I 

111TH CONGRESS 

2D SESSION H. R. 4529 

To provide for the reform of health care, the Social Security system, the 

tax code for individuals and business, job training, and the budget process. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 27, 2010 

Mr. RYAN of Wisconsin (for himself, Mr. BARTLETT, Mrs. BLACKBURN, Mr. 

BURGESS, Mr. CAMPBELL, Mr. HENSARLING, Mr. NUNES, and Mr. 

PRICE of Georgia) introduced the following bill; which was referred to the 

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

Energy and Commerce, Education and Labor, Rules, the Budget, and the 

Judiciary, for a period to be subsequently determined by the Speaker, in 

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

A BILL 

To provide for the reform of health care, the Social Security 

system, the tax code for individuals and business, job 

training, and the budget process. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Roadmap for America’s Future Act of 2010’’. 

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

7 this Act is as follows: 


rfrederick on DSKD9S0YB1PROD with BILLS
2 

•HR 4529 IH

Sec. 1. Short title; table of contents. 

Sec. 2. Findings and purpose. 

TITLE I—HEALTH CARE REFORM 

Subtitle A—Expanding Patient’s Health Care Choices 

PART 1—STATE-BASED HEALTH CARE EXCHANGES

Sec. 101. State-based health care exchanges. 

Sec. 102. Requirements. 

Sec. 103. State Exchange incentives. 

PART 2—FAIR TAX TREATMENT FOR ALL AMERICANS TO AFFORD HEALTH

CARE

Sec. 111. Reference. 

SUBPART A—REFUNDABLE AND ADVANCEABLE CREDIT FOR CERTAIN HEALTH

INSURANCE COVERAGE

Sec. 112. Refundable and advanceable credit for certain health insurance coverage. 

Sec. 113. Requiring employer transparency about employee benefits. 

Sec. 114. Changes to existing tax preferences for medical coverage, etc., for individuals eligible for qualified health insurance credit. 

SUBPART B—HEALTH SAVINGS ACCOUNTS

Sec. 121. Improvements to health savings accounts. 

Sec. 122. Exception to requirement for employers to make comparable health 

savings account contributions. 

Subtitle B—Health Plan Choice; Small Business Health Fairness; Tax 

Amendments 

Sec. 131. Cooperative governing of individual health insurance coverage. 

Sec. 132. Small business health fairness. 

Sec. 133. Repeal of certain tax exemptions for health insurance payments. 

Subtitle C—Health Care Services Commission 

PART I—ESTABLISHMENT AND GENERAL DUTIES

Sec. 141. Establishment. 

Sec. 142. General authorities and duties. 

Sec. 143. Dissemination. 

PART II—FORUM FOR QUALITY AND EFFECTIVENESS IN HEALTH CARE

Sec. 151. Establishment of office. 

Sec. 152. Membership. 

Sec. 153. Duties. 

Sec. 154. Adoption and enforcement of guidelines and standards. 

Sec. 155. Additional requirements. 

PART III—GENERAL PROVISIONS

Sec. 161. Certain administrative authorities. 


rfrederick on DSKD9S0YB1PROD with BILLS
3 

•HR 4529 IH

Sec. 162. Funding. 

Sec. 163. Definitions. 

PART IV—TERMINATIONS AND TRANSITION

Sec. 171. Termination of Agency for Healthcare Research and Quality. 

Sec. 172. Transition. 

PART V—INDEPENDENT HEALTH RECORD TRUST

Sec. 181. Short title of part. 

Sec. 182. Purpose. 

Sec. 183. Definitions. 

Sec. 184. Establishment, certification, and membership of independent health 

record trusts. 

Sec. 185. Duties of IHRT to IHRT participants. 

Sec. 186. Availability and use of information from records in IHRT consistent 

with privacy protections and agreements. 

Sec. 187. Voluntary nature of trust participation and information sharing. 

Sec. 188. Financing of activities. 

Sec. 189. Regulatory oversight. 

TITLE II—FAIRNESS FOR EVERY AMERICAN PATIENT 

Subtitle A—Medicaid Modernization 

Sec. 201. Medicaid modernization. 

Sec. 202. Outreach. 

Sec. 203. Transition rules; miscellaneous provisions. 

Subtitle B—Supplemental Health Care Assistance for Low-Income Families 

Sec. 211. Supplemental health care assistance for low-income families. 

TITLE III—MEDICARE REFORM 

Subtitle A—New Medicare Program 

Sec. 301. Benefit changes. 

Sec. 302. Increase in Medicare eligibility age. 

Sec. 303. Unified Medicare Trust Fund. 

Subtitle B—Changes in Current Medicare Program 

Sec. 311. Income-related reduction in part D premium subsidy. 

Sec. 312. Reduction in hospital marketbasket increases. 

Sec. 313. Elimination of indexing of income thresholds for part B income-related premiums. 

Sec. 314. Reinstatement of the Medicare trigger. 

Sec. 315. Eliminating inefficiencies and increasing choice in Medicare Advantage. 

Subtitle C—Medical Liability Reform 

PART 1—ENACTING REAL MEDICAL LIABILITY REFORM

Sec. 321. Encouraging speedy resolution of claims. 

Sec. 322. Compensating patient injury. 

Sec. 323. Maximizing patient recovery. 


rfrederick on DSKD9S0YB1PROD with BILLS
4 

•HR 4529 IH

Sec. 324. Additional health benefits. 

Sec. 325. Punitive damages. 

Sec. 326. Authorization of payment of future damages to claimants in health 

care lawsuits. 

Sec. 327. Definitions. 

Sec. 328. Effect on other laws. 

Sec. 329. State flexibility and protection of States’ rights. 

Sec. 330. Applicability; effective date. 

PART 2—ENDING LAWSUIT ABUSE

Sec. 331. State grants to create health court solutions. 

TITLE IV—SOCIAL SECURITY REFORM 

Sec. 401. Short title. 

Sec. 402. Establishment of Personal Social Security Savings Program. 

Sec. 403. Monthly insurance benefits for participating individuals. 

Sec. 404. Tax treatment of accounts. 

Sec. 405. Self-Liquidating Social Security Transition Fund. 

Sec. 406. Budgetary treatment of Social Security. 

Sec. 407. Accounting for the Old-Age, Survivors, and Disability Insurance Program and the Personal Social Security Savings Program. 

Sec. 408. Progressive indexing of benefits for old-age, wife’s, and husband’s insurance benefits. 

Sec. 409. Adjustments to schedule for increases in normal retirement age. 

TITLE V—SIMPLIFIED INCOME TAX 

Sec. 501. Short title. 

Sec. 502. Repeal of alternative minimum tax for noncorporate taxpayers. 

Sec. 503. Simplified income tax system. 

Sec. 504. Exclusion for capital gains, dividends, and interest. 

Sec. 505. Repeal of estate and gift taxes. 

TITLE VI—BUSINESS CONSUMPTION TAX 

Sec. 601. Short title. 

Sec. 602. Repeal of corporate income tax; new tax paid by corporations and 

other businesses. 

Sec. 603. Repeal of chapter 6. 

TITLE VII—JOB TRAINING RESULTS ACT OF 2010 

Sec. 701. Short title. 

Sec. 702. Purpose. 

Sec. 703. Improvement of job training programs; performance metrics for WIA 

job training programs. 

Sec. 704. Other job training programs. 

Sec. 705. Transparency. 

Sec. 706. Evaluations. 

Sec. 707. Encouraging innovation. 

Sec. 708. Making WIA Training Vouchers more accessible and flexible. 

Sec. 709. Life long learning awareness campaigns. 

Sec. 710. GAO reports. 

TITLE VIII—SPENDING LIMITS AND DEFICIT CONTROL 


rfrederick on DSKD9S0YB1PROD with BILLS
5 

•HR 4529 IH

Sec. 800. Short title. 

Subtitle A—Spending Limits and Deficit Control 

Sec. 801. Discretionary spending limits. 

Sec. 802. Total spending limits. 

Subtitle B—Reports and Orders 

Sec. 811. Reports and orders. 

Sec. 812. Spending limits enforcement. 

Sec. 813. Spending reduction orders. 

Sec. 814. Alternate spending reduction legislation in the House of Representatives. 

Sec. 815. Alternate spending reduction legislation in the Senate. 

Subtitle C—Long-Term Budgeting 

Sec. 821. CBO and OMB projections. 

Sec. 822. GAO and OMB statements of the Federal Government’s financial 

condition. 

Sec. 823. Five-year fiscal sustainability review. 

Sec. 824. Long-term reconciliation. 

Sec. 825. Long-term spending increase point of order. 

1 SEC. 2. FINDINGS AND PURPOSE. 

2 (a) FINDINGS.—The Congress finds as follows: 

3 (1) The Congressional Budget Office, the Gov4 ernment Accountability Office, and the Federal Re5 serve have all found that Social Security, Medicare, 

6 and Medicaid, as currently structured, will result in 

7 unsustainable levels of spending, deficits, and debt. 

8 (2) Although Americans remain committed to 

9 the missions of these initiatives, the goals can no 

10 longer be met on models created nearly 80 years 

11 ago—with large, centralized institutions, especially 

12 government, serving as sole providers for an increas13 ingly dependent population. 


rfrederick on DSKD9S0YB1PROD with BILLS
6 

•HR 4529 IH

1 (3) The continuing failure to enact solutions 

2 makes these problems more intractable with each 

3 succeeding year. 

4 (4) Among the inescapable signs are the fol5 lowing: an unsustainable path of Government spend6 ing; levels of projected debt that threaten to bank7 rupt the country; trillions of dollars of unfunded li8 abilities in the Government’s major benefit pro9 grams; and the erosion of Americans’ security and 

10 confidence in health care and retirement. 

11 (5) These conditions pose significant potential 

12 burdens not only for the Government, but for the 

13 United States economy as well, threatening its abil14 ity to continue raising standards of living, and its 

15 leadership in an increasingly international market16 place. 

17 (6) A comprehensive plan is needed, and this 

18 legislation aims to gain control of Federal spending, 

19 deficits, and debt while energizing the productive ca20 pacities of Americans to generate sustained eco21 nomic growth. 

22 (b) PURPOSE.—The purpose of this Act is as follows: 

23 (1) HEALTH CARE REFORM.—To provide access 

24 to health care coverage for uninsured Americans by 

25 establishing a new tax credit; to reform health insurVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
7 

•HR 4529 IH

1 ance markets, high-risk pools, and electronic health 

2 records; and to create a new agency to promote the 

3 dissemination of industry-defined health care price 

4 and quality data. 

5 (2) MEDICAID AND SCHIP REFORM.—To ensure 

6 health care coverage for those who need it most and 

7 can be sustained, reforms the Medicaid and SCHIP 

8 to expand coverage options for beneficiaries, gives 

9 greater flexibility, and slows the growth in spending. 

10 (3) MEDICARE REFORM.—To ensure the Medi11 care benefit continues to provide health care cov12 erage for seniors by establishing modernizing the 

13 program to slowly phase in reforms for those young14 er than 55 years of age, and to make the program 

15 permanently solvent and fiscally sustainable. 

16 (4) SOCIAL SECURITY REFORM.—To reform So17 cial Security to ensure retirement security for future 

18 generations and to make it solvent for the foresee19 able future; to address inequities in the system and 

20 provide millions of Americans with the opportunity 

21 to build a retirement nest egg that they can pass on 

22 to their heirs. 

23 (5) INDIVIDUAL INCOME TAX REFORM.—To 

24 offer taxpayers a choice in paying their Federal in25 come taxes; to allow individuals to choose between 


rfrederick on DSKD9S0YB1PROD with BILLS
8 

•HR 4529 IH

1 the current tax code or a highly simplified tax sys2 tem with virtually no deductions or credits (apart 

3 from an individual health care credit), two low tax 

4 rates and a generous standard deduction and per5 sonal exemption; to fully repeal the alternative min6 imum tax (AMT), eliminate the tax on interest, cap7 ital gains and dividends in order to promote saving; 

8 and to repeal the estate tax. 

9 (6) BUSINESS TAX REFORM.—To eliminate the 

10 United States corporate income tax and establishes 

11 a border-adjustable business consumption tax in its 

12 place; to provide a new method of business taxation 

13 that will level the playing field for United States 

14 businesses to compete with foreign businesses and 

15 will promote sustained economic growth, investment 

16 and job creation in America. 

17 (7) JOB TRAINING.—To assist working Ameri18 cans in an increasingly global economy, reforms 49 

19 job training programs across eight agencies to en20 hance transparency, accountability, and perform21 ance. 

22 (8) BUDGET PROCESS.—To keep total spending 

23 of the Government under control, nondefense discre24 tionary spending limits are set forth, a limit on total 

25 outlays as a percentage of the gross domestic 


rfrederick on DSKD9S0YB1PROD with BILLS
9 

•HR 4529 IH

1 produce is established, and the process is reformed 

2 to put a greater focus on long-term budgetary 

3 trends. 

4 TITLE I—HEALTH CARE REFORM 

5 Subtitle A—Expanding Patient’s 

6 Health Care Choices 

7 PART 1—STATE-BASED HEALTH CARE 

8 EXCHANGES 

9 SEC. 101. STATE-BASED HEALTH CARE EXCHANGES. 

10 (a) STATE-BASED HEALTH CARE EXCHANGES.— 

11 (1) IN GENERAL.—The Secretary of Health and 

12 Human Services (referred to in this part as the 

13 ‘‘Secretary’’) shall establish a process for the review 

14 of applications submitted by States for the establish15 ment and implementation of State-based health care 

16 Exchanges (referred to in this part as a ‘‘State Ex17 change’’) and for the certification of such Ex18 changes. The Secretary shall certify a State Ex19 change if the Secretary determines that such Ex20 change meets the requirements of this part. 

21 (2) CONTINUED CERTIFICATION.—The certifi22 cation of a State Exchange under subsection (a) 

23 shall remain in effect until the Secretary determines 

24 that the Exchange has failed to meet any of the re25 quirements under this part. 


rfrederick on DSKD9S0YB1PROD with BILLS
10 

•HR 4529 IH

1 SEC. 102. REQUIREMENTS. 

2 (a) GENERAL REQUIREMENTS FOR CERTIFI3 CATION.—An application for certification under section 

4 101(a) shall demonstrate compliance with the following: 

5 (1) PURPOSE.—The primary purpose of a State 

6 Exchange shall be the facilitation of the individual 

7 purchase of innovative private health insurance and 

8 the creation of a market where private health plans 

9 compete for enrollees based on price and quality. 

10 (2) ADMINISTRATION.—A State shall ensure 

11 the operation of the State Exchange through direct 

12 contracts with the health insurance plans that are 

13 participating in the State Exchange or through a 

14 contract with a third party administrator for the op15 eration of the Exchange. 

16 (3) PLAN PARTICIPATION.—A State shall not 

17 restrict or otherwise limit the ability of a health in18 surance plan to participate in, and offer health in19 surance coverage through, the State Exchange, so 

20 long as the health insurance issuers involved are 

21 duly licensed under State insurance laws applicable 

22 to all health insurance issuers in the State and oth23 erwise comply with the requirements of this part. 

24 (4) PREMIUMS.— 

25 (A) AMOUNT.—A State shall not determine 

26 premium or cost sharing amounts for health inVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
11 

•HR 4529 IH

1 surance coverage offered through the State Ex2 change. 

3 (B) COLLECTION METHOD.—A State shall 

4 ensure the existence of an effective and efficient 

5 method for the collection of premiums for 

6 health insurance coverage offered through the 

7 State Exchange. 

8 (b) BENEFIT PARITY WITH MEMBERS OF CON9 GRESS.—With respect to health insurance issuers offering 

10 health insurance coverage through the State Exchange, 

11 the State shall not impose any requirement that such 

12 issuers provide coverage that includes benefits different 

13 than requirements on plans offered to Members of Con14 gress under chapter 89 of title 5, United States Code. 

