) for 2025, $10,000,000,000; and 

25 ‘‘(9) for 2026, $10,000,000,000. 
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1 The amount otherwise appropriated under the previous 

2 sentence for 2020 shall be increased by $15,000,000,000, 

3 to be used and available under subsection (d) only for the 

4 purposes described in paragraphs (6) and (7) of section 

5 2202(a). The amount otherwise appropriated under this 

6 subsection shall be increased by $8,000,000,000 for the 

7 period beginning with 2018 and ending with 2023, to be 

8 allocated to States with a waiver in effect under section 

9 2701(b) of the Public Health Service Act with respect to 

10 the purpose described in paragraph (1)(C) of such section, 

11 in accordance with an allocation methodology specified by 

12 the Secretary that takes into account the relative alloca13 tion of other amounts appropriated under this subsection 

14 among such States, and to be used by (and made available 

15 under subsection (d), for any year during such period that 

16 such waiver is in effect, to) such States for the purpose 

17 of providing assistance to reduce premiums or other out18 of-pocket costs of individuals who are subject to an in19 crease in the monthly premium rate for health insurance 

20 coverage as a result of such waiver. 

21 ‘‘(b) ALLOCATIONS.— 

22 ‘‘(1) PAYMENT.— 

23 ‘‘(A) IN GENERAL.—From amounts appro24 priated under subsection (a) for a year, the Ad25 ministrator shall, with respect to a State and 
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1 not later than the date specified under subpara2 graph (B) for such year, allocate, subject to 

3 subsection (e), for such State (including pursu4 ant to section 2203(b)) the amount determined 

5 for such State and year under paragraph (2). 

6 ‘‘(B) SPECIFIED DATE.—For purposes of 

7 subparagraph (A), the date specified in this 

8 subparagraph is— 

9 ‘‘(i) for 2018, the date that is 45 days 

10 after the date of the enactment of this 

11 title; and 

12 ‘‘(ii) for 2019 and subsequent years, 

13 January 1 of the respective year. 

14 ‘‘(2) ALLOCATION AMOUNT DETERMINA15 TIONS.— 

16 ‘‘(A) FOR 2018 AND 2019.— 

17 ‘‘(i) IN GENERAL.—For purposes of 

18 paragraph (1), the amount determined 

19 under this paragraph for 2018 and 2019 

20 for a State is an amount equal to the sum 

21 of— 

22 ‘‘(I) the relative incurred claims 

23 amount described in clause (ii) for 

24 such State and year; and 
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1 ‘‘(II) the relative uninsured and 

2 issuer participation amount described 

3 in clause (iv) for such State and year. 

4 ‘‘(ii) RELATIVE INCURRED CLAIMS

5 AMOUNT.—For purposes of clause (i), the 

6 relative incurred claims amount described 

7 in this clause for a State for 2018 and 

8 2019 is the product of— 

9 ‘‘(I) 85 percent of the amount 

10 appropriated under subsection (a) for 

11 the year; and 

12 ‘‘(II) the relative State incurred 

13 claims proportion described in clause 

14 (iii) for such State and year. 

15 ‘‘(iii) RELATIVE STATE INCURRED

16 CLAIMS PROPORTION.—The relative State 

17 incurred claims proportion described in 

18 this clause for a State and year is the 

19 amount equal to the ratio of— 

20 ‘‘(I) the adjusted incurred claims 

21 by the State, as reported through the 

22 medical loss ratio annual reporting 

23 under section 2718 of the Public 

24 Health Service Act for the third pre25 vious year; to 
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1 ‘‘(II) the sum of such adjusted 

2 incurred claims for all States, as so 

3 reported, for such third previous year. 

4 ‘‘(iv) RELATIVE UNINSURED AND

5 ISSUER PARTICIPATION AMOUNT.—For 

6 purposes of clause (i), the relative unin7 sured and issuer participation amount de8 scribed in this clause for a State for 2018 

9 and 2019 is the product of— 

10 ‘‘(I) 15 percent of the amount 

11 appropriated under subsection (a) for 

12 the year; and 

13 ‘‘(II) the relative State uninsured 

14 and issuer participation proportion de15 scribed in clause (v) for such State 

16 and year. 

17 ‘‘(v) RELATIVE STATE UNINSURED

18 AND ISSUER PARTICIPATION PROPOR19 TION.—The relative State uninsured and 

20 issuer participation proportion described in 

21 this clause for a State and year is— 

22 ‘‘(I) in the case of a State not 

23 described in clause (vi) for such year, 

24 0; and 
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1 ‘‘(II) in the case of a State de2 scribed in clause (vi) for such year, 

3 the amount equal to the ratio of— 

4 ‘‘(aa) the number of individ5 uals residing in such State who 

6 for the third preceding year were 

7 not enrolled in a health plan or 

8 otherwise did not have health in9 surance coverage (including 

10 through a Federal or State 

11 health program) and whose in12 come is below 100 percent of the 

13 poverty line applicable to a family 

14 of the size involved; to 

15 ‘‘(bb) the sum of the num16 ber of such individuals for all 

17 States described in clause (vi) for 

18 the third preceding year. 

19 ‘‘(vi) STATES DESCRIBED.—For pur20 poses of clause (v), a State is described in 

21 this clause, with respect to 2018 and 2019, 

22 if the State satisfies either of the following 

23 criterion: 

24 ‘‘(I) The ratio described in sub25 clause (II) of clause (v) that would be 
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1 determined for such State by sub2 stituting ‘2015’ for each reference in 

3 such subclause to ‘the third preceding 

4 year’ and by substituting ‘all such 

5 States’ for the reference in item (bb) 

6 of such subclause to ‘all States de7 scribed in clause (vi)’ is greater than 

8 the ratio described in such subclause 

9 that would be determined for such 

10 State by substituting ‘2013’ for each 

11 reference in such subclause to ‘the 

12 third preceding year’ and by sub13 stituting ‘all such States’ for the ref14 erence in item (bb) of such subclause 

15 to ‘all States described in clause (vi)’. 

16 ‘‘(II) The State has fewer than 

17 three health insurance issuers offering 

18 qualified health plans through the Ex19 change for 2017. 

20 ‘‘(B) FOR 2020 THROUGH 2026.—For pur21 poses of paragraph (1), the amount determined 

22 under this paragraph for a year (beginning with 

23 2020) during the period described in section 

24 2201 for a State is an amount determined in 
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1 accordance with an allocation methodology spec2 ified by the Administrator which— 

3 ‘‘(i) takes into consideration the ad4 justed incurred claims of such State, the 

5 number of residents of such State who for 

6 the previous year were not enrolled in a 

7 health plan or otherwise did not have 

8 health insurance coverage (including 

9 through a Federal or State health pro10 gram) and whose income is below 100 per11 cent of the poverty line applicable to a 

12 family of the size involved, and the number 

13 of health insurance issuers participating in 

14 the insurance market in such State for 

15 such year; 

16 ‘‘(ii) is established after consultation 

17 with health care consumers, health insur18 ance issuers, State insurance commis19 sioners, and other stakeholders and after 

20 taking into consideration additional cost 

21 and risk factors that may inhibit health 

22 care consumer and health insurance issuer 

23 participation; and 

24 ‘‘(iii) reflects the goals of improving 

25 the health insurance risk pool, promoting a 
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1 more competitive health insurance market, 

2 and increasing choice for health care con3 sumers. 

4 ‘‘(c) ANNUAL DISTRIBUTION OF PREVIOUS YEAR’S

5 REMAINING FUNDS.— In carrying out subsection (b), the 

6 Administrator shall, with respect to a year (beginning with 

7 2020 and ending with 2027), not later than March 31 of 

8 such year— 

9 ‘‘(1) determine the amount of funds, if any, 

10 from the amounts appropriated under subsection (a) 

11 for the previous year but not allocated for such pre12 vious year; and 

13 ‘‘(2) if the Administrator determines that any 

14 funds were not so allocated for such previous year, 

15 allocate such remaining funds, in accordance with 

16 the allocation methodology specified pursuant to 

17 subsection (b)(2)(B)— 

18 ‘‘(A) to States that have submitted an ap19 plication approved under section 2203(a) for 

20 such previous year for any purpose for which 

21 such an application was approved; and 

22 ‘‘(B) for States for which allocations were 

23 made pursuant to section 2203(b) for such pre24 vious year, to be used by the Administrator for 

25 such States, to carry out the Federal Invisible 
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1 Risk Sharing Program in such States under 

2 section 2205; 

3 with, respect to a year before 2027, any remaining 

4 funds being made available for allocations to States 

5 for the subsequent year. 

6 ‘‘(d) AVAILABILITY.—Amounts appropriated under 

7 subsection (a) for a year and allocated to States in accord8 ance with this section shall remain available for expendi9 ture through December 31, 2027. 