15 (c) FACILITATING UNIVERSAL COVERAGE FOR

16 AMERICANS.— 

17 (1) AUTOMATIC ENROLLMENT.—The State Ex18 change shall ensure that health insurance coverage 

19 offered through the Exchange provides for the appli20 cation of uniform mechanisms that are designed to 

21 encourage and facilitate the enrollment of all eligible 

22 individuals in Exchange-based health insurance cov23 erage. Such mechanisms shall include automatic en24 rollment through various venues, which may include 

25 emergency rooms, the submission of State tax forms, 


rfrederick on DSKD9S0YB1PROD with BILLS
12 

•HR 4529 IH

1 places of employment in the State, and State depart2 ments of motor vehicles. 

3 (2) OTHER ENROLLMENT OPPORTUNITIES.— 

4 (A) IN GENERAL.—The State Exchange 

5 shall ensure that health insurance coverage of6 fered through the Exchange permits enrollment, 

7 and changes in enrollment, of individuals at the 

8 time such individuals become eligible individuals 

9 in the State. 

10 (B) ANNUAL OPEN ENROLLMENT PERI11 ODS.—The State Exchange shall ensure that 

12 health insurance coverage offered through the 

13 Exchange permits eligible individuals to annu14 ally change enrollment among the coverage of15 fered through the Exchange, subject to sub16 paragraph (A). 

17 (C) INCENTIVES FOR CONTINUOUS AN18 NUAL COVERAGE.—The State Exchange shall 

19 include an incentive for eligible individuals to 

20 remain insured from plan year to plan year, 

21 and may include incentives such as State tax 

22 incentives or premium-based incentives. 

23 (3) GUARANTEED ACCESS FOR INDIVIDUALS.— 

24 The State Exchange shall ensure that, with respect 

25 to health insurance coverage offered through the ExVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
13 

•HR 4529 IH

1 change, all eligible individuals are able to enroll in 

2 the coverage of their choice provided that such indi3 viduals agree to make applicable premium and cost 

4 sharing payments. 

5 (4) LIMITATION ON PRE-EXISTING CONDITION

6 EXCLUSIONS.—The State Exchange shall ensure 

7 that health insurance coverage offered through the 

8 Exchange meets the requirements of section 9801 of 

9 the Internal Revenue Code of 1986 in the same 

10 manner as if such coverage was a group health plan. 

11 (5) OPT-OUT.—Nothing in this part shall be 

12 construed to require that an individual be enrolled in 

13 health insurance coverage. 

14 (d) LIMITATION ON EXORBITANT PREMIUMS.— 

15 (1) ESTABLISHMENT OF MECHANISM.—With 

16 respect to health insurance coverage offered through 

17 the State Exchange, the Exchange shall establish a 

18 mechanisms to protect enrollees from the imposition 

19 of excessive premiums, to reduce adverse selection, 

20 and to share risk. 

21 (2) MECHANISM OPTIONS.—The mechanisms 

22 referred to in paragraph (1) may include the fol23 lowing: 

24 (A) INDEPENDENT RISK ADJUSTMENT.— 

25 The implementation of risk-adjustment among 


rfrederick on DSKD9S0YB1PROD with BILLS
14 

•HR 4529 IH

1 health insurance coverage offered through the 

2 State Exchange through a contract entered into 

3 with a private, independent board. Such board 

4 shall include representation of health insurance 

5 issuers and State officials but shall be inde6 pendently controlled. The State Exchange shall 

7 ensure that risk-adjustment implemented under 

8 this subparagraph shall be based on a blend of 

9 patient diagnoses and estimated costs. 

10 (B) HEALTH SECURITY POOLS.—The es11 tablishment (or continued operation under sec12 tion 2745 of the Public Health Service Act) of 

13 a health security pool to guarantee high-risk in14 dividuals access to affordable, quality health 

15 care. 

16 (C) REINSURANCE.—The implementation 

17 of a successful reinsurance mechanisms to guar18 antee high-risk individuals access to affordable, 

19 quality health care. 

20 (e) MEDICAID AND SCHIP BENEFICIARIES.—The 

21 State Exchange shall include procedures to permit eligible 

22 individuals who are receiving (or who are eligible to re23 ceive) health care under title XIX or XXI of the Social 

24 Security Act to enroll in health insurance coverage offered 

25 through the Exchange. 


rfrederick on DSKD9S0YB1PROD with BILLS
15 

•HR 4529 IH

1 (f) DISSEMINATION OF COVERAGE INFORMATION.— 

2 The State Exchange shall ensure that each health insur3 ance issuer that provides health insurance coverage 

4 through the Exchange disseminate to eligible individuals 

5 and employers within the State information concerning 

6 health insurance coverage options, including the plans of7 fered and premiums and benefits for such plans. 

8 (g) REGIONAL OPTIONS.— 

9 (1) INTERSTATE COMPACTS.—Two or more 

10 States that establish a State Exchange may enter 

11 into interstate compacts providing for the regula12 tions of health insurance coverage offered within 

13 such States. 

14 (2) MODEL LEGISLATION.—States adopting 

15 model legislation as developed by the National Asso16 ciation of Insurance Commissioners shall be eligible 

17 to enter into an interstate compact as provided for 

18 in this section. 

19 (3) MULTI-STATE POOLING ARRANGEMENTS.— 

20 State Exchanges may implement a multi-state health 

21 care coverage pooling arrangement under this part. 

22 (h) ELIGIBLE INDIVIDUAL.—In this part, the term 

23 ‘‘eligible individual’’ means an individual who is— 

24 (1) a citizen or national of the United States or 

25 an alien lawfully admitted to the United States for 


rfrederick on DSKD9S0YB1PROD with BILLS
16 

•HR 4529 IH

1 permanent residence or otherwise residing in the 

2 United States under color of law; 

3 (2) a resident of the State involved; 

4 (3) not incarcerated; and 

5 (4) not eligible for coverage under parts A and 

6 B (or C) of the Medicare program under title XVIII 

7 of the Social Security Act. 

8 SEC. 103. STATE EXCHANGE INCENTIVES. 

9 (a) GRANTS.—The Secretary may award grants, pur10 suant to subsection (b), to States for the development, im11 plementation, and evaluation of certified State Exchanges 

12 and to provide more options and choice for individuals 

13 purchasing health insurance coverage. 

14 (b) ONE-TIME INCREASE IN MEDICAID PAYMENT.— 

15 In the case of a State awarded a grant to carry out this 

16 section, the total amount of the Federal payment deter17 mined for the State under section 1913 of the Social Secu18 rity Act (as amended by section 201 of this Act) for fiscal 

19 year 2011 shall be increased by an amount equal to 1 per20 cent of the total amount of payments made to the State 

21 for fiscal year 2010 under section 1903(a) of the Social 

22 Security Act (42 U.S.C. 1396b(a)) for purposes of car23 rying out a grant awarded under this section. Amounts 

24 paid to a State pursuant to this subsection shall remain 

25 available until expended. 


rfrederick on DSKD9S0YB1PROD with BILLS
17 

•HR 4529 IH

1 PART 2—FAIR TAX TREATMENT FOR ALL 

2 AMERICANS TO AFFORD HEALTH CARE 

3 SEC. 111. REFERENCE. 

4 Except as otherwise expressly provided, whenever in 

5 this part an amendment or repeal is expressed in terms 

6 of an amendment to, or repeal of, a section or other provi7 sion, the reference shall be considered to be made to a 

8 section or other provision of the Internal Revenue Code 

9 of 1986. 

10 Subpart A—Refundable and Advanceable Credit for 

11 Certain Health Insurance Coverage 

12 SEC. 112. REFUNDABLE AND ADVANCEABLE CREDIT FOR 

13 CERTAIN HEALTH INSURANCE COVERAGE. 

14 (a) ADVANCEABLE CREDIT.—Subpart A of part IV 

15 of subchapter A of chapter 1 (relating to nonrefundable 

16 personal credits) is amended by adding at the end the fol17 lowing new section: 

18 ‘‘SEC. 25E. QUALIFIED HEALTH INSURANCE CREDIT. 

19 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in20 dividual, there shall be allowed as a credit against the tax 

21 imposed by this chapter for the taxable year the sum of 

22 the monthly limitations determined under subsection (b) 

23 for the taxpayer and the taxpayer’s spouse and depend24 ents. 

25 ‘‘(b) MONTHLY LIMITATION.— 


rfrederick on DSKD9S0YB1PROD with BILLS
18 

•HR 4529 IH

1 ‘‘(1) IN GENERAL.—The monthly limitation for 

2 each month during the taxable year for an eligible 

individual is 1 3 ⁄12th of— 

4 ‘‘(A) the applicable adult amount, in the 

5 case that the eligible individual is the taxpayer 

6 or the taxpayer’s spouse, 

7 ‘‘(B) the applicable adult amount, in the 

8 case that the eligible individual is an adult de9 pendent, and 

10 ‘‘(C) the applicable child amount, in the 

11 case that the eligible individual is a child de12 pendent. 

13 ‘‘(2) LIMITATION ON AGGREGATE AMOUNT.— 

14 Notwithstanding paragraph (1), the aggregate 

15 monthly limitations for the taxpayer and the tax16 payer’s spouse and dependents for any month shall 

not exceed 1 17 ⁄12th of the applicable aggregate amount. 

18 ‘‘(3) NO CREDIT FOR INELIGIBLE MONTHS.— 

19 With respect to any individual, the monthly limita20 tion shall be zero for any month for which such indi21 vidual is not an eligible individual. 

22 ‘‘(4) APPLICABLE AMOUNT.— 

23 ‘‘(A) IN GENERAL.—For purposes of this 

24 section— 


rfrederick on DSKD9S0YB1PROD with BILLS
19 

•HR 4529 IH

1 ‘‘(i) APPLICABLE ADULT AMOUNT.— 

2 The applicable adult amount is $2,300. 

3 ‘‘(ii) APPLICABLE CHILD AMOUNT.— 

4 The applicable child amount is $1,700. 

5 ‘‘(iii) APPLICABLE AGGREGATE

6 AMOUNT.—The applicable aggregate 

7 amount is $5,700. 

8 ‘‘(B) COST-OF-LIVING ADJUSTMENTS.— 

9 ‘‘(i) IN GENERAL.—In the case of any 

10 taxable year beginning in a calendar year 

11 after 2011, each dollar amount contained 

12 in subparagraph (A) shall be increased by 

13 an amount equal to such dollar amount 

14 multiplied by the blended cost-of-living ad15 justment. 

16 ‘‘(ii) BLENDED COST-OF-LIVING AD17 JUSTMENT.—For purposes of clause (i), 

18 the blended cost-of-living adjustment 

19 means one-half of the sum of— 

20 ‘‘(I) the cost-of-living adjustment 

21 determined under section 1(f)(3) for 

22 the calendar year in which the taxable 

23 year begins by substituting ‘calendar 

24 year 2010’ for ‘calendar year 1992’ in 

25 subparagraph (B) thereof, plus 


rfrederick on DSKD9S0YB1PROD with BILLS
20 

•HR 4529 IH

1 ‘‘(II) the cost-of-living adjust2 ment determined under section 

3 213(d)(10)(B)(ii) for the calendar 

4 year in which the taxable year begins 

5 by substituting ‘2010’ for ‘1996’ in 

6 subclause (II) thereof. 

7 ‘‘(iii) ROUNDING.—Any increase de8 termined under clause (i) shall be rounded 

9 to the nearest multiple of $10. 

10 ‘‘(C) REVENUE NEUTRALITY ADJUST11 MENTS.— 

12 ‘‘(i) IN GENERAL.—In the case of any 

13 taxable year beginning in a calendar year 

14 after 2011, each dollar amount contained 

15 in subparagraph (A), as adjusted under 

16 subparagraph (B), shall be further ad17 justed (if necessary) such that the aggre18 gate of such dollar amounts allowed as 

19 credits under this section for such taxable 

20 year equals but does not exceed the total 

21 increase in revenues in the Treasury re22 sulting from the amendments made by sec23 tions 124 and 201 of the Roadmap for 

24 America’s Future Act of 2010 for such 

25 taxable year as estimated by the Secretary. 


rfrederick on DSKD9S0YB1PROD with BILLS
21 

•HR 4529 IH

1 ‘‘(ii) DATE OF ADJUSTMENT.—The 

2 Secretary shall announce the adjustments 

3 for any taxable year under this subpara4 graph not later than the preceding October 

5 1. 

6 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—In 

7 the case of a taxable year to which section 26(a)(2) does 

8 not apply, the credit allowed under subsection (a) for the 

9 taxable year shall not exceed the excess of— 

10 ‘‘(1) the sum of the regular tax liability (as de11 fined in section 26(b)) plus the tax imposed by sec12 tion 55, over 

13 ‘‘(2) the sum of the credits allowable under this 

14 subpart (other than this section) and section 27 for 

15 the taxable year. 

16 ‘‘(d) EXCESS CREDIT REFUNDABLE TO CERTAIN

17 TAX-FAVORED ACCOUNTS.—If— 

18 ‘‘(1) the credit which would be allowable under 

19 subsection (a) if only qualified refund eligible health 

20 insurance were taken into account under this sec21 tion, exceeds 

22 ‘‘(2) the limitation imposed by section 26 or 

23 subsection (c) for the taxable year, 

24 such excess shall be paid by the Secretary into the des25 ignated account of the taxpayer. 


rfrederick on DSKD9S0YB1PROD with BILLS
22 

•HR 4529 IH

1 ‘‘(e) ELIGIBLE INDIVIDUAL.—For purposes of this 

2 section— 

3 ‘‘(1) IN GENERAL.—The term ‘eligible indi4 vidual’ means, with respect to any month, an indi5 vidual who— 

6 ‘‘(A) is the taxpayer, the taxpayer’s 

7 spouse, or the taxpayer’s dependent, and 

8 ‘‘(B) is covered under qualified health in9 surance as of the 1st day of such month. 

10 ‘‘(2) MEDICARE COVERAGE, MEDICAID DIS11 ABILITY COVERAGE, AND MILITARY COVERAGE.— 

12 The term ‘eligible individual’ shall not include any 

13 individual who for any month is— 

14 ‘‘(A) entitled to benefits under part A of 

15 title XVIII of the Social Security Act or en16 rolled under part B of such title, and the indi17 vidual is not a participant or beneficiary in a 

18 group health plan or large group health plan 

19 that is a primary plan (as defined in section 

20 1862(b)(2)(A) of such Act), 

21 ‘‘(B) enrolled by reason of disability in the 

22 program under title XIX of such Act, or 

23 ‘‘(C) entitled to benefits under chapter 55 

24 of title 10, United States Code, including under 


rfrederick on DSKD9S0YB1PROD with BILLS
23 

•HR 4529 IH

1 the TRICARE program (as defined in section 

2 1072(7) of such title). 

3 ‘‘(3) IDENTIFICATION REQUIREMENTS.—The 

4 term ‘eligible individual’ shall not include any indi5 vidual for any month unless the policy number asso6 ciated with the qualified health insurance and the 

7 TIN of each eligible individual covered under such 

8 health insurance for such month are included on the 

9 return of tax for the taxable year in which such 

10 month occurs. 

11 ‘‘(4) PRISONERS.—The term ‘eligible individual’ 

12 shall not include any individual for a month if, as 

13 of the first day of such month, such individual is im14 prisoned under Federal, State, or local authority. 

15 ‘‘(5) ALIENS.—The term ‘eligible individual’ 

16 shall not include any alien individual who is not a 

17 lawful permanent resident of the United States. 

18 ‘‘(f) HEALTH INSURANCE.—For purposes of this sec19 tion— 

20 ‘‘(1) QUALIFIED HEALTH INSURANCE.—The 

21 term ‘qualified health insurance’ means any insur22 ance constituting medical care which (as determined 

23 under regulations prescribed by the Secretary)— 

24 ‘‘(A) has a reasonable annual and lifetime 

25 benefit maximum, and 


rfrederick on DSKD9S0YB1PROD with BILLS
24 

•HR 4529 IH

1 ‘‘(B) provides coverage for inpatient and 

2 outpatient care, emergency benefits, and physi3 cian care. 

4 Such term does not include any insurance substan5 tially all of the coverage of which is coverage de6 scribed in section 223(c)(1)(B). 

7 ‘‘(2) QUALIFIED REFUND ELIGIBLE HEALTH

8 INSURANCE.—The term ‘qualified refund eligible 

9 health insurance’ means any qualified health insur10 ance which is coverage under a group health plan 

11 (as defined in section 5000(b)(1)). 

12 ‘‘(g) DESIGNATED ACCOUNTS.— 

13 ‘‘(1) DESIGNATED ACCOUNT.—For purposes of 

14 this section, the term ‘designated account’ means 

15 any specified account established and maintained by 

16 the provider of the taxpayer’s qualified refund eligi17 ble health insurance— 

18 ‘‘(A) which is designated by the taxpayer 

19 (in such form and manner as the Secretary may 

20 provide) on the return of tax for the taxable 

21 year, 

22 ‘‘(B) which, under the terms of the ac23 count, accepts the payment described in sub24 section (d) on behalf of the taxpayer, and 


rfrederick on DSKD9S0YB1PROD with BILLS
25 

•HR 4529 IH

1 ‘‘(C) which, under such terms, provides for 

2 the payment of expenses by the taxpayer or on 

3 behalf of such taxpayer by the trustee or custo4 dian of such account, including payment to 

5 such provider. 

6 ‘‘(2) SPECIFIED ACCOUNT.—For purposes of 

7 this paragraph, the term ‘specified account’ means— 

8 ‘‘(A) any health savings account under sec9 tion 223 or Archer MSA under section 220, or 

10 ‘‘(B) any health insurance reserve account. 

11 ‘‘(3) HEALTH INSURANCE RESERVE AC12 COUNT.—For purposes of this subsection, the term 

13 ‘health insurance reserve account’ means a trust cre14 ated or organized in the United States as a health 

15 insurance reserve account exclusively for the purpose 

16 of paying the qualified medical expenses (within the 

17 meaning of section 223(d)(2)) of the account bene18 ficiary (as defined in section 223(d)(3)), but only if 

19 the written governing instrument creating the trust 

20 meets the requirements described in subparagraphs 

21 (B), (C), (D), and (E) of section 223(d)(1). Rules 

22 similar to the rules under subsections (g) and (h) of 

23 section 408 shall apply for purposes of this subpara24 graph. 


rfrederick on DSKD9S0YB1PROD with BILLS
26 

•HR 4529 IH

1 ‘‘(4) TREATMENT OF PAYMENT.—Any payment 

2 under subsection (d) to a designated account shall 

3 not be taken into account with respect to any dollar 

4 limitation which applies with respect to contributions 

5 to such account (or to tax benefits with respect to 

6 such contributions). 

7 ‘‘(h) OTHER DEFINITIONS.—For purposes of this 

8 section— 

9 ‘‘(1) DEPENDENT.—The term ‘dependent’ has 

10 the meaning given such term by section 152 (deter11 mined without regard to subsections (b)(1), (b)(2), 

12 and (d)(1)(B) thereof). An individual who is a child 

13 to whom section 152(e) applies shall be treated as 

14 a dependent of the custodial parent for a coverage 

15 month unless the custodial and noncustodial parent 

16 provide otherwise. 

17 ‘‘(2) ADULT.—The term ‘adult’ means an indi18 vidual who is not a child. 

19 ‘‘(3) CHILD.—The term ‘child’ means a quali20 fying child (as defined in section 152(c)). 

21 ‘‘(i) SPECIAL RULES.— 

22 ‘‘(1) COORDINATION WITH MEDICAL DEDUC23 TION.—Any amount paid by a taxpayer for insur24 ance which is taken into account for purposes of de25 termining the credit allowable to the taxpayer under 


rfrederick on DSKD9S0YB1PROD with BILLS
27 

•HR 4529 IH

1 subsection (a) shall not be taken into account in 

2 computing the amount allowable to the taxpayer as 

3 a deduction under section 213(a) or 162(l). 

4 ‘‘(2) COORDINATION WITH HEALTH CARE TAX

5 CREDIT.—No credit shall be allowed under sub6 section (a) for any taxable year to any taxpayer and 

7 qualifying family members with respect to whom a 

8 credit under section 35 is allowed for such taxable 

9 year. 

10 ‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 

11 credit shall be allowed under this section to any indi12 vidual with respect to whom a deduction under sec13 tion 151 is allowable to another taxpayer for a tax14 able year beginning in the calendar year in which 

15 such individual’s taxable year begins. 

16 ‘‘(4) MARRIED COUPLES MUST FILE JOINT RE17 TURN.— 

18 ‘‘(A) IN GENERAL.—If the taxpayer is 

19 married at the close of the taxable year, the 

20 credit shall be allowed under subsection (a) only 

21 if the taxpayer and his spouse file a joint return 

22 for the taxable year. 

23 ‘‘(B) MARITAL STATUS; CERTAIN MARRIED

24 INDIVIDUALS LIVING APART.—Rules similar to 

25 the rules of paragraphs (3) and (4) of section 


rfrederick on DSKD9S0YB1PROD with BILLS
28 

•HR 4529 IH

1 21(e) shall apply for purposes of this para2 graph. 

3 ‘‘(5) VERIFICATION OF COVERAGE, ETC.—No 

4 credit shall be allowed under this section with re5 spect to any individual unless such individual’s cov6 erage (and such related information as the Secretary 

7 may require) is verified in such manner as the Sec8 retary may prescribe. 

9 ‘‘(6) INSURANCE WHICH COVERS OTHER INDI10 VIDUALS; TREATMENT OF PAYMENTS.—Rules similar 

11 to the rules of paragraphs (7) and (8) of section 

12 35(g) shall apply for purposes of this section. 

13 ‘‘(j) COORDINATION WITH ADVANCE PAYMENTS.— 

14 ‘‘(1) REDUCTION IN CREDIT FOR ADVANCE PAY15 MENTS.—With respect to any taxable year, the 

16 amount which would (but for this subsection) be al17 lowed as a credit to the taxpayer under subsection 

18 (a) shall be reduced (but not below zero) by the ag19 gregate amount paid on behalf of such taxpayer 

20 under section 7527A for months beginning in such 

21 taxable year. 

22 ‘‘(2) RECAPTURE OF EXCESS ADVANCE PAY23 MENTS.—If the aggregate amount paid on behalf of 

24 the taxpayer under section 7527A for months begin25 ning in the taxable year exceeds the sum of the 


rfrederick on DSKD9S0YB1PROD with BILLS
29 

•HR 4529 IH

1 monthly limitations determined under subsection (b) 

2 for the taxpayer and the taxpayer’s spouse and de3 pendents for such months, then the tax imposed by 

4 this chapter for such taxable year shall be increased 

5 by the sum of— 

6 ‘‘(A) such excess, plus 

7 ‘‘(B) interest on such excess determined at 

8 the underpayment rate established under sec9 tion 6621 for the period from the date of the 

10 payment under section 7527A to the date such 

11 excess is paid. 

12 For purposes of subparagraph (B), an equal part of 

13 the aggregate amount of the excess shall be deemed 

14 to be attributable to payments made under section 

15 7527A on the first day of each month beginning in 

16 such taxable year, unless the taxpayer establishes 

17 the date on which each such payment giving rise to 

18 such excess occurred, in which case subparagraph 

19 (B) shall be applied with respect to each date so es20 tablished. The Secretary may rescind or waive all or 

21 any portion of any amount imposed by reason of 

22 subparagraph (B) if such excess was not the result 

23 of the actions of the taxpayer.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
30 

•HR 4529 IH

1 (b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 

2 (relating to miscellaneous provisions) is amended by in3 serting after section 7527 the following new section: 

4 ‘‘SEC. 7527A. ADVANCE PAYMENT OF CREDIT FOR QUALI5 FIED REFUND ELIGIBLE HEALTH INSUR6 ANCE. 

7 ‘‘(a) IN GENERAL.—The Secretary shall establish a 

8 program for making payments on behalf of individuals to 

9 providers of qualified refund eligible health insurance (as 

10 defined in section 25E(f)(2)) for such individuals. 

11 ‘‘(b) LIMITATION.—The Secretary may make pay12 ments under subsection (a) only to the extent that the Sec13 retary determines that the amount of such payments made 

14 on behalf of any taxpayer for any month does not exceed 

15 the sum of the monthly limitations determined under sec16 tion 25E(b) for the taxpayer and taxpayer’s spouse and 

17 dependents for such month.’’. 

18 (c) INFORMATION REPORTING.— 

19 (1) IN GENERAL.—Subpart B of part III of 

20 subchapter A of chapter 61 (relating to information 

21 concerning transactions with other persons) is 

22 amended by inserting after section 6050W the fol23 lowing new section: 


rfrederick on DSKD9S0YB1PROD with BILLS
31 

•HR 4529 IH

1 ‘‘SEC. 6050X. RETURNS RELATING TO CREDIT FOR QUALI2 FIED REFUND ELIGIBLE HEALTH INSUR3 ANCE. 

4 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

5 who is entitled to receive payments for any month of any 

6 calendar year under section 7527A (relating to advance 

7 payment of credit for qualified refund eligible health insur8 ance) with respect to any individual shall, at such time 

9 as the Secretary may prescribe, make the return described 

10 in subsection (b) with respect to each such individual. 

11 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

12 is described in this subsection if such return— 

13 ‘‘(1) is in such form as the Secretary may pre14 scribe, and 

15 ‘‘(2) contains, with respect to each individual 

16 referred to in subsection (a)— 

17 ‘‘(A) the name, address, and TIN of each 

18 such individual, 

19 ‘‘(B) the months for which amounts pay20 ments under section 7527A were received, 

21 ‘‘(C) the amount of each such payment, 

22 ‘‘(D) the type of insurance coverage pro23 vided by such person with respect to such indi24 vidual and the policy number associated with 

25 such coverage, 


rfrederick on DSKD9S0YB1PROD with BILLS
32 

•HR 4529 IH

1 ‘‘(E) the name, address, and TIN of the 

2 spouse and each dependent covered under such 

3 coverage, and 

4 ‘‘(F) such other information as the Sec5 retary may prescribe. 

6 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID7 UALS WITH RESPECT TO WHOM INFORMATION IS RE8 QUIRED.—Every person required to make a return under 

9 subsection (a) shall furnish to each individual whose name 

10 is required to be set forth in such return a written state11 ment showing— 

12 ‘‘(1) the contact information of the person re13 quired to make such return, and 

14 ‘‘(2) the information required to be shown on 

15 the return with respect to such individual. 

16 The written statement required under the preceding sen17 tence shall be furnished on or before January 31 of the 

18 year following the calendar year for which the return 

19 under subsection (a) is required to be made. 

20 ‘‘(d) RETURNS WHICH WOULD BE REQUIRED TO BE

21 MADE BY 2 OR MORE PERSONS.—Except to the extent 

22 provided in regulations prescribed by the Secretary, in the 

23 case of any amount received by any person on behalf of 

24 another person, only the person first receiving such 


rfrederick on DSKD9S0YB1PROD with BILLS
33 

•HR 4529 IH

1 amount shall be required to make the return under sub2 section (a).’’. 

3 (2) ASSESSABLE PENALTIES.— 

4 (A) Subparagraph (B) of section 

5 6724(d)(1) (relating to definitions) is amended 

6 by striking ‘‘or’’ at the end of clause (xxii), by 

7 striking ‘‘and’’ at the end of clause (xxiii) and 

8 inserting ‘‘or’’, and by inserting after clause 

9 (xxiii) the following new clause: 

10 ‘‘(xxiv) section 6050X (relating to re11 turns relating to credit for qualified refund 

12 eligible health insurance), and’’. 

13 (B) Paragraph (2) of section 6724(d) is 

14 amended by striking ‘‘or’’ at the end of sub15 paragraph (EE), by striking the period at the 

16 end of subparagraph (FF) and inserting ‘‘, or’’ 

17 and by inserting after subparagraph (FF) the 

18 following new subparagraph: 

19 ‘‘(GG) section 6050X (relating to returns 

20 relating to credit for qualified refund eligible 

21 health insurance).’’. 

22 (d) CONFORMING AMENDMENTS.— 

23 (1) Paragraph (2) of section 1324(b) of title 

24 31, United States Code, is amended by inserting 

25 ‘‘25E,’’ before ‘‘35,’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
34 

•HR 4529 IH

1 (2)(A) Section 24(b)(3)(B) is amended by in2 serting ‘‘, 25E,’’ after ‘‘25D’’. 

3 (B) Section 25(e)(1)(C)(ii) is amended by in4 serting ‘‘25E,’’ after ‘‘25D,’’. 

5 (C) Section 25B(g)(2) is amended by inserting 

6 ‘‘25E,’’ after ‘‘25D,’’. 

7 (D) Section 26(a)(1) is amended by inserting 

8 ‘‘25E,’’ after ‘‘25D,’’. 

9 (E) Section 30(c)(2)(B)(ii) is amended by in10 serting ‘‘25E,’’ after ‘‘25D,’’. 

11 (F) Section 30D(c)(2)(B)(ii) is amended by 

12 striking ‘‘and 25D’’ and inserting ‘‘, 25D, and 

13 25E’’. 

14 (G) Section 904(i) is amended by inserting 

15 ‘‘25E,’’ after ‘‘25B,’’. 

16 (H) Section 1400C(d)(2) is amended by insert17 ing ‘‘25E,’’ after ‘‘25D,’’. 

18 (3) The table of sections for subpart A of part 

19 IV of subchapter A of chapter 1 is amended by in20 serting after the item relating to section 25D the 

21 following new item: 

‘‘Sec. 25E. Qualified health insurance credit.’’. 

22 (4) The table of sections for chapter 77 is 

23 amended by inserting after the item relating to sec24 tion 7527 the following new item: 


rfrederick on DSKD9S0YB1PROD with BILLS
35 

•HR 4529 IH

‘‘Sec. 7527A. Advance payment of credit for qualified refund eligible health insurance.’’. 

1 (5) The table of sections for subpart B of part 

2 III of subchapter A of chapter 61 is amended by 

3 adding at the end the following new item: 

‘‘Sec. 6050X. Returns relating to credit for qualified refund eligible health insurance.’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2010. 

7 SEC. 113. REQUIRING EMPLOYER TRANSPARENCY ABOUT 

8 EMPLOYEE BENEFITS. 

9 (a) IN GENERAL.—Section 6051(a) (relating to W– 

10 2 requirement) is amended by striking ‘‘and’’ at the end 

11 of paragraph (12), by striking the period at the end of 

12 paragraph (13) and inserting ‘‘, and’’ and by inserting 

13 after paragraph (13) the following new paragraph: 

14 ‘‘(14) the aggregate cost (within the meaning of 

15 section 4980B(f)(4)) for coverage of the employee 

16 under an accident or health plan which is excludable 

17 from the gross income of the employee under section 

18 106(a) (other than coverage under a health flexible 

19 spending arrangement).’’. 

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

21 this section shall apply to statements for calendar years 

22 beginning after 2010. 


rfrederick on DSKD9S0YB1PROD with BILLS
36 

•HR 4529 IH

1 SEC. 114. CHANGES TO EXISTING TAX PREFERENCES FOR 

2 MEDICAL COVERAGE, ETC., FOR INDIVIDUALS 

3 ELIGIBLE FOR QUALIFIED HEALTH INSUR4 ANCE CREDIT. 

5 (a) EXCLUSION FOR CONTRIBUTIONS BY EMPLOYER

6 TO ACCIDENT AND HEALTH PLANS.— 

7 (1) IN GENERAL.—Section 106 (relating to con8 tributions by employer to accident and health plans) 

9 is amended by adding at the end the following new 

10 subsection: 

11 ‘‘(f) NO EXCLUSION FOR INDIVIDUALS ELIGIBLE

12 FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub13 section (a) shall not apply with respect to any employer14 provided coverage under an accident or health plan for any 

15 individual for any month unless such individual is de16 scribed in paragraph (2) or (5) of section 25E(e) for such 

17 month. The amount includible in gross income by reason 

18 of this subsection shall be determined under rules similar 

19 to the rules of section 4980B(f)(4).’’. 