10 ‘‘(e) CONDITIONS FOR AND LIMITATIONS ON RE11 CEIPT OF FUNDS.—The Secretary may not make an allo12 cation under this title for a State, with respect to a pur13 pose described in section 2202— 

14 ‘‘(1) in the case of an allocation that would be 

15 made to a State pursuant to section 2203(a), if the 

16 State does not agree that the State will make avail17 able non-Federal contributions towards such purpose 

18 in an amount equal to— 

19 ‘‘(A) for 2020, 7 percent of the amount al20 located under this subsection to such State for 

21 such year and purpose; 

22 ‘‘(B) for 2021, 14 percent of the amount 

23 allocated under this subsection to such State 

24 for such year and purpose; 
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1 ‘‘(C) for 2022, 21 percent of the amount 

2 allocated under this subsection to such State 

3 for such year and purpose; 

4 ‘‘(D) for 2023, 28 percent of the amount 

5 allocated under this subsection to such State 

6 for such year and purpose; 

7 ‘‘(E) for 2024, 35 percent of the amount 

8 allocated under this subsection to such State 

9 for such year and purpose; 

10 ‘‘(F) for 2025, 42 percent of the amount 

11 allocated under this subsection to such State 

12 for such year and purpose; and 

13 ‘‘(G) for 2026, 50 percent of the amount 

14 allocated under this subsection to such State 

15 for such year and purpose; 

16 ‘‘(2) in the case of an allocation that would be 

17 made for a State pursuant to section 2203(b), if the 

18 State does not agree that the State will make avail19 able non-Federal contributions towards such purpose 

20 in an amount equal to— 

21 ‘‘(A) for 2020, 10 percent of the amount 

22 allocated under this subsection to such State 

23 for such year and purpose; 
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1 ‘‘(B) for 2021, 20 percent of the amount 

2 allocated under this subsection to such State 

3 for such year and purpose; and 

4 ‘‘(C) for 2022, 30 percent of the amount 

5 allocated under this subsection to such State 

6 for such year and purpose; 

7 ‘‘(D) for 2023, 40 percent of the amount 

8 allocated under this subsection to such State 

9 for such year and purpose; 

10 ‘‘(E) for 2024, 50 percent of the amount 

11 allocated under this subsection to such State 

12 for such year and purpose; 

13 ‘‘(F) for 2025, 50 percent of the amount 

14 allocated under this subsection to such State 

15 for such year and purpose; and 

16 ‘‘(G) for 2026, 50 percent of the amount 

17 allocated under this subsection to such State 

18 for such year and purpose; or 

19 ‘‘(3) if such an allocation for such purpose 

20 would not be permitted under subsection (c)(7) of 

21 section 2105 if such allocation were payment made 

22 under such section. 

23 ‘‘SEC. 2205. FEDERAL INVISIBLE RISK SHARING PROGRAM. 

24 ‘‘(a) IN GENERAL.—There is established within the 

25 Patient and State Stability Fund a Federal Invisible Risk 
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1 Sharing Program (in this section referred to as the ‘Pro2 gram’), to be administered by the Secretary of Health and 

3 Human Services, acting through the Administrator of the 

4 Centers for Medicare & Medicaid Services (in this section 

5 referred to as the ‘Administrator’), to provide payments 

6 to health insurance issuers with respect to claims for eligi7 ble individuals for the purpose of lowering premiums for 

8 health insurance coverage offered in the individual market. 

9 ‘‘(b) FUNDING.— 

10 ‘‘(1) APPROPRIATION.—For the purpose of pro11 viding funding for the Program there is appro12 priated, out of any money in the Treasury not other13 wise appropriated, $15,000,000,000 for the period 

14 beginning on January 1, 2018, and ending on De15 cember 31, 2026. 

16 ‘‘(2) USE OF UNALLOCATED FUNDS.—Funds 

17 provided under section 2204(c)(2)(B) to carry out 

18 this section are in addition to the amount appro19 priated under paragraph (1). 

20 ‘‘(c) OPERATION OF PROGRAM.— 

21 ‘‘(1) IN GENERAL.—The Administrator shall es22 tablish, after consultation with health care con23 sumers, health insurance issuers, State insurance 

24 commissioners, and other stakeholders and after tak25 ing into consideration high cost health conditions 
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1 and other health trends that generate high cost, pa2 rameters for the operation of the Program consistent 

3 with this section and consistent with the same limi4 tation on payment with respect to health insurance 

5 coverage that applies to payment with respect health 

6 benefits coverage under section 2105(c)(7). 

7 ‘‘(2) DEADLINE FOR INITIAL OPERATION.—Not 

8 later than 60 days after the date of the enactment 

9 of this title, the Administrator shall establish suffi10 cient parameters to specify how the Program will op11 erate for plan year 2018. 

12 ‘‘(3) STATE OPERATION OF PROGRAM.—The 

13 Administrator shall establish a process for a State to 

14 operate the Program in such State beginning with 

15 plan year 2020. 

16 ‘‘(d) DETAILS OF PROGRAM.—The parameters for 

17 the Program shall include the following: 

18 ‘‘(1) ELIGIBLE INDIVIDUALS.—A definition for 

19 eligible individuals. 

20 ‘‘(2) HEALTH STATUS STATEMENTS.—The de21 velopment and use of health status statements with 

22 respect to such individuals. 

23 ‘‘(3) STANDARDS FOR QUALIFICATION.— 

24 ‘‘(A) AUTOMATIC QUALIFICATION.—The 

25 identification of health conditions that auto-
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1 matically qualify individuals as eligible individ2 uals at the time of application for health insur3 ance coverage. 

4 ‘‘(B) VOLUNTARY QUALIFICATION.—A 

5 process under which health insurance issuers 

6 may voluntarily qualify individuals, who do not 

7 automatically qualify under subparagraph (A), 

8 as eligible individuals at the time of application 

9 for such coverage. 

10 ‘‘(4) PERCENTAGE OF INSURANCE PREMIUMS

11 TO BE APPLIED.—The percentage of the premiums 

12 paid, to health insurance issuers for health insur13 ance coverage by eligible individuals, that shall be 

14 collected and deposited to the credit (and available 

15 for the use) of the Program. 

16 ‘‘(5) ATTACHMENT DOLLAR AMOUNT AND PAY17 MENT PROPORTION.—The dollar amount of claims 

18 for eligible individuals after which the Program will 

19 provide payments to health insurance issuers and 

20 the proportion of such claims above such dollar 

21 amount that the Program will pay.’’. 

22 SEC. 133. CONTINUOUS HEALTH INSURANCE COVERAGE IN23 CENTIVE. 

24 Subpart I of part A of title XXVII of the Public 

25 Health Service Act is amended— 
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1 (1) in section 2701(a)(1)(B), by striking ‘‘such 

2 rate’’ and inserting ‘‘subject to section 2710A, such 

3 rate’’; 

4 (2) by redesignating the second section 2709 as 

5 section 2710; and 

6 (3) by adding at the end the following new sec7 tion: 

8 ‘‘SEC. 2710A. ENCOURAGING CONTINUOUS HEALTH INSUR9 ANCE COVERAGE. 

10 ‘‘(a) PENALTY APPLIED.— 

11 ‘‘(1) IN GENERAL.—Subject to the succeeding 

12 provisions of this section, a health insurance issuer 

13 offering health insurance coverage in the individual 

14 market shall, in the case of an individual who is an 

15 applicable policyholder of such coverage with respect 

16 to an enforcement period applicable to enrollments 

17 for a plan year beginning with plan year 2019 (or, 

18 in the case of enrollments during a special enroll19 ment period, beginning with plan year 2018), in20 crease the monthly premium rate otherwise applica21 ble to such individual for such coverage during each 

22 month of such period, by an amount determined 

23 under paragraph (2). 

24 ‘‘(2) AMOUNT OF PENALTY.—The amount de25 termined under this paragraph for an applicable pol-
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1 icyholder enrolling in health insurance coverage de2 scribed in paragraph (1) for a plan year, with re3 spect to each month during the enforcement period 

4 applicable to enrollments for such plan year, is the 

5 amount that is equal to 30 percent of the monthly 

6 premium rate otherwise applicable to such applicable 

7 policyholder for such coverage during such month. 

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

9 ‘‘(1) APPLICABLE POLICYHOLDER.—The term 

10 ‘applicable policyholder’ means, with respect to 

11 months of an enforcement period and health insur12 ance coverage, an individual who— 

13 ‘‘(A) is a policyholder of such coverage for 

14 such months; 

15 ‘‘(B) cannot demonstrate that (through 

16 presentation of certifications described in sec17 tion 2704(e) or in such other manner as may 

18 be specified in regulations, such as a return or 

19 statement made under section 6055(d) or 36B 

20 of the Internal Revenue Code of 1986), during 

21 the look-back period that is with respect to such 

22 enforcement period, there was not a period of 

23 at least 63 continuous days during which the 

24 individual did not have creditable coverage (as 

25 defined in paragraph (1) of section 2704(c) and 
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1 credited in accordance with paragraphs (2) and 

2 (3) of such section); and 

3 ‘‘(C) in the case of an individual who had 

4 been enrolled under dependent coverage under a 

5 group health plan or health insurance coverage 

6 by reason of section 2714 and such dependent 

7 coverage of such individual ceased because of 

8 the age of such individual, is not enrolling dur9 ing the first open enrollment period following 

10 the date on which such coverage so ceased. 

11 ‘‘(2) LOOK-BACK PERIOD.—The term ‘look-back 

12 period’ means, with respect to an enforcement period 

13 applicable to an enrollment of an individual for a 

14 plan year beginning with plan year 2019 (or, in the 

15 case of an enrollment of an individual during a spe16 cial enrollment period, beginning with plan year 

17 2018) in health insurance coverage described in sub18 section (a)(1), the 12-month period ending on the 

19 date the individual enrolls in such coverage for such 

20 plan year. 

21 ‘‘(3) ENFORCEMENT PERIOD.—The term ‘en22 forcement period’ means— 

23 ‘‘(A) with respect to enrollments during a 

24 special enrollment period for plan year 2018, 

25 the period beginning with the first month that 
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1 is during such plan year and that begins subse2 quent to such date of enrollment, and ending 

3 with the last month of such plan year; and 

4 ‘‘(B) with respect to enrollments for plan 

5 year 2019 or a subsequent plan year, the 12- 

6 month period beginning on the first day of the 

7 respective plan year.’’. 

8 SEC. 134. INCREASING COVERAGE OPTIONS. 

9 Section 1302 of the Patient Protection and Afford10 able Care Act (42 U.S.C. 18022) is amended— 

11 (1) in subsection (a)(3), by inserting ‘‘and with 

12 respect to a plan year before plan year 2020’’ after 

13 ‘‘subsection (e)’’; and 

14 (2) in subsection (d), by adding at the end the 

15 following: 

16 ‘‘(5) SUNSET.—The provisions of this sub17 section shall not apply after December 31, 2019, 

18 and after such date any reference to this subsection 

19 or level of coverage or plan described in this sub20 section and any requirement under law applying 

21 such a level of coverage or plan shall have no force 

22 or effect (and such a requirement shall be applied as 

23 if this section had been repealed).’’. 
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1 SEC. 135. CHANGE IN PERMISSIBLE AGE VARIATION IN 

2 HEALTH INSURANCE PREMIUM RATES. 

3 Section 2701(a)(1)(A)(iii) of the Public Health Serv4 ice Act (42 U.S.C. 300gg(a)(1)(A)(iii)), as inserted by sec5 tion 1201(4) of the Patient Protection and Affordable 

6 Care Act, is amended by inserting after ‘‘(consistent with 

7 section 2707(c))’’ the following: ‘‘or, for plan years begin8 ning on or after January 1, 2018, as the Secretary may 

9 implement through interim final regulation, 5 to 1 for 

10 adults (consistent with section 2707(c)) or such other 

11 ratio for adults (consistent with section 2707(c)) as the 

12 State involved may provide (or, in the case of a State with 

13 a waiver under subsection (b) in effect for such a plan 

14 year, the ratio applied for such plan year in accordance 

15 with such waiver)’’. 

16 SEC. 136. PERMITTING STATES TO WAIVE CERTAIN ACA RE17 QUIREMENTS TO ENCOURAGE FAIR HEALTH 

18 INSURANCE PREMIUMS. 

19 (a) IN GENERAL.—Section 2701 of the Public Health 

20 Service Act (42 U.S.C. 300gg) is amended by adding at 

21 the end the following new subsection: 

22 ‘‘(b) PERMISSIBLE STATE WAIVER TO ENCOURAGE

23 FAIR HEALTH INSURANCE PREMIUMS.— 

24 ‘‘(1) IN GENERAL.—A State may submit an ap25 plication to the Secretary for one or more of the fol26 lowing purposes: 
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1 ‘‘(A) In the case of plan years beginning 

2 on or after January 1, 2018, to apply, subject 

3 to paragraph (5), under subsection 

4 (a)(1)(A)(iii), instead of the ratio specified in 

5 such subsection, a higher ratio specified by the 

6 State (consistent with section 2707(c)). 

7 ‘‘(B) In the case of plan years beginning 

8 on or after January 1, 2020, for health insur9 ance coverage offered in the individual or small 

10 group market in such State, to apply, subject to 

11 paragraph (5), instead of the essential health 

12 benefits specified under subsection (b) of sec13 tion 1302 of the Patient Protection and Afford14 able Care Act, essential health benefits as speci15 fied by the State. 

16 ‘‘(C) In the case of a State that has in 

17 place a program that carries out the purpose 

18 described in paragraph (1) or (2) of section 

19 2202(a) of the Social Security Act or partici20 pates in the program established under section 

21 2205 of such Act, for health insurance offered 

22 in the individual market in such State, with re23 spect to an individual who is an applicable pol24 icyholder of such coverage with respect to an 

25 enforcement period (as defined in section 
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1 2710A(b)) applicable to enrollments for a plan 

2 year beginning with plan year 2019 (or, in the 

3 case of enrollments during a special enrollment 

4 period, beginning with plan year 2018), to— 

5 ‘‘(i) subject to paragraph (5), not 

6 apply any increase to the monthly premium 

7 rate that would otherwise apply under sec8 tion 2710A to such individual for such cov9 erage; and 

10 ‘‘(ii) instead, subject to paragraph 

11 (5)— 

12 ‘‘(I) apply subsection (a)(1) as if 

13 health status were included as a fac14 tor described in subparagraph (A) of 

15 such subsection; and 

16 ‘‘(II) not apply section 2705(b). 

17 ‘‘(2) DEFAULT APPROVAL.—An application sub18 mitted under paragraph (1) is approved unless the 

19 Secretary notifies the State submitting the applica20 tion, not later than 60 days after the date of the 

21 submission of such application, that the application 

22 has been denied for not being in compliance with 

23 any requirement of paragraph (3) and of the reason 

24 for such denial. 
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1 ‘‘(3) REQUIREMENTS.—The requirements of 

2 this paragraph, with respect to an application sub3 mitted under paragraph (1), are the following: 

4 ‘‘(A) The application is submitted at such 

5 time, and in such manner, as the Secretary may 

6 require. 

7 ‘‘(B) The application specifies how the ap8 proval of such application will provide for one 

9 or more of the following: 

10 ‘‘(i) Reducing average premiums for 

11 health insurance coverage in the State. 

12 ‘‘(ii) Increasing enrollment in health 

13 insurance coverage in the State. 

14 ‘‘(iii) Stabilizing the market for health 

15 insurance coverage in the State. 

16 ‘‘(iv) Stabilizing premiums for individ17 uals with pre-existing conditions. 

18 ‘‘(v) Increasing the choice of health 

19 plans in the State. 

20 ‘‘(C) The application specifies the period 

21 for which the waiver is to be effective, con22 sistent with paragraph (4). 

23 ‘‘(D) In the case of an application for pur24 poses of paragraph (1)(A), the application 
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1 specifies the higher ratio to be applied pursuant 

2 to such paragraph. 

3 ‘‘(E) In the case of an application for pur4 poses of paragraph (1)(B), the application 

5 specifies the essential health benefits to be ap6 plied pursuant to such paragraph. 

7 ‘‘(F) In the case of an application for pur8 poses of paragraph (1)(C), the application dem9 onstrates that the State has in place a program 

10 that carries out the purpose described in para11 graph (1) or (2) of section 2202(a) of the So12 cial Security Act or participates in the program 

13 established under section 2205 of such Act. 

14 ‘‘(4) TERM OF WAIVER.— 

15 ‘‘(A) IN GENERAL.—No waiver for a State 

16 under this subsection may extend over a period 

17 of longer than 10 years unless the State re18 quests continuation of such waiver, and such re19 quest shall be deemed granted unless the Sec20 retary, within 90 days after the date of its sub21 mission to the Secretary, either denies such re22 quest in writing or informs the State in writing 

23 with respect to any additional information 

24 which is needed in order to make a final deter25 mination with respect to the request. 
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1 ‘‘(B) SPECIAL RULE.—A waiver applied for 

2 by a State under paragraph (1)(C) may only be 

3 effective for a period during which the State— 

4 ‘‘(i) has in place a program that car5 ries out the purpose described in para6 graph (1) or (2) of section 2202(a) of the 

7 Social Security Act; or 

8 ‘‘(ii) participates in the program es9 tablished under section 2205 of such Act. 

10 ‘‘(5) NON-APPLICATION RULES.— 

11 ‘‘(A) SPECIFIED NON-APPLICATION PROVI12 SIONS.—In no case may a waiver for purposes 

13 of paragraph (1) apply with respect to any of 

14 the following provisions: 

15 ‘‘(i) Section 1301 of the Patient Pro16 tection and Affordable Care Act, to the ex17 tent that such section applies to qualified 

18 health plans offered through the CO-OP 

19 program under section 1322 of such Act or 

20 multi-State plans under section 1334 of 

21 such Act. 

22 ‘‘(ii) Sections 1312(d)(3)(D), 1331, 

23 1332, 1333, and 1334 of such Act. 

24 ‘‘(B) HOLD HARMLESS.—Any standard or 

25 requirement adopted by a State pursuant to the 
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1 terms of a waiver approved under this sub2 section shall be deemed to comply with section 

3 1252 of the Patient Protection and Affordable 

4 Care Act and subsection (a) of section 1324 of 

5 such Act, insofar as such standard or require6 ment relates to a Federal or State law de7 scribed in subsection (b)(2) of such section (re8 lating to rating).’’. 

9 (b) APPLICATION TO ESSENTIAL HEALTH BENE10 FITS.—Section 1302(a)(1) of the Patient Protection and 

11 Affordable Care Act (42 U.S.C. 18022(a)(1)) is amended 

12 by inserting ‘‘(or, in the case of health insurance coverage 

13 offered in the individual or small group market in a State 

14 for which there is an applicable waiver in effect under sec15 tion 2701(b) of the Public Health Service Act for a plan 

16 year, the essential health benefits applicable under such 

17 waiver)’’ after ‘‘subsection (b)’’. 

18 SEC. 137. CONSTRUCTIONS. 

19 (a) NO GENDER RATING.—Nothing in this Act shall 

20 be construed as permitting health insurance issuers to dis21 criminate in rates for health insurance coverage by gender. 