20 (2) CONFORMING AMENDMENTS.— 

21 (A) Section 106(b)(1) is amended— 

22 (i) by inserting ‘‘gross income does 

23 not include’’ before ‘‘amounts contrib24 uted’’, and 


rfrederick on DSKD9S0YB1PROD with BILLS
37 

•HR 4529 IH

1 (ii) by striking ‘‘shall be treated as 

2 employer-provided coverage for medical ex3 penses under an accident or health plan’’. 

4 (B) Section 106(d)(1) is amended— 

5 (i) by inserting ‘‘gross income does 

6 not include’’ before ‘‘amounts contrib7 uted’’, and 

8 (ii) by striking ‘‘shall be treated as 

9 employer-provided coverage for medical ex10 penses under an accident or health plan’’. 

11 (b) AMOUNTS RECEIVED UNDER ACCIDENT AND

12 HEALTH PLANS.—Section 105 (relating to amounts re13 ceived under accident and health plans) is amended by 

14 adding at the end the following new subsection: 

15 ‘‘(k) NO EXCLUSION FOR INDIVIDUALS ELIGIBLE

16 FOR QUALIFIED HEALTH INSURANCE CREDIT.—Sub17 section (b) shall not apply with respect to any employer18 provided coverage under an accident or health plan for any 

19 individual for any month unless such individual is de20 scribed in paragraph (2) or (5) of section 25E(e) for such 

21 month.’’. 

22 (c) SPECIAL RULES FOR HEALTH INSURANCE COSTS

23 OF SELF-EMPLOYED INDIVIDUALS.—Subsection (l) of sec24 tion 162 (relating to special rules for health insurance 


rfrederick on DSKD9S0YB1PROD with BILLS
38 

•HR 4529 IH

1 costs of self-employed individuals) is amended by adding 

2 at the end the following new paragraph: 

3 ‘‘(6) NO DEDUCTION TO INDIVIDUALS ELIGIBLE

4 FOR QUALIFIED HEALTH INSURANCE.—Paragraph 

5 (1) shall not apply for any individual for any month 

6 unless such individual is described in paragraph (2) 

7 or (5) of section 25E(e) for such month.’’. 

8 (d) EARNED INCOME CREDIT UNAFFECTED BY RE9 PEALED EXCLUSIONS.—Subparagraph (B) of section 

10 32(c)(2) is amended by redesignating clauses (v) and (vi) 

11 as clauses (vi) and (vii), respectively, and by inserting 

12 after clause (iv) the following new clause: 

13 ‘‘(v) the earned income of an indi14 vidual shall be computed without regard to 

15 sections 105(k) and 106(f),’’. 

16 (e) MODIFICATION OF DEDUCTION FOR MEDICAL

17 EXPENSES.—Subsection (d) of section 213 is amended by 

18 adding at the end the following new paragraph: 

19 ‘‘(12) PREMIUMS FOR QUALIFIED HEALTH IN20 SURANCE.—The term ‘medical care’ does not include 

21 any amount paid as a premium for coverage of an 

22 eligible individual (as defined in section 25E(e)) 

23 under qualified health insurance (as defined in sec24 tion 25E(f)) for any month.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
39 

•HR 4529 IH

1 (f) REPORTING REQUIREMENT.—Subsection (a) of 

2 section 6051 is amended by striking ‘‘and’’ at the end of 

3 paragraph (12), by striking the period at the end of para4 graph (13) and inserting ‘‘and’’, and by inserting after 

5 paragraph (13) the following new paragraph: 

6 ‘‘(14) the total amount of employer-provided 

7 coverage under an accident or health plan which is 

8 includible in gross income by reason of sections 

9 105(k) and 106(f).’’. 

10 (g) RETIRED PUBLIC SAFETY OFFICERS.—Section 

11 402(l)(4)(D) is amended by adding at the end the fol12 lowing: ‘‘Such term shall not include any premium for cov13 erage by an accident or health insurance plan for any 

14 month unless such individual is described in paragraph (2) 

15 or (5) of section 25E(e) for such month.’’. 

16 (h) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2010. 

19 (i) NO INTENT TO ENCOURAGE STATE TAXATION OF

20 HEALTH BENEFITS.—No intent to encourage any State 

21 to treat health benefits as taxable income for the purpose 

22 of increasing State income taxes may be inferred from the 

23 provisions of, and amendments made by, this section. 


rfrederick on DSKD9S0YB1PROD with BILLS
40 

•HR 4529 IH

1 Subpart B—Health Savings Accounts 

2 SEC. 121. IMPROVEMENTS TO HEALTH SAVINGS ACCOUNTS. 

3 (a) INCREASE IN MONTHLY CONTRIBUTION LIMIT.— 

4 (1) IN GENERAL.—Paragraph (2) of section 

5 223(b) (relating to limitations) is amended to read 

6 as follows: 

7 ‘‘(2) MONTHLY LIMITATION.— 

8 ‘‘(A) IN GENERAL.—In the case of an eligi9 ble individual who has coverage under a high 

10 deductible health plan, the monthly limitation 

for any month of such coverage is 1 11 ⁄12 of the 

12 sum of— 

13 ‘‘(i) the greater of— 

14 ‘‘(I) the sum of the annual de15 ductible and the other annual out-of16 pocket expenses (other than for pre17 miums) required to be paid under the 

18 plan by the eligible individual for cov19 ered benefits, or 

20 ‘‘(II) in the case of an eligible in21 dividual who has— 

22 ‘‘(aa) self-only coverage 

23 under a high deductible health 

24 plan as of the first day of such 

25 month, $3,000, or 


rfrederick on DSKD9S0YB1PROD with BILLS
41 

•HR 4529 IH

1 ‘‘(bb) family coverage under 

2 a high deductible health plan as 

3 of the first day of such month, 

4 $5,950, and 

5 ‘‘(ii) in the case of an eligible indi6 vidual who has coverage under a qualified 

7 long-term care insurance contract (as de8 fined in section 7702B(b)), the lesser of— 

9 ‘‘(I) the annual premium for 

10 such coverage, or 

11 ‘‘(II) $1,000. 

12 ‘‘(B) SPECIAL RULES RELATING TO OUT13 OF-POCKET EXPENSES.— 

14 ‘‘(i) REDUCTION FOR SEPARATE

15 PLAN.—The annual out-of-pocket expenses 

16 taken into account under subparagraph 

17 (A)(i)(I) with respect to any eligible indi18 vidual shall be reduced by any out-of-pock19 et expense payable under a separate plan 

20 covering the individual. 

21 ‘‘(ii) SECRETARIAL AUTHORITY.—The 

22 Secretary may by regulations provide that 

23 annual out-of-pocket expenses will not be 

24 taken into account under subparagraph 

25 (A)(i)(I) to the extent that there is only a 


rfrederick on DSKD9S0YB1PROD with BILLS
42 

•HR 4529 IH

1 remote likelihood that such amounts will 

2 be required to be paid.’’. 

3 (2) APPLICATION OF SPECIAL RULES FOR MAR4 RIED INDIVIDUALS.—Paragraph (5) of section 

5 223(b) (relating to limitations) is amended to read 

6 as follows: 

7 ‘‘(5) SPECIAL RULES FOR MARRIED INDIVID8 UALS.— 

9 ‘‘(A) IN GENERAL.—In the case of individ10 uals who are married to each other and who are 

11 both eligible individuals, the limitation under 

12 paragraph (1) for each spouse shall be equal to 

13 the spouse’s applicable share of the combined 

14 marital limit. 

15 ‘‘(B) COMBINED MARITAL LIMIT.—For 

16 purposes of subparagraph (A), the combined 

17 marital limit is the excess (if any) of— 

18 ‘‘(i) the lesser of— 

19 ‘‘(I) subject to subparagraph (C), 

20 the sum of the limitations computed 

21 separately under paragraph (1) for 

22 each spouse (including any additional 

23 contribution amount under paragraph 

24 (3)), or 


rfrederick on DSKD9S0YB1PROD with BILLS
43 

•HR 4529 IH

1 ‘‘(II) the dollar amount in effect 

2 under subsection (c)(2)(A)(ii)(II), 

3 over 

4 ‘‘(ii) the aggregate amount paid to 

5 Archer MSAs of such spouses for the tax6 able year. 

7 ‘‘(C) SPECIAL RULE WHERE BOTH

8 SPOUSES HAVE FAMILY COVERAGE.—For pur9 poses of subparagraph (B)(i)(I), if either spouse 

10 has family coverage which covers both spouses, 

11 both spouses shall be treated as having only 

12 such coverage (and if both spouses each have 

13 such coverage under different plans, shall be 

14 treated as having only family coverage with the 

15 plan with respect to which the lowest amount is 

16 determined under paragraph (2)(A)(i)(I)). 

17 ‘‘(D) APPLICABLE SHARE.—For purposes 

18 of subparagraph (A), a spouse’s applicable 

share is 1 19 ⁄2 of the combined marital limit unless 

20 both spouses agree on a different division. 

21 ‘‘(E) COUPLES NOT MARRIED ENTIRE

22 YEAR.—The Secretary shall prescribe rules for 

23 the application of this paragraph in the case of 

24 any taxable year for which the individuals were 

25 not married to each other during all months inVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
44 

•HR 4529 IH

1 cluded in the taxable year, including rules 

2 which allow individuals in appropriate cases to 

3 take into account coverage prior to marriage in 

4 computing the combined marital limit for pur5 poses of this paragraph.’’. 

6 (3) SELF-ONLY COVERAGE.—Paragraph (4) of 

7 section 223(c) (relating to definitions and special 

8 rules) is amended to read as follows: 

9 ‘‘(4) COVERAGE.— 

10 ‘‘(A) FAMILY COVERAGE.—The term ‘fam11 ily coverage’ means any coverage other than 

12 self-only coverage. 

13 ‘‘(B) SELF-ONLY COVERAGE.—If more 

14 than 1 individual is covered by a high deduct15 ible health plan but only 1 of the individuals is 

16 an eligible individual, the coverage shall be 

17 treated as self-only coverage.’’. 

18 (4) CONFORMING AMENDMENTS.— 

19 (A) Section 223(b)(3)(A) is amended by 

20 striking ‘‘subparagraphs (A) and (B) of’’. 

21 (B) Section 223(c)(2)(A) is amended— 

22 (i) by striking ‘‘$1,000’’ in clause 

23 (i)(I) and inserting ‘‘$1,150’’, and 

24 (ii) by striking ‘‘$5,000’’ in clause 

25 (ii)(I) and inserting ‘‘$5,800’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
45 

•HR 4529 IH

1 (C) Section 223(d)(1)(A)(ii)(I) is amended 

2 by striking ‘‘subsection (b)(2)(B)(ii)’’ and in3 serting ‘‘subsection (c)(2)(A)(ii)(II)’’. 

4 (D) Clause (ii) of section 223(c)(2)(D) is 

5 amended to read as follows: 

6 ‘‘(ii) CERTAIN ITEMS DISREGARDED

7 IN COMPUTING MONTHLY LIMITATION.— 

8 Such plan’s annual deductible, and such 

9 plan’s annual out-of-pocket limitation, for 

10 services provided outside of such network 

11 shall not be taken into account for pur12 poses of subsection (b)(2).’’ 

13 (E) Subsection (g) of section 223 is 

14 amended to read as follows: 

15 ‘‘(g) COST-OF-LIVING ADJUSTMENTS.— 

16 ‘‘(1) IN GENERAL.—In the case of any taxable 

17 year beginning in a calendar year after 2010, each 

18 dollar amount contained in subsections (b)(2)(A) 

19 and (c)(2)(A) shall be increased by an amount equal 

20 to such dollar amount multiplied by the blended 

21 cost-of-living adjustment. 

22 ‘‘(2) BLENDED COST-OF-LIVING ADJUST23 MENT.—For purposes of paragraph (1), the blended 

24 cost-of-living adjustment means one-half of the sum 

25 of— 


rfrederick on DSKD9S0YB1PROD with BILLS
46 

•HR 4529 IH

1 ‘‘(A) the cost-of-living adjustment deter2 mined under section 1(f)(3) for the calendar 

3 year in which the taxable year begins by sub4 stituting ‘calendar year 2008’ for ‘calendar year 

5 1992’ in subparagraph (B) thereof, plus 

6 ‘‘(B) the cost-of-living adjustment deter7 mined under section 213(d)(10)(B)(ii) for the 

8 calendar year in which the taxable year begins 

9 by substituting ‘2008’ for ‘1996’ in subclause 

10 (II) thereof. 

11 ‘‘(3) ROUNDING.—Any increase determined 

12 under paragraph (2) shall be rounded to the nearest 

13 multiple of $50.’’. 

14 (b) USE OF ACCOUNT FOR INDIVIDUAL HIGH DE15 DUCTIBLE HEALTH PLAN PREMIUMS.—Section 

16 223(d)(2)(C) (relating to exceptions) is amended by strik17 ing ‘‘or’’ at the end of clause (iii), by striking the period 

18 at the end of clause (iv) and inserting ‘‘, or’’, and by add19 ing at the end the following new clause: 

20 ‘‘(v) a high deductible health plan, but 

21 only if— 

22 ‘‘(I) the plan is not a group 

23 health plan (as defined in section 

24 5000(b)(1) without regard to section 

25 5000(d)), and 


rfrederick on DSKD9S0YB1PROD with BILLS
47 

•HR 4529 IH

1 ‘‘(II) the expenses are for cov2 erage for a month with respect to 

3 which the account beneficiary is an el4 igible individual by reason of the cov5 erage under the plan. 

6 For purposes of clause (v), an arrangement 

7 which constitutes individual health insurance 

8 shall not be treated as a group health plan, not9 withstanding that an employer or employee or10 ganization negotiates the cost of benefits of 

11 such arrangement.’’. 

12 (c) SAFE HARBOR FOR ABSENCE OF MAINTENANCE

13 OF CHRONIC DISEASE.—Section 223(c)(2)(C) (safe har14 bor for absence of preventive care deductible) is amend15 ed— 

16 (1) by inserting ‘‘or maintenance of chronic dis17 ease, or both’’ after ‘‘the Secretary)’’, and 

18 (2) by inserting ‘‘OR MAINTENANCE OF CHRON19 IC DISEASE’’ in the heading after ‘‘PREVENTIVE

20 CARE’’. 

21 (d) CLARIFICATION OF TREATMENT OF CAPITATED

22 PRIMARY CARE PAYMENTS AS AMOUNTS PAID FOR MED23 ICAL CARE.—Section 213(d) (relating to definitions) is 

24 amended by adding at the end the following new para25 graph: 


rfrederick on DSKD9S0YB1PROD with BILLS
48 

•HR 4529 IH

1 ‘‘(12) TREATMENT OF CAPITATED PRIMARY

2 CARE PAYMENTS.—Capitated primary care payments 

3 shall be treated as amounts paid for medical care.’’. 

4 (e) SPECIAL RULE FOR INDIVIDUALS ELIGIBLE FOR

5 VETERANS OR INDIAN HEALTH BENEFITS.—Section 

6 223(c)(1) (defining eligible individual) is amended by add7 ing at the end the following new subparagraph: 

8 ‘‘(C) SPECIAL RULE FOR INDIVIDUALS ELI9 GIBLE FOR VETERANS OR INDIAN HEALTH BEN10 EFITS.—For purposes of subparagraph (A)(ii), 

11 an individual shall not be treated as covered 

12 under a health plan described in such subpara13 graph merely because the individual receives 

14 periodic hospital care or medical services under 

15 any law administered by the Secretary of Vet16 erans Affairs or the Bureau of Indian Affairs.’’. 