22 (b) NO LIMITING ACCESS TO COVERAGE FOR INDI23 VIDUALS WITH PREEXISTING CONDITIONS.—Nothing in 

24 this Act shall be construed as permitting health insurance 
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1 issuers to limit access to health coverage for individuals 

2 with preexisting conditions. 

3 Subtitle E—Implementation 

4 Funding 

5 SEC. 141. AMERICAN HEALTH CARE IMPLEMENTATION 

6 FUND. 

7 (a) IN GENERAL.—There is hereby established an 

8 American Health Care Implementation Fund (referred to 

9 in this section as the ‘‘Fund’’) within the Department of 

10 Health and Human Services to carry out sections 121, 

11 132, 202, and 214 (including the amendments made by 

12 such sections). 

13 (b) FUNDING.—There is appropriated to the Fund, 

14 out of any funds in the Treasury not otherwise appro15 priated, $1,000,000,000 for Federal administrative ex16 penses to carry out the sections described in subsection 

17 (a) (including the amendments made by such sections). 
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1 TITLE II—COMMITTEE ON WAYS 

2 AND MEANS 

3 Subtitle A—Repeal and Replace of 

4 Health-Related Tax Policy 

5 SEC. 201. RECAPTURE EXCESS ADVANCE PAYMENTS OF 

6 PREMIUM TAX CREDITS. 

7 Subparagraph (B) of section 36B(f)(2) of the Inter8 nal Revenue Code of 1986 is amended by adding at the 

9 end the following new clause: 

10 ‘‘(iii) NONAPPLICABILITY OF LIMITA11 TION.—This subparagraph shall not apply 

12 to taxable years beginning after December 

13 31, 2017, and before January 1, 2020.’’. 

14 SEC. 202. ADDITIONAL MODIFICATIONS TO PREMIUM TAX 

15 CREDIT. 

16 (a) MODIFICATION OF DEFINITION OF QUALIFIED

17 HEALTH PLAN.— 

18 (1) IN GENERAL.—Section 36B(c)(3)(A) of the 

19 Internal Revenue Code of 1986 is amended— 

20 (A) by inserting ‘‘(determined without re21 gard to subparagraphs (A), (C)(ii), and (C)(iv) 

22 of paragraph (1) thereof and without regard to 

23 whether the plan is offered on an Exchange)’’ 

24 after ‘‘1301(a) of the Patient Protection and 

25 Affordable Care Act’’, and 
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1 (B) by striking ‘‘shall not include’’ and all 

2 that follows and inserting ‘‘shall not include any 

3 health plan that— 

4 ‘‘(i) is a grandfathered health plan or 

5 a grandmothered health plan, or 

6 ‘‘(ii) includes coverage for abortions 

7 (other than any abortion necessary to save 

8 the life of the mother or any abortion with 

9 respect to a pregnancy that is the result of 

10 an act of rape or incest).’’. 

11 (2) DEFINITION OF GRANDMOTHERED HEALTH

12 PLAN.—Section 36B(c)(3) of such Code is amended 

13 by adding at the end the following new subpara14 graph: 

15 ‘‘(C) GRANDMOTHERED HEALTH PLAN.— 

16 ‘‘(i) IN GENERAL.—The term 

17 ‘grandmothered health plan’ means health 

18 insurance coverage which is offered in the 

19 individual health insurance market as of 

20 October 1, 2013, and is permitted to be of21 fered in such market after January 1, 

22 2014, as a result of CCIIO guidance. 

23 ‘‘(ii) CCIIO GUIDANCE DEFINED.— 

24 The term ‘CCIIO guidance’ means the let25 ter issued by the Centers for Medicare & 
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1 Medicaid Services on November 14, 2013, 

2 to the State Insurance Commissioners out3 lining a transitional policy for non-grand4 fathered coverage in the individual health 

5 insurance market, as subsequently ex6 tended and modified (including by a com7 munication entitled ‘Insurance Standards 

8 Bulletin Series—INFORMATION—Ex9 tension of Transitional Policy through Cal10 endar Year 2017’ issued on February 29, 

11 2016, by the Director of the Center for 

12 Consumer Information & Insurance Over13 sight of such Centers). 

14 ‘‘(iii) INDIVIDUAL HEALTH INSUR15 ANCE MARKET.—The term ‘individual 

16 health insurance market’ means the mar17 ket for health insurance coverage (as de18 fined in section 9832(b)) offered to individ19 uals other than in connection with a group 

20 health plan (within the meaning of section 

21 5000(b)(1)).’’. 

22 (3) CONFORMING AMENDMENT RELATED TO

23 ABORTION COVERAGE.—Section 36B(c)(3) of such 

24 Code, as amended by paragraph (2), is amended by 

25 adding at the end the following new subparagraph: 
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1 ‘‘(D) CERTAIN RULES RELATED TO ABOR2 TION.— 

3 ‘‘(i) OPTION TO PURCHASE SEPARATE

4 COVERAGE OR PLAN.—Nothing in subpara5 graph (A) shall be construed as prohibiting 

6 any individual from purchasing separate 

7 coverage for abortions described in such 

8 subparagraph, or a health plan that in9 cludes such abortions, so long as no credit 

10 is allowed under this section with respect 

11 to the premiums for such coverage or plan. 

12 ‘‘(ii) OPTION TO OFFER COVERAGE OR

13 PLAN.—Nothing in subparagraph (A) shall 

14 restrict any health insurance issuer offer15 ing a health plan from offering separate 

16 coverage for abortions described in such 

17 subparagraph, or a plan that includes such 

18 abortions, so long as premiums for such 

19 separate coverage or plan are not paid for 

20 with any amount attributable to the credit 

21 allowed under this section (or the amount 

22 of any advance payment of the credit 

23 under section 1412 of the Patient Protec24 tion and Affordable Care Act). 
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1 ‘‘(iii) OTHER TREATMENTS.—The 

2 treatment of any infection, injury, disease, 

3 or disorder that has been caused by or ex4 acerbated by the performance of an abor5 tion shall not be treated as an abortion for 

6 purposes of subparagraph (A).’’. 

7 (4) CONFORMING AMENDMENTS RELATED TO

8 OFF-EXCHANGE COVERAGE.— 

9 (A) ADVANCE PAYMENT NOT APPLICA10 BLE.—Section 1412 of the Patient Protection 

11 and Affordable Care Act is amended by adding 

12 at the end the following new subsection: 

13 ‘‘(f) EXCLUSION OF OFF-EXCHANGE COVERAGE.— 

14 Advance payments under this section, and advance deter15 minations under section 1411, with respect to any credit 

16 allowed under section 36B shall not be made with respect 

17 to any health plan which is not enrolled in through an 

18 Exchange.’’. 

19 (B) REPORTING.—Section 6055(b) of the 

20 Internal Revenue Code of 1986 is amended by 

21 adding at the end the following new paragraph: 

22 ‘‘(3) INFORMATION RELATING TO OFF-EX23 CHANGE PREMIUM CREDIT ELIGIBLE COVERAGE.—If 

24 minimum essential coverage provided to an indi25 vidual under subsection (a) consists of a qualified 
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1 health plan (as defined in section 36B(c)(3)) which 

2 is not enrolled in through an Exchange established 

3 under title I of the Patient Protection and Afford4 able Care Act, a return described in this subsection 

5 shall include— 

6 ‘‘(A) a statement that such plan is a quali7 fied health plan (as defined in section 

8 36B(c)(3)), 

9 ‘‘(B) the premiums paid with respect to 

10 such coverage, 

11 ‘‘(C) the months during which such cov12 erage is provided to the individual, 

13 ‘‘(D) the adjusted monthly premium for 

14 the applicable second lowest cost silver plan (as 

15 defined in section 36B(b)(3)) for each such 

16 month with respect to such individual, and 

17 ‘‘(E) such other information as the Sec18 retary may prescribe.’’. 

19 (C) OTHER CONFORMING AMENDMENTS.— 

20 (i) Section 36B(b)(2)(A) of such Code 

21 is amended by striking ‘‘and which were 

22 enrolled’’ and all that follows and inserting 

23 ‘‘, or’’. 

24 (ii) Section 36B(b)(3)(B)(i) of such 

25 Code is amended by striking ‘‘the same 
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1 Exchange’’ and all that follows and insert2 ing ‘‘the Exchange through which such 

3 taxpayer is permitted to obtain coverage, 

4 and’’. 

5 (iii) Section 36B(c)(2)(A)(i) of such 

6 Code is amended by striking ‘‘that was en7 rolled in through an Exchange established 

8 by the State under section 1311 of the Pa9 tient Protection and Affordable Care Act’’. 

10 (b) MODIFICATION OF APPLICABLE PERCENTAGE.— 

11 Section 36B(b)(3)(A) of such Code is amended to read 

12 as follows: 

13 ‘‘(A) APPLICABLE PERCENTAGE.— 

14 ‘‘(i) IN GENERAL.—The applicable 

15 percentage for any taxable year shall be 

16 the percentage such that the applicable 

17 percentage for any taxpayer whose house18 hold income is within an income tier speci19 fied in the following table shall increase, on 

20 a sliding scale in a linear manner, from the 

21 initial percentage to the final percentage 

22 specified in such table for such income tier 

23 with respect to a taxpayer of the age in24 volved: 
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‘‘In the case of 

household income 

(expressed as a 

percent of the 

poverty line) 

within the following income 

tier: 

Up to Age 29 Age 30-39 Age 40-49 Age 50-59 Over Age 59 

Initial 

% 

Final 

% 

Initial 

% 

Final 

% 

Initial 

% 

Final 

% 

Initial 

% 

Final 

% 

Initial 

% 

Final 

% 

Up to 133% 2 2 2 2 2 2 2 2 2 2 

133%-150% 3 4 3 4 3 4 3 4 3 4 

150%-200% 4 4.3 4 5.3 4 6.3 4 7.3 4 8.3 

200%-250% 4.3 4.3 5.3 5.9 6.3 8.05 7.3 9 8.3 10 

250%-300% 4.3 4.3 5.9 5.9 8.05 8.35 9 10.5 10 11.5 

300%-400% 4.3 4.3 5.9 5.9 8.35 8.35 10.5 10.5 11.5 11.5 

1 ‘‘(ii) AGE DETERMINATIONS.— 

2 ‘‘(I) IN GENERAL.—For purposes 

3 of clause (i), the age of the taxpayer 

4 taken into account under clause (i) 

5 with respect to any taxable year is the 

6 age attained by such taxpayer before 

7 the close of such taxable year. 

8 ‘‘(II) JOINT RETURNS.—In the 

9 case of a joint return, the age of the 

10 older spouse shall be taken into ac11 count under clause (i). 

12 ‘‘(iii) INDEXING.—In the case of any 

13 taxable year beginning in calendar year 

14 2019, the initial and final percentages con15 tained in clause (i) shall be adjusted to re16 flect— 

17 ‘‘(I) the excess (if any) of the 

18 rate of premium growth for the period 

19 beginning with calendar year 2013 

20 and ending with calendar year 2018, 
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1 over the rate of income growth for 

2 such period, and 

3 ‘‘(II) in addition to any adjust4 ment under subclause (I), the excess 

5 (if any) of the rate of premium 

6 growth for calendar year 2018, over 

7 the rate of growth in the consumer 

8 price index for calendar year 2018. 

9 ‘‘(iv) FAILSAFE.—Clause (iii)(II) shall 

10 apply only if the aggregate amount of pre11 mium tax credits under this section and 

12 cost-sharing reductions under section 1402 

13 of the Patient Protection and Affordable 

14 Care Act for calendar year 2018 exceeds 

15 an amount equal to 0.504 percent of the 

16 gross domestic product for such calendar 

17 year.’’. 

18 (c) EFFECTIVE DATE.— 

19 (1) IN GENERAL.—Except as otherwise pro20 vided in this subsection, the amendments made by 

21 this section shall apply to taxable years beginning 

22 after December 31, 2017. 

23 (2) ADVANCE PAYMENT NOT APPLICABLE TO

24 OFF-EXCHANGE COVERAGE.—The amendment made 
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1 by subsection (a)(4)(A) shall take effect on January 

2 1, 2018. 

3 (3) REPORTING.—The amendment made by 

4 subsection (a)(4)(B) shall apply to coverage provided 

5 for months beginning after December 31, 2017. 

6 (4) MODIFICATION OF APPLICABLE PERCENT7 AGE.—The amendment made by subsection (b) shall 

8 apply to taxable years beginning after December 31, 

9 2018. 

10 SEC. 203. SMALL BUSINESS TAX CREDIT. 

11 (a) IN GENERAL.—Section 45R of the Internal Rev12 enue Code of 1986 is amended by adding at the end the 

13 following new subsection: 

14 ‘‘(j) SHALL NOT APPLY.—This section shall not 

15 apply with respect to amounts paid or incurred in taxable 

16 years beginning after December 31, 2019.’’. 

17 (b) DISALLOWANCE OF SMALL EMPLOYER HEALTH

18 INSURANCE EXPENSE CREDIT FOR PLAN WHICH IN19 CLUDES COVERAGE FOR ABORTION.—Subsection (h) of 

20 section 45R of the Internal Revenue Code of 1986 is 

21 amended— 

22 (1) by striking ‘‘Any term’’ and inserting the 

23 following: 

24 ‘‘(1) IN GENERAL.—Any term’’; and 
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1 (2) by adding at the end the following new 

2 paragraph: 

3 ‘‘(2) EXCLUSION OF HEALTH PLANS INCLUDING

4 COVERAGE FOR ABORTION.— 

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

6 health plan’ does not include any health plan 

7 that includes coverage for abortions (other than 

8 any abortion necessary to save the life of the 

9 mother or any abortion with respect to a preg10 nancy that is the result of an act of rape or in11 cest). 

12 ‘‘(B) CERTAIN RULES RELATED TO ABOR13 TION.— 

14 ‘‘(i) OPTION TO PURCHASE SEPARATE

15 COVERAGE OR PLAN.—Nothing in subpara16 graph (A) shall be construed as prohibiting 

17 any employer from purchasing for its em18 ployees separate coverage for abortions de19 scribed in such subparagraph, or a health 

20 plan that includes such abortions, so long 

21 as no credit is allowed under this section 

22 with respect to the employer contributions 

23 for such coverage or plan. 

24 ‘‘(ii) OPTION TO OFFER COVERAGE OR

25 PLAN.—Nothing in subparagraph (A) shall 
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1 restrict any health insurance issuer offer2 ing a health plan from offering separate 

3 coverage for abortions described in such 

4 subparagraph, or a plan that includes such 

5 abortions, so long as such separate cov6 erage or plan is not paid for with any em7 ployer contribution eligible for the credit 

8 allowed under this section. 

9 ‘‘(iii) OTHER TREATMENTS.—The 

10 treatment of any infection, injury, disease, 

11 or disorder that has been caused by or ex12 acerbated by the performance of an abor13 tion shall not be treated as an abortion for 

14 purposes of subparagraph (A).’’. 

15 (c) EFFECTIVE DATES.— 

16 (1) IN GENERAL.—The amendment made by 

17 subsection (a) shall apply to taxable years beginning 

18 after December 31, 2019. 

19 (2) DISALLOWANCE OF SMALL EMPLOYER

20 HEALTH INSURANCE EXPENSE CREDIT FOR PLAN

21 WHICH INCLUDES COVERAGE FOR ABORTION.—The 

22 amendments made by subsection (b) shall apply to 

23 taxable years beginning after December 31, 2017. 
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1 SEC. 204. INDIVIDUAL MANDATE. 

2 (a) IN GENERAL.—Section 5000A(c) of the Internal 

3 Revenue Code of 1986 is amended— 

4 (1) in paragraph (2)(B)(iii), by striking ‘‘2.5 

5 percent’’ and inserting ‘‘Zero percent’’, and 

6 (2) in paragraph (3)— 

7 (A) by striking ‘‘$695’’ in subparagraph 

8 (A) and inserting ‘‘$0’’, and 

9 (B) by striking subparagraph (D). 

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

11 this section shall apply to months beginning after Decem12 ber 31, 2015. 

13 SEC. 205. EMPLOYER MANDATE. 

14 (a) IN GENERAL.— 

15 (1) Paragraph (1) of section 4980H(c) of the 

16 Internal Revenue Code of 1986 is amended by in17 serting ‘‘($0 in the case of months beginning after 

18 December 31, 2015)’’ after ‘‘$2,000’’. 

19 (2) Paragraph (1) of section 4980H(b) of the 

20 Internal Revenue Code of 1986 is amended by in21 serting ‘‘($0 in the case of months beginning after 

22 December 31, 2015)’’ after ‘‘$3,000’’. 

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

24 this section shall apply to months beginning after Decem25 ber 31, 2015. 
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1 SEC. 206. REPEAL OF THE TAX ON EMPLOYEE HEALTH IN2 SURANCE PREMIUMS AND HEALTH PLAN 

3 BENEFITS. 

4 Section 4980I of the Internal Revenue Code of 1986 

5 is amended by adding at the end the following new sub6 section: 

7 ‘‘(h) SHALL NOT APPLY.—No tax shall be imposed 

8 under this section with respect to any taxable period be9 ginning after December 31, 2019, and before January 1, 

10 2026.’’. 

11 SEC. 207. REPEAL OF TAX ON OVER-THE-COUNTER MEDICA12 TIONS. 

13 (a) HSAS.—Subparagraph (A) of section 223(d)(2) 

14 of the Internal Revenue Code of 1986 is amended by strik15 ing ‘‘Such term’’ and all that follows through the period. 

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

17 220(d)(2) of the Internal Revenue Code of 1986 is amend18 ed by striking ‘‘Such term’’ and all that follows through 

19 the period. 

20 (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS

21 AND HEALTH REIMBURSEMENT ARRANGEMENTS.—Sec22 tion 106 of the Internal Revenue Code of 1986 is amended 

23 by striking subsection (f) and by redesignating subsection 

24 (g) as subsection (f). 

25 (d) EFFECTIVE DATES.— 
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1 (1) DISTRIBUTIONS FROM SAVINGS AC2 COUNTS.—The amendments made by subsections (a) 

3 and (b) shall apply to amounts paid with respect to 

4 taxable years beginning after December 31, 2016. 

5 (2) REIMBURSEMENTS.—The amendment made 

6 by subsection (c) shall apply to expenses incurred 

7 with respect to taxable years beginning after Decem8 ber 31, 2016. 