17 (f) CERTAIN PHYSICIAN FEES TO BE TREATED AS

18 MEDICAL CARE.— 

19 (1) IN GENERAL.—Section 213(d), is amended 

20 by adding at the end the following new paragraph: 

21 ‘‘(12) PRE-PAID PHYSICIAN FEES.—The term 

22 ‘medical care’ shall include amounts paid by patients 

23 to their primary physician in advance for the right 

24 to receive medical services on an as-needed basis.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
49 

•HR 4529 IH

1 (2) EFFECTIVE DATE.—The amendment made 

2 by this section shall apply to taxable years beginning 

3 after the date of the enactment of this Act. 

4 (g) EFFECTIVE DATES.— 

5 (1) IN GENERAL.—Except as provided in para6 graph (2), the amendments made by this section 

7 shall apply to taxable years beginning after Decem8 ber 31, 2010. 

9 (2) CAPITATED PRIMARY CARE PAYMENTS.— 

10 The amendment made by subsection (d) shall apply 

11 to amounts paid before, on, or after the date of the 

12 enactment of this Act. 

13 SEC. 122. EXCEPTION TO REQUIREMENT FOR EMPLOYERS 

14 TO MAKE COMPARABLE HEALTH SAVINGS AC15 COUNT CONTRIBUTIONS. 

16 (a) GREATER EMPLOYER-PROVIDED CONTRIBU17 TIONS TO HSAS FOR CHRONICALLY ILL EMPLOYEES

18 TREATED AS MEETING COMPARABILITY REQUIRE19 MENTS.—Subsection (b) of section 4980G (relating to fail20 ure of employer to make comparable health savings ac21 count contributions) is amended to read as follows: 

22 ‘‘(b) RULES AND REQUIREMENTS.— 

23 ‘‘(1) IN GENERAL.—Except as provided in para24 graph (2), rules and requirements similar to the 


rfrederick on DSKD9S0YB1PROD with BILLS
50 

•HR 4529 IH

1 rules and requirements of section 4980E shall apply 

2 for purposes of this section. 

3 ‘‘(2) TREATMENT OF EMPLOYER-PROVIDED

4 CONTRIBUTIONS TO HSAS FOR CHRONICALLY ILL

5 EMPLOYEES.—For purposes of this section— 

6 ‘‘(A) IN GENERAL.—Any contribution by 

7 an employer to a health savings account of an 

8 employee who is (or the spouse or any depend9 ent of the employee who is) a chronically ill in10 dividual in an amount which is greater than a 

11 contribution to a health savings account of a 

12 comparable participating employee who is not a 

13 chronically ill individual shall not fail to be con14 sidered a comparable contribution. 

15 ‘‘(B) NONDISCRIMINATION REQUIRE16 MENT.—Subparagraph (A) shall not apply un17 less the excess employer contributions described 

18 in subparagraph (A) are the same for all chron19 ically ill individuals who are similarly situated. 

20 ‘‘(C) CHRONICALLY ILL INDIVIDUAL.—For 

21 purposes of this paragraph, the term ‘chron22 ically ill individual’ means any individual whose 

23 qualified medical expenses for any taxable year 

24 are more than 50 percent greater than the avVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
51 

•HR 4529 IH

1 erage qualified medical expenses of all employ2 ees of the employer for such year.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2010. 

6 Subtitle B—Health Plan Choice; 

7 Small Business Health Fairness; 

8 Tax Amendments 

9 SEC. 131. COOPERATIVE GOVERNING OF INDIVIDUAL 

10 HEALTH INSURANCE COVERAGE. 

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

12 Service Act (42 U.S.C. 300gg et seq.) is amended by add13 ing at the end the following new part: 

14 ‘‘PART D—COOPERATIVE GOVERNING OF 

15 INDIVIDUAL HEALTH INSURANCE COVERAGE 

16 ‘‘SEC. 2795. DEFINITIONS. 

17 ‘‘In this part: 

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

19 State’ means, with respect to individual health insur20 ance coverage offered by a health insurance issuer, 

21 the State designated by the issuer as the State 

22 whose covered laws shall govern the health insurance 

23 issuer in the sale of such coverage under this part. 

24 An issuer, with respect to a particular policy, may 

25 only designate one such State as its primary State 


rfrederick on DSKD9S0YB1PROD with BILLS
52 

•HR 4529 IH

1 with respect to all such coverage it offers. Such an 

2 issuer may not change the designated primary State 

3 with respect to individual health insurance coverage 

4 once the policy is issued, except that such a change 

5 may be made upon renewal of the policy. With re6 spect to such designated State, the issuer is deemed 

7 to be doing business in that State. 

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

9 State’ means, with respect to individual health insur10 ance coverage offered by a health insurance issuer, 

11 any State that is not the primary State. In the case 

12 of a health insurance issuer that is selling a policy 

13 in, or to a resident of, a secondary State, the issuer 

14 is deemed to be doing business in that secondary 

15 State. 

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

17 ‘health insurance issuer’ has the meaning given such 

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

19 issuer must be licensed in the primary State and be 

20 qualified to sell individual health insurance coverage 

21 in that State. 

22 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV23 ERAGE.—The term ‘individual health insurance cov24 erage’ means health insurance coverage offered in 


rfrederick on DSKD9S0YB1PROD with BILLS
53 

•HR 4529 IH

1 the individual market, as defined in section 

2 2791(e)(1). 

3 ‘‘(5) APPLICABLE STATE AUTHORITY.—The 

4 term ‘applicable State authority’ means, with respect 

5 to a health insurance issuer in a State, the State in6 surance commissioner or official or officials des7 ignated by the State to enforce the requirements of 

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

9 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 

10 term ‘hazardous financial condition’ means that, 

11 based on its present or reasonably anticipated finan12 cial condition, a health insurance issuer is unlikely 

13 to be able— 

14 ‘‘(A) to meet obligations to policyholders 

15 with respect to known claims and reasonably 

16 anticipated claims; or 

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

18 course of business. 

19 ‘‘(7) COVERED LAWS.— 

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

21 laws’ means the laws, rules, regulations, agree22 ments, and orders governing the insurance busi23 ness pertaining to— 

24 ‘‘(i) individual health insurance cov25 erage issued by a health insurance issuer; 


rfrederick on DSKD9S0YB1PROD with BILLS
54 

•HR 4529 IH

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

2 medical underwriting), renewal, and 

3 issuance of individual health insurance cov4 erage to an individual; 

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

6 relation to individual health insurance cov7 erage of health care and insurance related 

8 services; 

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

10 relation to individual health insurance cov11 erage of management, operations, and in12 vestment activities of a health insurance 

13 issuer; and 

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

15 relation to individual health insurance cov16 erage of loss control and claims adminis17 tration for a health insurance issuer with 

18 respect to liability for which the issuer pro19 vides insurance. 

20 ‘‘(B) EXCEPTION.—Such term does not in21 clude any law, rule, regulation, agreement, or 

22 order governing the use of care or cost manage23 ment techniques, including any requirement re24 lated to provider contracting, network access or 


rfrederick on DSKD9S0YB1PROD with BILLS
55 

•HR 4529 IH

1 adequacy, health care data collection, or quality 

2 assurance. 

3 ‘‘(8) STATE.—The term ‘State’ means the 50 

4 States and includes the District of Columbia, Puerto 

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

6 and the Northern Mariana Islands. 

7 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC8 TICES.—The term ‘unfair claims settlement prac9 tices’ means only the following practices: 

10 ‘‘(A) Knowingly misrepresenting to claim11 ants and insured individuals relevant facts or 

12 policy provisions relating to coverage at issue. 

13 ‘‘(B) Failing to acknowledge with reason14 able promptness pertinent communications with 

15 respect to claims arising under policies. 

16 ‘‘(C) Failing to adopt and implement rea17 sonable standards for the prompt investigation 

18 and settlement of claims arising under policies. 

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

20 and equitable settlement of claims submitted in 

21 which liability has become reasonably clear. 

22 ‘‘(E) Refusing to pay claims without con23 ducting a reasonable investigation. 

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

25 claims within a reasonable period of time after 


rfrederick on DSKD9S0YB1PROD with BILLS
56 

•HR 4529 IH

1 having completed an investigation related to 

2 those claims. 

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

4 insured individuals or their beneficiaries to in5 stitute suits to recover amounts due under its 

6 policies by offering substantially less than the 

7 amounts ultimately recovered in suits brought 

8 by them. 

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

10 to settle or settling claims for less than the 

11 amount that a reasonable person would believe 

12 the insured individual or his or her beneficiary 

13 was entitled by reference to written or printed 

14 advertising material accompanying or made 

15 part of an application. 

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

17 on the basis of an application that was materi18 ally altered without notice to, or knowledge or 

19 consent of, the insured. 

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

21 present claims within 15 calendar days of a re22 quests with reasonable explanations regarding 

23 their use. 


rfrederick on DSKD9S0YB1PROD with BILLS
57 

•HR 4529 IH

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

2 time than that prescribed in the policy or by the 

3 law of the primary State. 

4 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 

5 and abuse’ means an act or omission committed by 

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

7 commits, or conceals any material information con8 cerning, one or more of the following: 

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

10 or preparing with knowledge or belief that it 

11 will be presented to or by an insurer, a rein12 surer, broker or its agent, false information as 

13 part of, in support of or concerning a fact ma14 terial to one or more of the following: 

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

16 renewal of an insurance policy or reinsur17 ance contract. 

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

19 or reinsurance contract. 

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

21 pursuant to an insurance policy or reinsur22 ance contract. 

23 ‘‘(iv) Premiums paid on an insurance 

24 policy or reinsurance contract. 


rfrederick on DSKD9S0YB1PROD with BILLS
58 

•HR 4529 IH

1 ‘‘(v) Payments made in accordance 

2 with the terms of an insurance policy or 

3 reinsurance contract. 

4 ‘‘(vi) A document filed with the com5 missioner or the chief insurance regulatory 

6 official of another jurisdiction. 

7 ‘‘(vii) The financial condition of an in8 surer or reinsurer. 

9 ‘‘(viii) The formation, acquisition, 

10 merger, reconsolidation, dissolution or 

11 withdrawal from one or more lines of in12 surance or reinsurance in all or part of a 

13 State by an insurer or reinsurer. 

14 ‘‘(ix) The issuance of written evidence 

15 of insurance. 

16 ‘‘(x) The reinstatement of an insur17 ance policy. 

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

19 renewal insurance risks on behalf of an insurer 

20 reinsurer or other person engaged in the busi21 ness of insurance by a person who knows or 

22 should know that the insurer or other person 

23 responsible for the risk is insolvent at the time 

24 of the transaction. 


rfrederick on DSKD9S0YB1PROD with BILLS
59 

•HR 4529 IH

1 ‘‘(C) Transaction of the business of insur2 ance in violation of laws requiring a license, cer3 tificate of authority or other legal authority for 

4 the transaction of the business of insurance. 

5 ‘‘(D) Attempt to commit, aiding or abet6 ting in the commission of, or conspiracy to com7 mit the acts or omissions specified in this para8 graph. 

9 ‘‘SEC. 2796. APPLICATION OF LAW. 

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

11 State shall apply to individual health insurance coverage 

12 offered by a health insurance issuer in the primary State 

13 and in any secondary State, but only if the coverage and 

14 issuer comply with the conditions of this section with re15 spect to the offering of coverage in any secondary State. 

16 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC17 ONDARY STATE.—Except as provided in this section, a 

18 health insurance issuer with respect to its offer, sale, rat19 ing (including medical underwriting), renewal, and 

20 issuance of individual health insurance coverage in any 

21 secondary State is exempt from any covered laws of the 

22 secondary State (and any rules, regulations, agreements, 

23 or orders sought or issued by such State under or related 

24 to such covered laws) to the extent that such laws would— 


rfrederick on DSKD9S0YB1PROD with BILLS
60 

•HR 4529 IH

1 ‘‘(1) make unlawful, or regulate, directly or in2 directly, the operation of the health insurance issuer 

3 operating in the secondary State, except that any 

4 secondary State may require such an issuer— 

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

6 applicable premium and other taxes (including 

7 high risk pool assessments) which are levied on 

8 insurers and surplus lines insurers, brokers, or 

9 policyholders under the laws of the State; 

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

11 State insurance commissioner as its agent solely 

12 for the purpose of receiving service of legal doc13 uments or process; 

14 ‘‘(C) to submit to an examination of its fi15 nancial condition by the State insurance com16 missioner in any State in which the issuer is 

17 doing business to determine the issuer’s finan18 cial condition, if— 

19 ‘‘(i) the State insurance commissioner 

20 of the primary State has not done an ex21 amination within the period recommended 

22 by the National Association of Insurance 

23 Commissioners; and 

24 ‘‘(ii) any such examination is con25 ducted in accordance with the examiners’ 


rfrederick on DSKD9S0YB1PROD with BILLS
61 

•HR 4529 IH

1 handbook of the National Association of 

2 Insurance Commissioners and is coordi3 nated to avoid unjustified duplication and 

4 unjustified repetition; 

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

6 issued— 

7 ‘‘(i) in a delinquency proceeding com8 menced by the State insurance commis9 sioner if there has been a finding of finan10 cial impairment under subparagraph (C); 

11 or 

12 ‘‘(ii) in a voluntary dissolution pro13 ceeding; 

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

15 by a court of competent jurisdiction, upon a pe16 tition by the State insurance commissioner al17 leging that the issuer is in hazardous financial 

18 condition; 

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

20 basis, in any insurance insolvency guaranty as21 sociation or similar association to which a 

22 health insurance issuer in the State is required 

23 to belong; 

24 ‘‘(G) to comply with any State law regard25 ing fraud and abuse (as defined in section 


rfrederick on DSKD9S0YB1PROD with BILLS
62 

•HR 4529 IH

1 2795(10)), except that if the State seeks an in2 junction regarding the conduct described in this 

3 subparagraph, such injunction must be obtained 

4 from a court of competent jurisdiction; 

5 ‘‘(H) to comply with any State law regard6 ing unfair claims settlement practices (as de7 fined in section 2795(9)); or 

8 ‘‘(I) to comply with the applicable require9 ments for independent review under section 

10 2798 with respect to coverage offered in the 

11 State; 

12 ‘‘(2) require any individual health insurance 

13 coverage issued by the issuer to be countersigned by 

14 an insurance agent or broker residing in that Sec15 ondary State; or 

16 ‘‘(3) otherwise discriminate against the issuer 

17 issuing insurance in both the primary State and in 

18 any secondary State. 

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

20 health insurance issuer shall provide the following notice, 

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

22 in a secondary State under this part by such a health in23 surance issuer and at renewal of the policy, with the 5 

24 blank spaces therein being appropriately filled with the 

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


rfrederick on DSKD9S0YB1PROD with BILLS
63 

•HR 4529 IH

1 State, the name of the secondary State, the name of the 

2 secondary State, and the name of the secondary State, re3 spectively, for the coverage concerned: 

4 ‘‘ ‘Notice 

5 ‘‘ ‘This policy is issued by lllll and is 

6 governed by the laws and regulations of the 

7 State of lllll, and it has met all the laws 

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

10 less expensive than others because it is not 

11 subject to all of the insurance laws and regu12 lations of the State of lllll, including 

13 coverage of some services or benefits man14 dated by the law of the State of lllll. Ad15 ditionally, this policy is not subject to all of 

16 the consumer protection laws or restrictions 

17 on rate changes of the State of lllll. As 

18 with all insurance products, before pur19 chasing this policy, you should carefully re20 view the policy and determine what health 

21 care services the policy covers and what bene22 fits it provides, including any exclusions, limi23 tations, or conditions for such services or ben24 efits.’. 


rfrederick on DSKD9S0YB1PROD with BILLS
64 

•HR 4529 IH

1 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

2 AND PREMIUM INCREASES.— 

3 ‘‘(1) IN GENERAL.—For purposes of this sec4 tion, a health insurance issuer that provides indi5 vidual health insurance coverage to an individual 

6 under this part in a primary or secondary State may 

7 not upon renewal— 

8 ‘‘(A) move or reclassify the individual in9 sured under the health insurance coverage from 

10 the class such individual is in at the time of 

11 issue of the contract based on the health-status 

12 related factors of the individual; or 

13 ‘‘(B) increase the premiums assessed the 

14 individual for such coverage based on a health 

15 status-related factor or change of a health sta16 tus-related factor or the past or prospective 

17 claim experience of the insured individual. 