9 SEC. 208. REPEAL OF INCREASE OF TAX ON HEALTH SAV10 INGS ACCOUNTS. 

11 (a) HSAS.—Section 223(f)(4)(A) of the Internal 

12 Revenue Code of 1986 is amended by striking ‘‘20 per13 cent’’ and inserting ‘‘10 percent’’. 

14 (b) ARCHER MSAS.—Section 220(f)(4)(A) of the In15 ternal Revenue Code of 1986 is amended by striking ‘‘20 

16 percent’’ and inserting ‘‘15 percent’’. 

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

18 this section shall apply to distributions made after Decem19 ber 31, 2016. 

20 SEC. 209. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO 

21 FLEXIBLE SPENDING ACCOUNTS. 

22 (a) IN GENERAL.—Section 125 of the Internal Rev23 enue Code of 1986 is amended by striking subsection (i). 
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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, 2016. 

4 SEC. 210. REPEAL OF MEDICAL DEVICE EXCISE TAX. 

5 Section 4191 of the Internal Revenue Code of 1986 

6 is amended by adding at the end the following new sub7 section: 

8 ‘‘(d) APPLICABILITY.—The tax imposed under sub9 section (a) shall not apply to sales after December 31, 

10 2016.’’. 

11 SEC. 211. REPEAL OF ELIMINATION OF DEDUCTION FOR 

12 EXPENSES ALLOCABLE TO MEDICARE PART D 

13 SUBSIDY. 

14 (a) IN GENERAL.—Section 139A of the Internal Rev15 enue Code of 1986 is amended by adding at the end the 

16 following new sentence: ‘‘This section shall not be taken 

17 into account for purposes of determining whether any de18 duction is allowable with respect to any cost taken into 

19 account in determining such payment.’’. 

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2016. 
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1 SEC. 212. REDUCTION OF INCOME THRESHOLD FOR DETER2 MINING MEDICAL CARE DEDUCTION. 

3 (a) IN GENERAL.—Subsection (a) of section 213 of 

4 the Internal Revenue Code of 1986 is amended by striking 

5 ‘‘10 percent’’ and inserting ‘‘5.8 percent’’. 

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2016. 

9 SEC. 213. REPEAL OF MEDICARE TAX INCREASE. 

10 (a) IN GENERAL.—Subsection (b) of section 3101 of 

11 the Internal Revenue Code of 1986 is amended to read 

12 as follows: 

13 ‘‘(b) HOSPITAL INSURANCE.—In addition to the tax 

14 imposed by the preceding subsection, there is hereby im15 posed on the income of every individual a tax equal to 1.45 

16 percent of the wages (as defined in section 3121(a)) re17 ceived by such individual with respect to employment (as 

18 defined in section 3121(b)).’’. 

19 (b) SECA.—Subsection (b) of section 1401 of the In20 ternal Revenue Code of 1986 is amended to read as fol21 lows: 

22 ‘‘(b) HOSPITAL INSURANCE.—In addition to the tax 

23 imposed by the preceding subsection, there shall be im24 posed for each taxable year, on the self-employment in25 come of every individual, a tax equal to 2.9 percent of the 
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1 amount of the self-employment income for such taxable 

2 year.’’. 

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

4 this section shall apply with respect to remuneration re5 ceived after, and taxable years beginning after, December 

6 31, 2022. 

7 SEC. 214. REFUNDABLE TAX CREDIT FOR HEALTH INSUR8 ANCE COVERAGE. 

9 (a) IN GENERAL.—Section 36B of the Internal Rev10 enue Code of 1986 is amended to read as follows: 

11 ‘‘SEC. 36B. REFUNDABLE CREDIT FOR COVERAGE UNDER A 

12 QUALIFIED HEALTH PLAN. 

13 ‘‘(a) ALLOWANCE OF PREMIUM TAX CREDIT.—In the 

14 case of an individual, there shall be allowed as a credit 

15 against the tax imposed by this subtitle for the taxable 

16 year the sum of the monthly credit amounts with respect 

17 to such taxpayer for calendar months during such taxable 

18 year which are eligible coverage months appropriately 

19 taken into account under subsection (b)(2) with respect 

20 to the taxpayer or any qualifying family member of the 

21 taxpayer. 

22 ‘‘(b) MONTHLY CREDIT AMOUNTS.— 

23 ‘‘(1) IN GENERAL.—The monthly credit amount 

24 with respect to any taxpayer for any calendar month 

25 is the lesser of— 
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1 ‘‘(A) the sum of the monthly limitation 

2 amounts determined under subsection (c) with 

3 respect to the taxpayer and the taxpayer’s 

4 qualifying family members for such month, or 

5 ‘‘(B) the amount paid for a qualified 

6 health plan for the taxpayer and the taxpayer’s 

7 qualifying family members for such month. 

8 ‘‘(2) ELIGIBLE COVERAGE MONTH REQUIRE9 MENT.—No amount shall be taken into account 

10 under subparagraph (A) or (B) of paragraph (1) 

11 with respect to any individual for any month unless 

12 such month is an eligible coverage month with re13 spect to such individual. 

14 ‘‘(c) MONTHLY LIMITATION AMOUNTS.— 

15 ‘‘(1) IN GENERAL.—The monthly limitation 

16 amount with respect to any individual for any eligible coverage month during any taxable year is 1 17 ⁄12

18 of— 

19 ‘‘(A) $2,000 in the case of an individual 

20 who has not attained age 30 as of the begin21 ning of such taxable year, 

22 ‘‘(B) $2,500 in the case of an individual 

23 who has attained age 30 but who has not at24 tained age 40 as of such time, 
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1 ‘‘(C) $3,000 in the case of an individual 

2 who has attained age 40 but who has not at3 tained age 50 as of such time, 

4 ‘‘(D) $3,500 in the case of an individual 

5 who has attained age 50 but who has not at6 tained age 60 as of such time, and 

7 ‘‘(E) $4,000 in the case of an individual 

8 who has attained age 60 as of such time. 

9 ‘‘(2) LIMITATION BASED ON MODIFIED AD10 JUSTED GROSS INCOME.—The credit allowed under 

11 subsection (a) with respect to any taxpayer for any 

12 taxable year shall be reduced (but not below zero) by 

13 10 percent of the excess (if any) of— 

14 ‘‘(A) the taxpayer’s modified adjusted 

15 gross income (as defined in section 

16 36B(d)(2)(B), as in effect for taxable years be17 ginning before January 1, 2020) for such tax18 able year, over 

19 ‘‘(B) $75,000 (twice such amount in the 

20 case of a joint return). 

21 ‘‘(3) OTHER LIMITATIONS.— 

22 ‘‘(A) AGGREGATE DOLLAR LIMITATION.— 

23 The sum of the monthly limitation amounts 

24 taken into account under this section with re-
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1 spect to any taxpayer for any taxable year shall 

2 not exceed $14,000. 

3 ‘‘(B) MAXIMUM NUMBER OF INDIVIDUALS

4 TAKEN INTO ACCOUNT.—With respect to any 

5 taxpayer for any month, monthly limitation 

6 amounts shall be taken into account under this 

7 section only with respect to the 5 oldest individ8 uals with respect to whom monthly limitation 

9 amounts could (without regard to this subpara10 graph) otherwise be so taken into account. 

11 ‘‘(d) ELIGIBLE COVERAGE MONTH.—For purposes of 

12 this section, the term ‘eligible coverage month’ means, 

13 with respect to any individual, any month if, as of the first 

14 day of such month, the individual meets the following re15 quirements: 

16 ‘‘(1) The individual is covered by a health in17 surance coverage which is certified by the State in 

18 which such insurance is offered as coverage that 

19 meets the requirements for qualified health plans 

20 under subsection (f). 

21 ‘‘(2) The individual is not eligible for— 

22 ‘‘(A) coverage under a group health plan 

23 (within the meaning of section 5000(b)(1)) 

24 other than coverage under a plan substantially 
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1 all of the coverage of which is of excepted bene2 fits described in section 9832(c), or 

3 ‘‘(B) coverage described in section 

4 5000A(f)(1)(A). 

5 ‘‘(3) The individual is either— 

6 ‘‘(A) a citizen or national of the United 

7 States, or 

8 ‘‘(B) a qualified alien (within the meaning 

9 of section 431 of the Personal Responsibility 

10 and Work Opportunity Reconciliation Act of 

11 1996 (8 U.S.C. 1641)). 

12 ‘‘(4) The individual is not incarcerated, other 

13 than incarceration pending the disposition of 

14 charges. 

15 ‘‘(e) QUALIFYING FAMILY MEMBER.—For purposes 

16 of this section, the term ‘qualifying family member’ 

17 means— 

18 ‘‘(1) in the case of a joint return, the taxpayer’s 

19 spouse, 

20 ‘‘(2) any dependent of the taxpayer, and 

21 ‘‘(3) with respect to any eligible coverage 

22 month, any child (as defined in section 152(f)(1)) of 

23 the taxpayer who as of the end of the taxable year 

24 has not attained age 27 if such child is covered for 

25 such month under a qualified health plan which also 
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1 covers the taxpayer (in the case of a joint return, ei2 ther spouse). 

3 ‘‘(f) QUALIFIED HEALTH PLAN.—For purposes of 

4 this section, the term ‘qualified health plan’ means any 

5 health insurance coverage (as defined in section 9832(b)) 

6 if— 

7 ‘‘(1) such coverage is offered in the individual 

8 health insurance market within a State (within the 

9 meaning of section 5000A(f)(1)(C)), 

10 ‘‘(2) substantially all of such coverage is not of 

11 excepted benefits described in section 9832(c), 

12 ‘‘(3) such coverage does not consist of short13 term limited duration insurance (within the meaning 

14 of section 2791(b)(5) of the Public Health Service 

15 Act), 

16 ‘‘(4) such coverage is not a grandfathered 

17 health plan (as defined in section 1251 of the Pa18 tient Protection and Affordable Care Act) or a 

19 grandmothered health plan (as defined in section 

20 36B(c)(3)(C) as in effect for taxable years beginning 

21 before January 1, 2020), and 

22 ‘‘(5) such coverage does not include coverage 

23 for abortions (other than any abortion necessary to 

24 save the life of the mother or any abortion with re-
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1 spect to a pregnancy that is the result of an act of 

2 rape or incest). 

3 ‘‘(g) SPECIAL RULES.— 

4 ‘‘(1) MARRIED COUPLES MUST FILE JOINT RE5 TURN.— 

6 ‘‘(A) IN GENERAL.—Except as provided in 

7 subparagraph (B), if the taxpayer is married 

8 (within the meaning of section 7703) at the 

9 close of the taxable year, no credit shall be al10 lowed under this section to such taxpayer unless 

11 such taxpayer and the taxpayer’s spouse file a 

12 joint return for such taxable year. 

13 ‘‘(B) EXCEPTION FOR CERTAIN TAX14 PAYERS.—Subparagraph (A) shall not apply to 

15 any married taxpayer who— 

16 ‘‘(i) is living apart from the taxpayer’s 

17 spouse at the time the taxpayer files the 

18 tax return, 

19 ‘‘(ii) is unable to file a joint return be20 cause such taxpayer is a victim of domestic 

21 abuse or spousal abandonment, 

22 ‘‘(iii) certifies on the tax return that 

23 such taxpayer meets the requirements of 

24 clauses (i) and (ii), and 
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1 ‘‘(iv) has not met the requirements of 

2 clauses (i), (ii), and (iii) for each of the 3 

3 preceding taxable years. 

4 ‘‘(2) DENIAL OF CREDIT TO DEPENDENTS.— 

5 ‘‘(A) IN GENERAL.—No credit shall be al6 lowed under this section to any individual who 

7 is a dependent with respect to another taxpayer 

8 for a taxable year beginning in the calendar 

9 year in which such individual’s taxable year be10 gins. 

11 ‘‘(B) COORDINATION WITH RULE FOR

12 OLDER CHILDREN.—In the case of any indi13 vidual who is a qualifying family member de14 scribed in subsection (e)(3) with respect to an15 other taxpayer for any month, in determining 

16 the amount of any credit allowable to such indi17 vidual under this section for any taxable year of 

18 such individual which includes such month, the 

19 monthly limitation amount with respect to such 

20 individual for such month shall be zero and no 

21 amount paid for any qualified health plan with 

22 respect to such individual for such month shall 

23 be taken into account. 

24 ‘‘(3) COORDINATION WITH MEDICAL EXPENSE

25 DEDUCTION.—Amounts described in subsection 
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1 (b)(1)(B) with respect to any month shall not be 

2 taken into account in determining the deduction al3 lowed under section 213 except to the extent that 

4 such amounts exceed the amount described in sub5 section (b)(1)(A) with respect to such month. 

6 ‘‘(4) COORDINATION WITH ADVANCE PAYMENTS

7 OF CREDIT.—With respect to any taxable year— 

8 ‘‘(A) the amount which would (but for this 

9 subsection) be allowed as a credit to the tax10 payer under subsection (a) shall be reduced 

11 (but not below zero) by the aggregate amount 

12 paid on behalf of such taxpayer under section 

13 1412 of the Patient Protection and Affordable 

14 Care Act for months beginning in such taxable 

15 year, and 

16 ‘‘(B) the tax imposed by section 1 for such 

17 taxable year shall be increased by the excess (if 

18 any) of— 

19 ‘‘(i) the aggregate amount paid on be20 half of such taxpayer under such section 

21 1412 for months beginning in such taxable 

22 year, over 

23 ‘‘(ii) the amount which would (but for 

24 this subsection) be allowed as a credit to 

25 the taxpayer under subsection (a). 
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1 ‘‘(5) SPECIAL RULES FOR QUALIFIED SMALL

2 EMPLOYER HEALTH REIMBURSEMENT ARRANGE3 MENTS.— 

4 ‘‘(A) IN GENERAL.—If the taxpayer or any 

5 qualifying family member of the taxpayer is 

6 provided a qualified small employer health reim7 bursement arrangement for an eligible coverage 

8 month, the sum determined under subsection 

9 (b)(1)(A) with respect to the taxpayer shall be 

reduced (but not below zero) by 1 10 ⁄12 of the per11 mitted benefit (as defined in section 

12 9831(d)(3)(C)) under such arrangement for 

13 each such month such arrangement is provided 

14 to such taxpayer. 

15 ‘‘(B) QUALIFIED SMALL EMPLOYER

16 HEALTH REIMBURSEMENT ARRANGEMENT.— 

17 For purposes of this paragraph, the term 

18 ‘qualified small employer health reimbursement 

19 arrangement’ has the meaning given such term 

20 by section 9831(d)(2). 

21 ‘‘(C) COVERAGE FOR LESS THAN ENTIRE

22 YEAR.—In the case of an employee who is pro23 vided a qualified small employer health reim24 bursement arrangement for less than an entire 

25 year, subparagraph (A) shall be applied by sub-
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1 stituting ‘the number of months during the year 

2 for which such arrangement was provided’ for 

3 ‘12’. 

4 ‘‘(6) CERTAIN RULES RELATED TO NON5 QUALIFIED HEALTH PLANS.—The rules of section 

6 36B(c)(3)(D), as in effect for taxable years begin7 ning before January 1, 2020, shall apply with re8 spect to subsection (f)(5). 

9 ‘‘(7) INFLATION ADJUSTMENT.— 

10 ‘‘(A) IN GENERAL.—In the case of any 

11 taxable year beginning in a calendar year after 

12 2020, each dollar amount in subsection (c)(1), 

13 the $75,000 amount in subsection (c)(2)(B), 

14 and the dollar amount in subsection (c)(3)(A), 

15 shall be increased by an amount equal to— 

16 ‘‘(i) such dollar amount, multiplied by 

17 ‘‘(ii) the cost-of-living adjustment de18 termined under section 1(f)(3) for the cal19 endar year in which the taxable year be20 gins, determined— 

21 ‘‘(I) by substituting ‘calendar 

22 year 2019’ for ‘calendar year 1992’ in 

23 subparagraph (B) thereof, and 

24 ‘‘(II) by substituting for the CPI 

25 referred to section 1(f)(3)(A) the 
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1 amount that such CPI would have 

2 been if the annual percentage increase 

3 in CPI with respect to each year after 

4 2019 had been one percentage point 

5 greater. 

6 ‘‘(B) TERMS RELATED TO CPI.— 

7 ‘‘(i) ANNUAL PERCENTAGE IN8 CREASE.—For purposes of subparagraph 

9 (A)(ii)(II), the term ‘annual percentage in10 crease’ means the percentage (if any) by 

11 which CPI for any year exceeds CPI for 

12 the prior year. 

13 ‘‘(ii) OTHER TERMS.—Terms used in 

14 this paragraph which are also used in sec15 tion 1(f)(3) shall have the same meanings 

16 as when used in such section. 

17 ‘‘(C) ROUNDING.—Any increase deter18 mined under subparagraph (A) shall be rounded 

19 to the nearest multiple of $50. 

20 ‘‘(8) RULES RELATED TO STATE CERTIFI21 CATION OF QUALIFIED HEALTH PLANS.—A certifi22 cation shall not be taken into account under sub23 section (d)(1) unless such certification is made avail24 able to the public and meets such other require25 ments as the Secretary may provide. 
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1 ‘‘(9) REGULATIONS.—The Secretary may pre2 scribe such regulations and other guidance as may 

3 be necessary or appropriate to carry out this section 

4 and section 1412 of the Patient Protection and Af5 fordable Care Act.’’. 

6 (b) ADVANCE PAYMENT OF CREDIT.—Section 

7 1412(f) of the Patient Protection and Affordable Care 

8 Act, as added by section 202, is amended to read as fol9 lows: 

10 ‘‘(f) APPLICATION TO CERTAIN PLANS.—The Sec11 retary and the Secretary of the Treasury shall prescribe 

12 such regulations as each respective Secretary may deem 

13 necessary in order to establish and operate the advance 

14 payment program established under this section for indi15 viduals covered under qualified health plans (whether en16 rolled in through an Exchange or otherwise) in such a 

17 manner that protects taxpayer information (including 

18 names, taxpayer identification numbers, and other con19 fidential information), provides robust verification of all 

20 information necessary to establish eligibility of taxpayer 

21 for advance payments under this section, ensures proper 

22 and timely payments to appropriate health providers, and 

23 protects program integrity to the maximum extent fea24 sible.’’. 
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1 (c) INCREASED PENALTY ON ERRONEOUS CLAIMS OF

2 CREDIT.—Section 6676(a) of the Internal Revenue Code 

3 of 1986 is amended by inserting ‘‘(25 percent in the case 

4 of a claim for refund or credit relating to the health insur5 ance coverage credit under section 36B)’’. 