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

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

20 issuer— 

21 ‘‘(A) from terminating or discontinuing 

22 coverage or a class of coverage in accordance 

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


rfrederick on DSKD9S0YB1PROD with BILLS
65 

•HR 4529 IH

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

2 policy holders within a class based on claims ex3 perience; 

4 ‘‘(C) from changing premiums or offering 

5 discounted premiums to individuals who engage 

6 in wellness activities at intervals prescribed by 

7 the issuer, if such premium changes or incen8 tives— 

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

10 the insurance contract; 

11 ‘‘(ii) are based on specific wellness ac12 tivities that are not applicable to all indi13 viduals; and 

14 ‘‘(iii) are not obtainable by all individ15 uals to whom coverage is offered; 

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

17 ‘‘(E) from retroactively adjusting the rates 

18 charged an insured individual if the initial rates 

19 were set based on material misrepresentation by 

20 the individual at the time of issue. 

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

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

23 individual health insurance coverage in a secondary State 

24 unless that coverage is currently offered for sale in the 

25 primary State. 


rfrederick on DSKD9S0YB1PROD with BILLS
66 

•HR 4529 IH

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

2 HEALTH INSURANCE ISSUERS.—Any State may require 

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

4 broker for a health insurance issuer with respect to the 

5 offering of individual health insurance coverage obtain a 

6 license from that State, with commissions or other com7 pensation subject to the provisions of the laws of that 

8 State, except that a State may not impose any qualifica9 tion or requirement which discriminates against a non10 resident agent or broker. 

11 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN12 SURANCE COMMISSIONER.—Each health insurance issuer 

13 issuing individual health insurance coverage in both pri14 mary and secondary States shall submit— 

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

16 State in which it intends to offer such coverage, be17 fore it may offer individual health insurance cov18 erage in such State— 

19 ‘‘(A) a copy of the plan of operation or fea20 sibility study or any similar statement of the 

21 policy being offered and its coverage (which 

22 shall include the name of its primary State and 

23 its principal place of business); 

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

25 designation of its primary State; and 


rfrederick on DSKD9S0YB1PROD with BILLS
67 

•HR 4529 IH

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

2 issuer’s compliance with all the laws of the pri3 mary State; and 

4 ‘‘(2) to the insurance commissioner of each sec5 ondary State in which it offers individual health in6 surance coverage, a copy of the issuer’s quarterly fi7 nancial statement submitted to the primary State, 

8 which statement shall be certified by an independent 

9 public accountant and contain a statement of opin10 ion on loss and loss adjustment expense reserves 

11 made by— 

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

13 of Actuaries; or 

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

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

16 Nothing in this section shall be construed to affect the 

17 authority of any Federal or State court to enjoin— 

18 ‘‘(1) the solicitation or sale of individual health 

19 insurance coverage by a health insurance issuer to 

20 any person or group who is not eligible for such in21 surance; or 

22 ‘‘(2) the solicitation or sale of individual health 

23 insurance coverage that violates the requirements of 

24 the law of a secondary State which are described in 


rfrederick on DSKD9S0YB1PROD with BILLS
68 

•HR 4529 IH

1 subparagraphs (A) through (H) of section 

2 2796(b)(1). 

3 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD4 MINISTRATIVE ACTION.—Nothing in this section shall be 

5 construed to affect the authority of any State to enjoin 

6 conduct in violation of that State’s laws described in sec7 tion 2796(b)(1). 

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

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

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

11 paragraph (2), nothing in this section shall be con12 strued to affect the authority of any State to make 

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

14 State with respect to which a health insurance issuer 

15 is not exempt under subsection (b). 

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

17 If a State seeks an injunction regarding the conduct 

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

19 (h), such injunction must be obtained from a Fed20 eral or State court of competent jurisdiction. 

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

22 section shall affect the authority of any State to bring ac23 tion in any Federal or State court. 

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

25 this section shall be construed to affect the applicability 


rfrederick on DSKD9S0YB1PROD with BILLS
69 

•HR 4529 IH

1 of State laws generally applicable to persons or corpora2 tions. 

3 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

4 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

5 health insurance issuer is offering coverage in a primary 

6 State that does not accommodate residents of secondary 

7 States or does not provide a working mechanism for resi8 dents of a secondary State, and the issuer is offering cov9 erage under this part in such secondary State which has 

10 not adopted a qualified high risk pool as its acceptable 

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

12 the issuer shall, with respect to any individual health in13 surance coverage offered in a secondary State under this 

14 part, comply with the guaranteed availability requirements 

15 for eligible individuals in section 2741. 

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

17 BEFORE ISSUER MAY SELL INTO SECONDARY 

18 STATES. 

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

20 issue individual health insurance coverage in a secondary 

21 State if the State insurance commissioner does not use 

22 a risk-based capital formula for the determination of cap23 ital and surplus requirements for all health insurance 

24 issuers. 


rfrederick on DSKD9S0YB1PROD with BILLS
70 

•HR 4529 IH

1 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE2 DURES. 

3 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur4 ance issuer may not offer, sell, or issue individual health 

5 insurance coverage in a secondary State under the provi6 sions of this title unless— 

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

8 State have legislation or regulations in place estab9 lishing an independent review process for individuals 

10 who are covered by individual health insurance cov11 erage, or 

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

13 subparagraph (A) are not met with respect to the ei14 ther of such States, the issuer provides an inde15 pendent review mechanism substantially identical (as 

16 determined by the applicable State authority of such 

17 State) to that prescribed in the ‘Health Carrier Ex18 ternal Review Model Act’ of the National Association 

19 of Insurance Commissioners for all individuals who 

20 purchase insurance coverage under the terms of this 

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

22 is conducted by an independent medical reviewer, or 

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

24 requirements of subsection (b) are met. 


rfrederick on DSKD9S0YB1PROD with BILLS
71 

•HR 4529 IH

1 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

2 REVIEWERS.—In the case of any independent review 

3 mechanism referred to in subsection (a)(2)— 

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

5 claim to an independent medical reviewer, or to any 

6 panel of such reviewers, to conduct independent 

7 medical review, the issuer shall ensure that— 

8 ‘‘(A) each independent medical reviewer 

9 meets the qualifications described in paragraphs 

10 (2) and (3); 

11 ‘‘(B) with respect to each review, each re12 viewer meets the requirements of paragraph (4) 

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

14 panel, meets the requirements described in 

15 paragraph (5); and 

16 ‘‘(C) compensation provided by the issuer 

17 to each reviewer is consistent with paragraph 

18 (6). 

19 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde20 pendent medical reviewer shall be a physician 

21 (allopathic or osteopathic) or health care profes22 sional who— 

23 ‘‘(A) is appropriately credentialed or li24 censed in 1 or more States to deliver health 

25 care services; and 


rfrederick on DSKD9S0YB1PROD with BILLS
72 

•HR 4529 IH

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

2 the diagnosis, or provides the type of treatment 

3 under review. 

4 ‘‘(3) INDEPENDENCE.— 

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), each independent medical reviewer 

7 in a case shall— 

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

9 in paragraph (7)); 

10 ‘‘(ii) not have a material familial, fi11 nancial, or professional relationship with 

12 such a party; and 

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

14 interest with such a party (as determined 

15 under regulations). 

16 ‘‘(B) EXCEPTION.—Nothing in subpara17 graph (A) shall be construed to— 

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

19 the basis of affiliation with the issuer, 

20 from serving as an independent medical re21 viewer if— 

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

23 not reasonably available; 


rfrederick on DSKD9S0YB1PROD with BILLS
73 

•HR 4529 IH

1 ‘‘(II) the affiliated individual is 

2 not involved in the provision of items 

3 or services in the case under review; 

4 ‘‘(III) the fact of such an affili5 ation is disclosed to the issuer and the 

6 enrollee (or authorized representative) 

7 and neither party objects; and 

8 ‘‘(IV) the affiliated individual is 

9 not an employee of the issuer and 

10 does not provide services exclusively or 

11 primarily to or on behalf of the issuer; 

12 ‘‘(ii) prohibit an individual who has 

13 staff privileges at the institution where the 

14 treatment involved takes place from serv15 ing as an independent medical reviewer 

16 merely on the basis of such affiliation if 

17 the affiliation is disclosed to the issuer and 

18 the enrollee (or authorized representative), 

19 and neither party objects; or 

20 ‘‘(iii) prohibit receipt of compensation 

21 by an independent medical reviewer from 

22 an entity if the compensation is provided 

23 consistent with paragraph (6). 

24 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

25 IN SAME FIELD.— 


rfrederick on DSKD9S0YB1PROD with BILLS
74 

•HR 4529 IH

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

2 treatment, or the provision of items or serv3 ices— 

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

5 a practicing physician (allopathic or osteo6 pathic) of the same or similar specialty, as 

7 a physician who, acting within the appro8 priate scope of practice within the State in 

9 which the service is provided or rendered, 

10 typically treats the condition, makes the 

11 diagnosis, or provides the type of treat12 ment under review; or 

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

14 professional, the reviewer, or at least 1 

15 member of the review panel, shall be a 

16 practicing non-physician health care pro17 fessional of the same or similar specialty 

18 as the non-physician health care profes19 sional who, acting within the appropriate 

20 scope of practice within the State in which 

21 the service is provided or rendered, typi22 cally treats the condition, makes the diag23 nosis, or provides the type of treatment 

24 under review. 


rfrederick on DSKD9S0YB1PROD with BILLS
75 

•HR 4529 IH

1 ‘‘(B) PRACTICING DEFINED.—For pur2 poses of this paragraph, the term ‘practicing’ 

3 means, with respect to an individual who is a 

4 physician or other health care professional, that 

5 the individual provides health care services to 

6 individual patients on average at least 2 days 

7 per week. 

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

9 external review relating to a child, a reviewer shall 

10 have expertise under paragraph (2) in pediatrics. 

11 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA12 TION.—Compensation provided by the issuer to an 

13 independent medical reviewer in connection with a 

14 review under this section shall— 

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

16 ‘‘(B) not be contingent on the decision ren17 dered by the reviewer. 

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

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

20 respect to a denial of a claim under a coverage relat21 ing to an enrollee, any of the following: 

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

23 officer, director, or employee of the issuer. 

24 ‘‘(B) The enrollee (or authorized represent25 ative). 


rfrederick on DSKD9S0YB1PROD with BILLS
76 

•HR 4529 IH

1 ‘‘(C) The health care professional that pro2 vides the items or services involved in the de3 nial. 

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

5 services (or treatment) involved in the denial 

6 are provided. 

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

8 other item that is included in the items or serv9 ices involved in the denial. 

10 ‘‘(F) Any other party determined under 

11 any regulations to have a substantial interest in 

12 the denial involved. 

13 ‘‘(8) DEFINITIONS.—For purposes of this sub14 section: 

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

16 means, with respect to health insurance cov17 erage offered by a health insurance issuer, an 

18 individual enrolled with the issuer to receive 

19 such coverage. 

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

21 term ‘health care professional’ means an indi22 vidual who is licensed, accredited, or certified 

23 under State law to provide specified health care 

24 services and who is operating within the scope 

25 of such licensure, accreditation, or certification. 


rfrederick on DSKD9S0YB1PROD with BILLS
77 

•HR 4529 IH

1 ‘‘SEC. 2799. ENFORCEMENT. 

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

3 respect to specific individual health insurance coverage the 

4 primary State for such coverage has sole jurisdiction to 

5 enforce the primary State’s covered laws in the primary 

6 State and any secondary State. 

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

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

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

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

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

12 initiated by the applicable secondary State authority, the 

13 court of competent jurisdiction shall apply the covered 

14 laws of the primary State. 

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

16 of individual health insurance coverage offered in a sec17 ondary State that fails to comply with the covered laws 

18 of the primary State, the applicable State authority of the 

19 secondary State may notify the applicable State authority 

20 of the primary State.’’. 

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

22 subsection (a) shall apply to individual health insurance 

23 coverage offered, issued, or sold after the date that is one 

24 year after the date of the enactment of this Act. 

25 (c) GAO ONGOING STUDY AND REPORTS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
78 

•HR 4529 IH

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

2 United States shall conduct an ongoing study con3 cerning the effect of the amendment made by sub4 section (a) on— 

5 (A) the number of uninsured and under-in6 sured; 

7 (B) the availability and cost of health in8 surance policies for individuals with pre-existing 

9 medical conditions; 

10 (C) the availability and cost of health in11 surance policies generally; 

12 (D) the elimination or reduction of dif13 ferent types of benefits under health insurance 

14 policies offered in different States; and 

15 (E) cases of fraud or abuse relating to 

16 health insurance coverage offered under such 

17 amendment and the resolution of such cases. 

18 (2) ANNUAL REPORTS.—The Comptroller Gen19 eral shall submit to Congress an annual report, after 

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

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

22 the ongoing study conducted under paragraph (1). 

23 (d) SEVERABILITY.—If any provision of this subtitle 

24 or the application of such provision to any person or cir25 cumstance is held to be unconstitutional, the remainder 


rfrederick on DSKD9S0YB1PROD with BILLS
79 

•HR 4529 IH

1 of this subtitle and the application of the provisions of 

2 such to any other person or circumstance shall not be af3 fected. 

4 SEC. 132. SMALL BUSINESS HEALTH FAIRNESS. 

5 (a) RULES GOVERNING ASSOCIATION HEALTH

6 PLANS.— 

7 (1) IN GENERAL.—Subtitle B of title I of the 

8 Employee Retirement Income Security Act of 1974 

9 is amended by adding after part 7 the following new 

10 part: 

11 ‘‘PART 8—RULES GOVERNING ASSOCIATION 

12 HEALTH PLANS 

13 ‘‘SEC. 801. ASSOCIATION HEALTH PLANS. 

14 ‘‘(a) IN GENERAL.—For purposes of this part, the 

15 term ‘association health plan’ means a group health plan 

16 whose sponsor is (or is deemed under this part to be) de17 scribed in subsection (b). 

18 ‘‘(b) SPONSORSHIP.—The sponsor of a group health 

19 plan is described in this subsection if such sponsor— 

20 ‘‘(1) is organized and maintained in good faith, 

21 with a constitution and bylaws specifically stating its 

22 purpose and providing for periodic meetings on at 

23 least an annual basis, as a bona fide trade associa24 tion, a bona fide industry association (including a 

25 rural electric cooperative association or a rural teleVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00079 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
80 

•HR 4529 IH

1 phone cooperative association), a bona fide profes2 sional association, or a bona fide chamber of com3 merce (or similar bona fide business association, in4 cluding a corporation or similar organization that 

5 operates on a cooperative basis (within the meaning 

6 of section 1381 of the Internal Revenue Code of 

7 1986)), for substantial purposes other than that of 

8 obtaining or providing medical care; 

9 ‘‘(2) is established as a permanent entity which 

10 receives the active support of its members and re11 quires for membership payment on a periodic basis 

12 of dues or payments necessary to maintain eligibility 

13 for membership in the sponsor; and 

14 ‘‘(3) does not condition membership, such dues 

15 or payments, or coverage under the plan on the 

16 basis of health status-related factors with respect to 

17 the employees of its members (or affiliated mem18 bers), or the dependents of such employees, and does 

19 not condition such dues or payments on the basis of 

20 group health plan participation. 

21 Any sponsor consisting of an association of entities which 

22 meet the requirements of paragraphs (1), (2), and (3) 

23 shall be deemed to be a sponsor described in this sub24 section. 


rfrederick on DSKD9S0YB1PROD with BILLS
81 

•HR 4529 IH

1 ‘‘SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH 

2 PLANS. 

3 ‘‘(a) IN GENERAL.—The applicable authority shall 

4 prescribe by regulation a procedure under which, subject 

5 to subsection (b), the applicable authority shall certify as6 sociation health plans which apply for certification as 

7 meeting the requirements of this part. 