6 (d) REPORTING BY EMPLOYERS.—Section 6051(a) of 

7 such Code is amended by striking ‘‘and’’ at the end of 

8 paragraph (14), by striking the period at the end of para9 graph (15) and inserting ‘‘, and’’, and by inserting after 

10 paragraph (15) the following new paragraph: 

11 ‘‘(16) each month with respect to which the em12 ployee is eligible for coverage described in section 

13 36B(d)(2) in connection with employment with the 

14 employer.’’. 

15 (e) COORDINATION WITH OTHER TAX BENEFITS.— 

16 (1) CREDIT FOR HEALTH INSURANCE COSTS OF

17 ELIGIBLE INDIVIDUALS.—Section 35(g) of such 

18 Code is amended by adding at the end the following 

19 new paragraph: 

20 ‘‘(14) COORDINATION WITH HEALTH INSUR21 ANCE COVERAGE CREDIT.— 

22 ‘‘(A) IN GENERAL.—An eligible coverage 

23 month to which the election under paragraph 

24 (11) applies shall not be treated as an eligible 

25 coverage month (as defined in section 36B(d)) 
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1 for purposes of section 36B with respect to the 

2 taxpayer or any of the taxpayer’s qualifying 

3 family members (as defined in section 36B(e)). 

4 ‘‘(B) COORDINATION WITH ADVANCE PAY5 MENTS OF HEALTH INSURANCE COVERAGE

6 CREDIT.—In the case of a taxpayer who makes 

7 the election under paragraph (11) with respect 

8 to any eligible coverage month in a taxable year 

9 or on behalf of whom any advance payment is 

10 made under section 7527 with respect to any 

11 month in such taxable year— 

12 ‘‘(i) the tax imposed by this chapter 

13 for the taxable year shall be increased by 

14 the excess, if any, of— 

15 ‘‘(I) the sum of any advance pay16 ments made on behalf of the taxpayer 

17 under section 7527 and section 1412 

18 of the Patient Protection and Afford19 able Care Act, over 

20 ‘‘(II) the sum of the credits al21 lowed under this section (determined 

22 without regard to paragraph (1)) and 

23 section 36B (determined without re24 gard to subsection (g)(4)(A) thereof) 

25 for such taxable year, and 
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1 ‘‘(ii) section 36B(g)(4)(B) shall not 

2 apply with respect to such taxpayer for 

3 such taxable year.’’. 

4 (2) TRADE OR BUSINESS DEDUCTION.—Section 

5 162(l) of such Code is amended by adding at the 

6 end the following new paragraph: 

7 ‘‘(6) COORDINATION WITH HEALTH INSURANCE

8 COVERAGE CREDIT.—The deduction otherwise allow9 able to a taxpayer under paragraph (1) for any tax10 able year shall be reduced (but not below zero) by 

11 the amount of the credit allowable to such taxpayer 

12 under section 36B (determined without regard to 

13 subsection (g)(4)(A) thereof) for such taxable year.’’. 

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

15 this section shall apply to months beginning after Decem16 ber 31, 2019, in taxable years ending after such date. 

17 SEC. 215. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAV18 INGS ACCOUNT INCREASED TO AMOUNT OF 

19 DEDUCTIBLE AND OUT-OF-POCKET LIMITA20 TION. 

21 (a) SELF-ONLY COVERAGE.—Section 223(b)(2)(A) 

22 of the Internal Revenue Code of 1986 is amended by strik23 ing ‘‘$2,250’’ and inserting ‘‘the amount in effect under 

24 subsection (c)(2)(A)(ii)(I)’’. 
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1 (b) FAMILY COVERAGE.—Section 223(b)(2)(B) of 

2 such Code is amended by striking ‘‘$4,500’’ and inserting 

3 ‘‘the amount in effect under subsection (c)(2)(A)(ii)(II)’’. 

4 (c) CONFORMING AMENDMENTS.—Section 223(g)(1) 

5 of such Code is amended— 

6 (1) by striking ‘‘subsections (b)(2) and’’ both 

7 places it appears and inserting ‘‘subsection’’, and 

8 (2) in subparagraph (B), by striking ‘‘deter9 mined by’’ and all that follows through ‘‘ ‘calendar 

10 year 2003’.’’ and inserting ‘‘determined by sub11 stituting ‘calendar year 2003’ for ‘calendar year 

12 1992’ in subparagraph (B) thereof.’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2017. 

16 SEC. 216. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CON17 TRIBUTIONS TO THE SAME HEALTH SAVINGS 

18 ACCOUNT. 

19 (a) IN GENERAL.—Section 223(b)(5) of the Internal 

20 Revenue Code of 1986 is amended to read as follows: 

21 ‘‘(5) SPECIAL RULE FOR MARRIED INDIVIDUALS

22 WITH FAMILY COVERAGE.— 

23 ‘‘(A) IN GENERAL.—In the case of individ24 uals who are married to each other, if both 

25 spouses are eligible individuals and either 
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1 spouse has family coverage under a high de2 ductible health plan as of the first day of any 

3 month— 

4 ‘‘(i) the limitation under paragraph 

5 (1) shall be applied by not taking into ac6 count any other high deductible health 

7 plan coverage of either spouse (and if such 

8 spouses both have family coverage under 

9 separate high deductible health plans, only 

10 one such coverage shall be taken into ac11 count), 

12 ‘‘(ii) such limitation (after application 

13 of clause (i)) shall be reduced by the ag14 gregate amount paid to Archer MSAs of 

15 such spouses for the taxable year, and 

16 ‘‘(iii) such limitation (after application 

17 of clauses (i) and (ii)) shall be divided 

18 equally between such spouses unless they 

19 agree on a different division. 

20 ‘‘(B) TREATMENT OF ADDITIONAL CON21 TRIBUTION AMOUNTS.—If both spouses referred 

22 to in subparagraph (A) have attained age 55 

23 before the close of the taxable year, the limita24 tion referred to in subparagraph (A)(iii) which 

25 is subject to division between the spouses shall 
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1 include the additional contribution amounts de2 termined under paragraph (3) for both spouses. 

3 In any other case, any additional contribution 

4 amount determined under paragraph (3) shall 

5 not be taken into account under subparagraph 

6 (A)(iii) and shall not be subject to division be7 tween the spouses.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2017. 

11 SEC. 217. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 

12 INCURRED BEFORE ESTABLISHMENT OF 

13 HEALTH SAVINGS ACCOUNT. 

14 (a) IN GENERAL.—Section 223(d)(2) of the Internal 

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

16 the following new subparagraph: 

17 ‘‘(D) TREATMENT OF CERTAIN MEDICAL

18 EXPENSES INCURRED BEFORE ESTABLISHMENT

19 OF ACCOUNT.—If a health savings account is 

20 established during the 60-day period beginning 

21 on the date that coverage of the account bene22 ficiary under a high deductible health plan be23 gins, then, solely for purposes of determining 

24 whether an amount paid is used for a qualified 

25 medical expense, such account shall be treated 
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1 as having been established on the date that 

2 such coverage begins.’’. 

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

4 this section shall apply with respect to coverage beginning 

5 after December 31, 2017. 

6 Subtitle B—Repeal of Certain 

7 Consumer Taxes 

8 SEC. 221. REPEAL OF TAX ON PRESCRIPTION MEDICA9 TIONS. 

10 Subsection (j) of section 9008 of the Patient Protec11 tion and Affordable Care Act is amended to read as fol12 lows: 

13 ‘‘(j) REPEAL.—This section shall apply to calendar 

14 years beginning after December 31, 2010, and ending be15 fore January 1, 2017.’’. 

16 SEC. 222. REPEAL OF HEALTH INSURANCE TAX. 

17 Subsection (j) of section 9010 of the Patient Protec18 tion and Affordable Care Act is amended to read as fol19 lows: 

20 ‘‘(j) REPEAL.—This section shall apply to calendar 

21 years beginning after December 31, 2013, and ending be22 fore January 1, 2017.’’. 
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1 Subtitle C—Repeal of Tanning Tax 

2 SEC. 231. REPEAL OF TANNING TAX. 

3 (a) IN GENERAL.—The Internal Revenue Code of 

4 1986 is amended by striking chapter 49. 

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

6 this section shall apply to services performed after June 

7 30, 2017. 

8 Subtitle D—Remuneration From 

9 Certain Insurers 

10 SEC. 241. REMUNERATION FROM CERTAIN INSURERS. 

11 Paragraph (6) of section 162(m) of the Internal Rev12 enue Code of 1986 is amended by adding at the end the 

13 following new subparagraph: 

14 ‘‘(I) TERMINATION.—This paragraph shall 

15 not apply to taxable years beginning after De16 cember 31, 2016.’’. 

17 Subtitle E—Repeal of Net 

18 Investment Income Tax 

19 SEC. 251. REPEAL OF NET INVESTMENT INCOME TAX. 

20 (a) IN GENERAL.—Subtitle A of the Internal Rev21 enue Code of 1986 is amended by striking chapter 2A. 
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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, 2016. 

Passed the House of Representatives May 4, 2017. 

Attest: 

Clerk. 
115TH CONGRESS 

1ST SESSION H. R. 1628 

AN ACT 

To provide for reconciliation pursuant to title II of 

year 2017. the concurrent resolution on the budget for fiscal