8 ‘‘(b) STANDARDS.—Under the procedure prescribed 

9 pursuant to subsection (a), in the case of an association 

10 health plan that provides at least one benefit option which 

11 does not consist of health insurance coverage, the applica12 ble authority shall certify such plan as meeting the re13 quirements of this part only if the applicable authority is 

14 satisfied that the applicable requirements of this part are 

15 met (or, upon the date on which the plan is to commence 

16 operations, will be met) with respect to the plan. 

17 ‘‘(c) REQUIREMENTS APPLICABLE TO CERTIFIED

18 PLANS.—An association health plan with respect to which 

19 certification under this part is in effect shall meet the ap20 plicable requirements of this part, effective on the date 

21 of certification (or, if later, on the date on which the plan 

22 is to commence operations). 

23 ‘‘(d) REQUIREMENTS FOR CONTINUED CERTIFI24 CATION.—The applicable authority may provide by regula25 tion for continued certification of association health plans 

26 under this part. 


rfrederick on DSKD9S0YB1PROD with BILLS
82 

•HR 4529 IH

1 ‘‘(e) CLASS CERTIFICATION FOR FULLY INSURED

2 PLANS.—The applicable authority shall establish a class 

3 certification procedure for association health plans under 

4 which all benefits consist of health insurance coverage. 

5 Under such procedure, the applicable authority shall pro6 vide for the granting of certification under this part to 

7 the plans in each class of such association health plans 

8 upon appropriate filing under such procedure in connec9 tion with plans in such class and payment of the pre10 scribed fee under section 807(a). 

11 ‘‘(f) CERTIFICATION OF SELF-INSURED ASSOCIATION

12 HEALTH PLANS.—An association health plan which offers 

13 one or more benefit options which do not consist of health 

14 insurance coverage may be certified under this part only 

15 if such plan consists of any of the following: 

16 ‘‘(1) a plan which offered such coverage on the 

17 date of the enactment of this part, 

18 ‘‘(2) a plan under which the sponsor does not 

19 restrict membership to one or more trades and busi20 nesses or industries and whose eligible participating 

21 employers represent a broad cross-section of trades 

22 and businesses or industries, or 

23 ‘‘(3) a plan whose eligible participating employ24 ers represent one or more trades or businesses, or 

25 one or more industries, consisting of any of the folVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00082 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
83 

•HR 4529 IH

1 lowing: agriculture; equipment and automobile deal2 erships; barbering and cosmetology; certified public 

3 accounting practices; child care; construction; dance, 

4 theatrical and orchestra productions; disinfecting 

5 and pest control; financial services; fishing; food 

6 service establishments; hospitals; labor organiza7 tions; logging; manufacturing (metals); mining; med8 ical and dental practices; medical laboratories; pro9 fessional consulting services; sanitary services; trans10 portation (local and freight); warehousing; whole11 saling/distributing; or any other trade or business or 

12 industry which has been indicated as having average 

13 or above-average risk or health claims experience by 

14 reason of State rate filings, denials of coverage, pro15 posed premium rate levels, or other means dem16 onstrated by such plan in accordance with regula17 tions. 

18 ‘‘SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND 

19 BOARDS OF TRUSTEES. 

20 ‘‘(a) SPONSOR.—The requirements of this subsection 

21 are met with respect to an association health plan if the 

22 sponsor has met (or is deemed under this part to have 

23 met) the requirements of section 801(b) for a continuous 

24 period of not less than 3 years ending with the date of 

25 the application for certification under this part. 


rfrederick on DSKD9S0YB1PROD with BILLS
84 

•HR 4529 IH

1 ‘‘(b) BOARD OF TRUSTEES.—The requirements of 

2 this subsection are met with respect to an association 

3 health plan if the following requirements are met: 

4 ‘‘(1) FISCAL CONTROL.—The plan is operated, 

5 pursuant to a trust agreement, by a board of trust6 ees which has complete fiscal control over the plan 

7 and which is responsible for all operations of the 

8 plan. 

9 ‘‘(2) RULES OF OPERATION AND FINANCIAL

10 CONTROLS.—The board of trustees has in effect 

11 rules of operation and financial controls, based on a 

12 3-year plan of operation, adequate to carry out the 

13 terms of the plan and to meet all requirements of 

14 this title applicable to the plan. 

15 ‘‘(3) RULES GOVERNING RELATIONSHIP TO

16 PARTICIPATING EMPLOYERS AND TO CONTRAC17 TORS.— 

18 ‘‘(A) BOARD MEMBERSHIP.— 

19 ‘‘(i) IN GENERAL.—Except as pro20 vided in clauses (ii) and (iii), the members 

21 of the board of trustees are individuals se22 lected from individuals who are the owners, 

23 officers, directors, or employees of the par24 ticipating employers or who are partners in 


rfrederick on DSKD9S0YB1PROD with BILLS
85 

•HR 4529 IH

1 the participating employers and actively 

2 participate in the business. 

3 ‘‘(ii) LIMITATION.— 

4 ‘‘(I) GENERAL RULE.—Except as 

5 provided in subclauses (II) and (III), 

6 no such member is an owner, officer, 

7 director, or employee of, or partner in, 

8 a contract administrator or other 

9 service provider to the plan. 

10 ‘‘(II) LIMITED EXCEPTION FOR

11 PROVIDERS OF SERVICES SOLELY ON

12 BEHALF OF THE SPONSOR.—Officers 

13 or employees of a sponsor which is a 

14 service provider (other than a contract 

15 administrator) to the plan may be 

16 members of the board if they con17 stitute not more than 25 percent of 

18 the membership of the board and they 

19 do not provide services to the plan 

20 other than on behalf of the sponsor. 

21 ‘‘(III) TREATMENT OF PRO22 VIDERS OF MEDICAL CARE.—In the 

23 case of a sponsor which is an associa24 tion whose membership consists pri25 marily of providers of medical care, 


rfrederick on DSKD9S0YB1PROD with BILLS
86 

•HR 4529 IH

1 subclause (I) shall not apply in the 

2 case of any service provider described 

3 in subclause (I) who is a provider of 

4 medical care under the plan. 

5 ‘‘(iii) CERTAIN PLANS EXCLUDED.— 

6 Clause (i) shall not apply to an association 

7 health plan which is in existence on the 

8 date of the enactment of this part. 

9 ‘‘(B) SOLE AUTHORITY.—The board has 

10 sole authority under the plan to approve appli11 cations for participation in the plan and to con12 tract with a service provider to administer the 

13 day-to-day affairs of the plan. 

14 ‘‘(c) TREATMENT OF FRANCHISE NETWORKS.—In 

15 the case of a group health plan which is established and 

16 maintained by a franchiser for a franchise network con17 sisting of its franchisees— 

18 ‘‘(1) the requirements of subsection (a) and sec19 tion 801(a) shall be deemed met if such require20 ments would otherwise be met if the franchiser were 

21 deemed to be the sponsor referred to in section 

22 801(b), such network were deemed to be an associa23 tion described in section 801(b), and each franchisee 

24 were deemed to be a member (of the association and 

25 the sponsor) referred to in section 801(b); and 


rfrederick on DSKD9S0YB1PROD with BILLS
87 

•HR 4529 IH

1 ‘‘(2) the requirements of section 804(a)(1) shall 

2 be deemed met. 

3 The Secretary may by regulation define for purposes of 

4 this subsection the terms ‘franchiser’, ‘franchise network’, 

5 and ‘franchisee’. 

6 ‘‘SEC. 804. PARTICIPATION AND COVERAGE REQUIRE7 MENTS. 

8 ‘‘(a) COVERED EMPLOYERS AND INDIVIDUALS.—The 

9 requirements of this subsection are met with respect to 

10 an association health plan if, under the terms of the 

11 plan— 

12 ‘‘(1) each participating employer must be— 

13 ‘‘(A) a member of the sponsor, 

14 ‘‘(B) the sponsor, or 

15 ‘‘(C) an affiliated member of the sponsor 

16 with respect to which the requirements of sub17 section (b) are met, 

18 except that, in the case of a sponsor which is a pro19 fessional association or other individual-based asso20 ciation, if at least one of the officers, directors, or 

21 employees of an employer, or at least one of the in22 dividuals who are partners in an employer and who 

23 actively participates in the business, is a member or 

24 such an affiliated member of the sponsor, particiVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00087 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
88 

•HR 4529 IH

1 pating employers may also include such employer; 

2 and 

3 ‘‘(2) all individuals commencing coverage under 

4 the plan after certification under this part must 

5 be— 

6 ‘‘(A) active or retired owners (including 

7 self-employed individuals), officers, directors, or 

8 employees of, or partners in, participating em9 ployers; or 

10 ‘‘(B) the beneficiaries of individuals de11 scribed in subparagraph (A). 

12 ‘‘(b) COVERAGE OF PREVIOUSLY UNINSURED EM13 PLOYEES.—In the case of an association health plan in 

14 existence on the date of the enactment of this part, an 

15 affiliated member of the sponsor of the plan may be of16 fered coverage under the plan as a participating employer 

17 only if— 

18 ‘‘(1) the affiliated member was an affiliated 

19 member on the date of certification under this part; 

20 or 

21 ‘‘(2) during the 12-month period preceding the 

22 date of the offering of such coverage, the affiliated 

23 member has not maintained or contributed to a 

24 group health plan with respect to any of its employVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00088 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
89 

•HR 4529 IH

1 ees who would otherwise be eligible to participate in 

2 such association health plan. 

3 ‘‘(c) INDIVIDUAL MARKET UNAFFECTED.—The re4 quirements of this subsection are met with respect to an 

5 association health plan if, under the terms of the plan, 

6 no participating employer may provide health insurance 

7 coverage in the individual market for any employee not 

8 covered under the plan which is similar to the coverage 

9 contemporaneously provided to employees of the employer 

10 under the plan, if such exclusion of the employee from cov11 erage under the plan is based on a health status-related 

12 factor with respect to the employee and such employee 

13 would, but for such exclusion on such basis, be eligible 

14 for coverage under the plan. 

15 ‘‘(d) PROHIBITION OF DISCRIMINATION AGAINST

16 EMPLOYERS AND EMPLOYEES ELIGIBLE TO PARTICI17 PATE.—The requirements of this subsection are met with 

18 respect to an association health plan if— 

19 ‘‘(1) under the terms of the plan, all employers 

20 meeting the preceding requirements of this section 

21 are eligible to qualify as participating employers for 

22 all geographically available coverage options, unless, 

23 in the case of any such employer, participation or 

24 contribution requirements of the type referred to in 


rfrederick on DSKD9S0YB1PROD with BILLS
90 

•HR 4529 IH

1 section 2711 of the Public Health Service Act are 

2 not met; 

3 ‘‘(2) upon request, any employer eligible to par4 ticipate is furnished information regarding all cov5 erage options available under the plan; and 

6 ‘‘(3) the applicable requirements of sections 

7 701, 702, and 703 are met with respect to the plan. 

8 ‘‘SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN 

9 DOCUMENTS, CONTRIBUTION RATES, AND 

10 BENEFIT OPTIONS. 

11 ‘‘(a) IN GENERAL.—The requirements of this section 

12 are met with respect to an association health plan if the 

13 following requirements are met: 

14 ‘‘(1) CONTENTS OF GOVERNING INSTRU15 MENTS.—The instruments governing the plan in16 clude a written instrument, meeting the require17 ments of an instrument required under section 

18 402(a)(1), which— 

19 ‘‘(A) provides that the board of trustees 

20 serves as the named fiduciary required for plans 

21 under section 402(a)(1) and serves in the ca22 pacity of a plan administrator (referred to in 

23 section 3(16)(A)); 


rfrederick on DSKD9S0YB1PROD with BILLS
91 

•HR 4529 IH

1 ‘‘(B) provides that the sponsor of the plan 

2 is to serve as plan sponsor (referred to in sec3 tion 3(16)(B)); and 

4 ‘‘(C) incorporates the requirements of sec5 tion 806. 

6 ‘‘(2) CONTRIBUTION RATES MUST BE NON7 DISCRIMINATORY.— 

8 ‘‘(A) The contribution rates for any par9 ticipating small employer do not vary on the 

10 basis of any health status-related factor in rela11 tion to employees of such employer or their 

12 beneficiaries and do not vary on the basis of the 

13 type of business or industry in which such em14 ployer is engaged. 

15 ‘‘(B) Nothing in this title or any other pro16 vision of law shall be construed to preclude an 

17 association health plan, or a health insurance 

18 issuer offering health insurance coverage in 

19 connection with an association health plan, 

20 from— 

21 ‘‘(i) setting contribution rates based 

22 on the claims experience of the plan; or 

23 ‘‘(ii) varying contribution rates for 

24 small employers in a State to the extent 

25 that such rates could vary using the same 


rfrederick on DSKD9S0YB1PROD with BILLS
92 

•HR 4529 IH

1 methodology employed in such State for 

2 regulating premium rates in the small 

3 group market with respect to health insur4 ance coverage offered in connection with 

5 bona fide associations (within the meaning 

6 of section 2791(d)(3) of the Public Health 

7 Service Act), 

8 subject to the requirements of section 702(b) 

9 relating to contribution rates. 

10 ‘‘(3) FLOOR FOR NUMBER OF COVERED INDI11 VIDUALS WITH RESPECT TO CERTAIN PLANS.—If 

12 any benefit option under the plan does not consist 

13 of health insurance coverage, the plan has as of the 

14 beginning of the plan year not fewer than 1,000 par15 ticipants and beneficiaries. 

16 ‘‘(4) MARKETING REQUIREMENTS.— 

17 ‘‘(A) IN GENERAL.—If a benefit option 

18 which consists of health insurance coverage is 

19 offered under the plan, State-licensed insurance 

20 agents shall be used to distribute to small em21 ployers coverage which does not consist of 

22 health insurance coverage in a manner com23 parable to the manner in which such agents are 

24 used to distribute health insurance coverage. 


rfrederick on DSKD9S0YB1PROD with BILLS
93 

•HR 4529 IH

1 ‘‘(B) STATE-LICENSED INSURANCE

2 AGENTS.—For purposes of subparagraph (A), 

3 the term ‘State-licensed insurance agents’ 

4 means one or more agents who are licensed in 

5 a State and are subject to the laws of such 

6 State relating to licensure, qualification, test7 ing, examination, and continuing education of 

8 persons authorized to offer, sell, or solicit 

9 health insurance coverage in such State. 

10 ‘‘(5) REGULATORY REQUIREMENTS.—Such 

11 other requirements as the applicable authority deter12 mines are necessary to carry out the purposes of this 

13 part, which shall be prescribed by the applicable au14 thority by regulation. 

15 ‘‘(b) ABILITY OF ASSOCIATION HEALTH PLANS TO

16 DESIGN BENEFIT OPTIONS.—Subject to section 514(d), 

17 nothing in this part or any provision of State law (as de18 fined in section 514(c)(1)) shall be construed to preclude 

19 an association health plan, or a health insurance issuer 

20 offering health insurance coverage in connection with an 

21 association health plan, from exercising its sole discretion 

22 in selecting the specific items and services consisting of 

23 medical care to be included as benefits under such plan 

24 or coverage, except (subject to section 514) in the case 

25 of (1) any law to the extent that it is not preempted under 


rfrederick on DSKD9S0YB1PROD with BILLS
94 

•HR 4529 IH

1 section 731(a)(1) with respect to matters governed by sec2 tion 711, 712, or 713, or (2) any law of the State with 

3 which filing and approval of a policy type offered by the 

4 plan was initially obtained to the extent that such law pro5 hibits an exclusion of a specific disease from such cov6 erage. 

7 ‘‘SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS 

8 FOR SOLVENCY FOR PLANS PROVIDING 

9 HEALTH BENEFITS IN ADDITION TO HEALTH 

10 INSURANCE COVERAGE. 

11 ‘‘(a) IN GENERAL.—The requirements of this section 

12 are met with respect to an association health plan if— 

13 ‘‘(1) the benefits under the plan consist solely 

14 of health insurance coverage; or 

15 ‘‘(2) if the plan provides any additional benefit 

16 options which do not consist of health insurance cov17 erage, the plan— 

18 ‘‘(A) establishes and maintains reserves 

19 with respect to such additional benefit options, 

20 in amounts recommended by the qualified actu21 ary, consisting of— 

22 ‘‘(i) a reserve sufficient for unearned 

23 contributions; 

24 ‘‘(ii) a reserve sufficient for benefit li25 abilities which have been incurred, which 


rfrederick on DSKD9S0YB1PROD with BILLS
95 

•HR 4529 IH

1 have not been satisfied, and for which risk 

2 of loss has not yet been transferred, and 

3 for expected administrative costs with re4 spect to such benefit liabilities; 

5 ‘‘(iii) a reserve sufficient for any other 

6 obligations of the plan; and 

7 ‘‘(iv) a reserve sufficient for a margin 

8 of error and other fluctuations, taking into 

9 account the specific circumstances of the 

10 plan; and 

11 ‘‘(B) establishes and maintains aggregate 

12 and specific excess/stop loss insurance and sol13 vency indemnification, with respect to such ad14 ditional benefit options for which risk of loss 

15 has not yet been transferred, as follows: 

16 ‘‘(i) The plan shall secure aggregate 

17 excess/stop loss insurance for the plan with 

18 an attachment point which is not greater 

19 than 125 percent of expected gross annual 

20 claims. The applicable authority may by 

21 regulation provide for upward adjustments 

22 in the amount of such percentage in speci23 fied circumstances in which the plan spe24 cifically provides for and maintains reVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00095 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
96 

•HR 4529 IH

1 serves in excess of the amounts required 

2 under subparagraph (A). 

3 ‘‘(ii) The plan shall secure specific ex4 cess/stop loss insurance for the plan with 

5 an attachment point which is at least equal 

6 to an amount recommended by the plan’s 

7 qualified actuary. The applicable authority 

8 may by regulation provide for adjustments 

9 in the amount of such insurance in speci10 fied circumstances in which the plan spe11 cifically provides for and maintains re12 serves in excess of the amounts required 

13 under subparagraph (A). 

14 ‘‘(iii) The plan shall secure indem15 nification insurance for any claims which 

16 the plan is unable to satisfy by reason of 

17 a plan termination. 

18 Any person issuing to a plan insurance described in clause 

19 (i), (ii), or (iii) of subparagraph (B) shall notify the Sec20 retary of any failure of premium payment meriting can21 cellation of the policy prior to undertaking such a cancella22 tion. Any regulations prescribed by the applicable author23 ity pursuant to clause (i) or (ii) of subparagraph (B) may 

24 allow for such adjustments in the required levels of excess/ 

25 stop loss insurance as the qualified actuary may recVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00096 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
97 

•HR 4529 IH

1 ommend, taking into account the specific circumstances 

2 of the plan. 

3 ‘‘(b) MINIMUM SURPLUS IN ADDITION TO CLAIMS

4 RESERVES.—In the case of any association health plan de5 scribed in subsection (a)(2), the requirements of this sub6 section are met if the plan establishes and maintains sur7 plus in an amount at least equal to— 

8 ‘‘(1) $500,000, or 

9 ‘‘(2) such greater amount (but not greater than 

10 $2,000,000) as may be set forth in regulations pre11 scribed by the applicable authority, considering the 

12 level of aggregate and specific excess/stop loss insur13 ance provided with respect to such plan and other 

14 factors related to solvency risk, such as the plan’s 

15 projected levels of participation or claims, the nature 

16 of the plan’s liabilities, and the types of assets avail17 able to assure that such liabilities are met. 

18 ‘‘(c) ADDITIONAL REQUIREMENTS.—In the case of 

19 any association health plan described in subsection (a)(2), 

20 the applicable authority may provide such additional re21 quirements relating to reserves, excess/stop loss insurance, 

22 and indemnification insurance as the applicable authority 

23 considers appropriate. Such requirements may be provided 

24 by regulation with respect to any such plan or any class 

25 of such plans. 


rfrederick on DSKD9S0YB1PROD with BILLS
98 

•HR 4529 IH

1 ‘‘(d) ADJUSTMENTS FOR EXCESS/STOP LOSS INSUR2 ANCE.—The applicable authority may provide for adjust3 ments to the levels of reserves otherwise required under 

4 subsections (a) and (b) with respect to any plan or class 

5 of plans to take into account excess/stop loss insurance 

6 provided with respect to such plan or plans. 

7 ‘‘(e) ALTERNATIVE MEANS OF COMPLIANCE.—The 

8 applicable authority may permit an association health plan 

9 described in subsection (a)(2) to substitute, for all or part 

10 of the requirements of this section (except subsection 

11 (a)(2)(B)(iii)), such security, guarantee, hold-harmless ar12 rangement, or other financial arrangement as the applica13 ble authority determines to be adequate to enable the plan 

14 to fully meet all its financial obligations on a timely basis 

15 and is otherwise no less protective of the interests of par16 ticipants and beneficiaries than the requirements for 

17 which it is substituted. The applicable authority may take 

18 into account, for purposes of this subsection, evidence pro19 vided by the plan or sponsor which demonstrates an as20 sumption of liability with respect to the plan. Such evi21 dence may be in the form of a contract of indemnification, 

22 lien, bonding, insurance, letter of credit, recourse under 

23 applicable terms of the plan in the form of assessments 

24 of participating employers, security, or other financial ar25 rangement. 


rfrederick on DSKD9S0YB1PROD with BILLS
99 

•HR 4529 IH

1 ‘‘(f) MEASURES TO ENSURE CONTINUED PAYMENT

2 OF BENEFITS BY CERTAIN PLANS IN DISTRESS.— 

3 ‘‘(1) PAYMENTS BY CERTAIN PLANS TO ASSO4 CIATION HEALTH PLAN FUND.— 

5 ‘‘(A) IN GENERAL.—In the case of an as6 sociation health plan described in subsection 

7 (a)(2), the requirements of this subsection are 

8 met if the plan makes payments into the Asso9 ciation Health Plan Fund under this subpara10 graph when they are due. Such payments shall 

11 consist of annual payments in the amount of 

12 $5,000, and, in addition to such annual pay13 ments, such supplemental payments as the Sec14 retary may determine to be necessary under 

15 paragraph (2). Payments under this paragraph 

16 are payable to the Fund at the time determined 

17 by the Secretary. Initial payments are due in 

18 advance of certification under this part. Pay19 ments shall continue to accrue until a plan’s as20 sets are distributed pursuant to a termination 

21 procedure. 

22 ‘‘(B) PENALTIES FOR FAILURE TO MAKE

23 PAYMENTS.—If any payment is not made by a 

24 plan when it is due, a late payment charge of 

25 not more than 100 percent of the payment 


rfrederick on DSKD9S0YB1PROD with BILLS
100 

•HR 4529 IH

1 which was not timely paid shall be payable by 

2 the plan to the Fund. 

3 ‘‘(C) CONTINUED DUTY OF THE SEC4 RETARY.—The Secretary shall not cease to 

5 carry out the provisions of paragraph (2) on ac6 count of the failure of a plan to pay any pay7 ment when due. 

8 ‘‘(2) PAYMENTS BY SECRETARY TO CONTINUE

9 EXCESS/STOP LOSS INSURANCE COVERAGE AND IN10 DEMNIFICATION INSURANCE COVERAGE FOR CER11 TAIN PLANS.—In any case in which the applicable 

12 authority determines that there is, or that there is 

13 reason to believe that there will be: (A) a failure to 

14 take necessary corrective actions under section 

15 809(a) with respect to an association health plan de16 scribed in subsection (a)(2); or (B) a termination of 

17 such a plan under section 809(b) or 810(b)(8) (and, 

18 if the applicable authority is not the Secretary, cer19 tifies such determination to the Secretary), the Sec20 retary shall determine the amounts necessary to 

21 make payments to an insurer (designated by the 

22 Secretary) to maintain in force excess/stop loss in23 surance coverage or indemnification insurance cov24 erage for such plan, if the Secretary determines that 

25 there is a reasonable expectation that, without such 


rfrederick on DSKD9S0YB1PROD with BILLS
101 

•HR 4529 IH

1 payments, claims would not be satisfied by reason of 

2 termination of such coverage. The Secretary shall, to 

3 the extent provided in advance in appropriation 

4 Acts, pay such amounts so determined to the insurer 

5 designated by the Secretary. 

6 ‘‘(3) ASSOCIATION HEALTH PLAN FUND.— 

7 ‘‘(A) IN GENERAL.—There is established 

8 on the books of the Treasury a fund to be 

9 known as the ‘Association Health Plan Fund’. 

10 The Fund shall be available for making pay11 ments pursuant to paragraph (2). The Fund 

12 shall be credited with payments received pursu13 ant to paragraph (1)(A), penalties received pur14 suant to paragraph (1)(B); and earnings on in15 vestments of amounts of the Fund under sub16 paragraph (B). 

17 ‘‘(B) INVESTMENT.—Whenever the Sec18 retary determines that the moneys of the fund 

19 are in excess of current needs, the Secretary 

20 may request the investment of such amounts as 

21 the Secretary determines advisable by the Sec22 retary of the Treasury in obligations issued or 

23 guaranteed by the United States. 

24 ‘‘(g) EXCESS/STOP LOSS INSURANCE.—For purposes 

25 of this section— 


rfrederick on DSKD9S0YB1PROD with BILLS
102 

•HR 4529 IH

1 ‘‘(1) AGGREGATE EXCESS/STOP LOSS INSUR2 ANCE.—The term ‘aggregate excess/stop loss insur3 ance’ means, in connection with an association 

4 health plan, a contract— 

5 ‘‘(A) under which an insurer (meeting such 

6 minimum standards as the applicable authority 

7 may prescribe by regulation) provides for pay8 ment to the plan with respect to aggregate 

9 claims under the plan in excess of an amount 

10 or amounts specified in such contract; 

11 ‘‘(B) which is guaranteed renewable; and 

12 ‘‘(C) which allows for payment of pre13 miums by any third party on behalf of the in14 sured plan. 

15 ‘‘(2) SPECIFIC EXCESS/STOP LOSS INSUR16 ANCE.—The term ‘specific excess/stop loss insur17 ance’ means, in connection with an association 

18 health plan, a contract— 

19 ‘‘(A) under which an insurer (meeting such 

20 minimum standards as the applicable authority 

21 may prescribe by regulation) provides for pay22 ment to the plan with respect to claims under 

23 the plan in connection with a covered individual 

24 in excess of an amount or amounts specified in 


rfrederick on DSKD9S0YB1PROD with BILLS
103 

•HR 4529 IH

1 such contract in connection with such covered 

2 individual; 

3 ‘‘(B) which is guaranteed renewable; and 

4 ‘‘(C) which allows for payment of pre5 miums by any third party on behalf of the in6 sured plan. 

7 ‘‘(h) INDEMNIFICATION INSURANCE.—For purposes 

8 of this section, the term ‘indemnification insurance’ 

9 means, in connection with an association health plan, a 

10 contract— 

11 ‘‘(1) under which an insurer (meeting such min12 imum standards as the applicable authority may pre13 scribe by regulation) provides for payment to the 

14 plan with respect to claims under the plan which the 

15 plan is unable to satisfy by reason of a termination 

16 pursuant to section 809(b) (relating to mandatory 

17 termination); 

18 ‘‘(2) which is guaranteed renewable and 

19 noncancellable for any reason (except as the applica20 ble authority may prescribe by regulation); and 

21 ‘‘(3) which allows for payment of premiums by 

22 any third party on behalf of the insured plan. 

23 ‘‘(i) RESERVES.—For purposes of this section, the 

24 term ‘reserves’ means, in connection with an association 

25 health plan, plan assets which meet the fiduciary standVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00103 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
104 

•HR 4529 IH

1 ards under part 4 and such additional requirements re2 garding liquidity as the applicable authority may prescribe 

3 by regulation. 

4 ‘‘(j) SOLVENCY STANDARDS WORKING GROUP.— 

5 ‘‘(1) IN GENERAL.—Within 90 days after the 

6 date of the enactment of this part, the applicable au7 thority shall establish a Solvency Standards Working 

8 Group. In prescribing the initial regulations under 

9 this section, the applicable authority shall take into 

10 account the recommendations of such Working 

11 Group. 

12 ‘‘(2) MEMBERSHIP.—The Working Group shall 

13 consist of not more than 15 members appointed by 

14 the applicable authority. The applicable authority 

15 shall include among persons invited to membership 

16 on the Working Group at least one of each of the 

17 following: 

18 ‘‘(A) a representative of the National Asso19 ciation of Insurance Commissioners; 

20 ‘‘(B) a representative of the American 

21 Academy of Actuaries; 

22 ‘‘(C) a representative of the State govern23 ments, or their interests; 

24 ‘‘(D) a representative of existing self-in25 sured arrangements, or their interests; 


rfrederick on DSKD9S0YB1PROD with BILLS
105 

•HR 4529 IH

1 ‘‘(E) a representative of associations of the 

2 type referred to in section 801(b)(1), or their 

3 interests; and 

4 ‘‘(F) a representative of multiemployer 

5 plans that are group health plans, or their in6 terests. 

7 ‘‘SEC. 807. REQUIREMENTS FOR APPLICATION AND RE8 LATED REQUIREMENTS. 

9 ‘‘(a) FILING FEE.—Under the procedure prescribed 

10 pursuant to section 802(a), an association health plan 

11 shall pay to the applicable authority at the time of filing 

12 an application for certification under this part a filing fee 

13 in the amount of $5,000, which shall be available in the 

14 case of the Secretary, to the extent provided in appropria15 tion Acts, for the sole purpose of administering the certifi16 cation procedures applicable with respect to association 

17 health plans. 

18 ‘‘(b) INFORMATION TO BE INCLUDED IN APPLICA19 TION FOR CERTIFICATION.—An application for certifi20 cation under this part meets the requirements of this sec21 tion only if it includes, in a manner and form which shall 

22 be prescribed by the applicable authority by regulation, at 

23 least the following information: 

24 ‘‘(1) IDENTIFYING INFORMATION.—The names 

25 and addresses of— 


rfrederick on DSKD9S0YB1PROD with BILLS
106 

•HR 4529 IH

1 ‘‘(A) the sponsor; and 

2 ‘‘(B) the members of the board of trustees 

3 of the plan. 

4 ‘‘(2) STATES IN WHICH PLAN INTENDS TO DO

5 BUSINESS.—The States in which participants and 

6 beneficiaries under the plan are to be located and 

7 the number of them expected to be located in each 

8 such State. 

9 ‘‘(3) BONDING REQUIREMENTS.—Evidence pro10 vided by the board of trustees that the bonding re11 quirements of section 412 will be met as of the date 

12 of the application or (if later) commencement of op13 erations. 

14 ‘‘(4) PLAN DOCUMENTS.—A copy of the docu15 ments governing the plan (including any bylaws and 

16 trust agreements), the summary plan description, 

17 and other material describing the benefits that will 

18 be provided to participants and beneficiaries under 

19 the plan. 

20 ‘‘(5) AGREEMENTS WITH SERVICE PRO21 VIDERS.—A copy of any agreements between the 

22 plan and contract administrators and other service 

23 providers. 

24 ‘‘(6) FUNDING REPORT.—In the case of asso25 ciation health plans providing benefits options in adVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00106 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
107 

•HR 4529 IH

1 dition to health insurance coverage, a report setting 

2 forth information with respect to such additional 

3 benefit options determined as of a date within the 

4 120-day period ending with the date of the applica5 tion, including the following: 

6 ‘‘(A) RESERVES.—A statement, certified 

7 by the board of trustees of the plan, and a 

8 statement of actuarial opinion, signed by a 

9 qualified actuary, that all applicable require10 ments of section 806 are or will be met in ac11 cordance with regulations which the applicable 

12 authority shall prescribe. 

13 ‘‘(B) ADEQUACY OF CONTRIBUTION

14 RATES.—A statement of actuarial opinion, 

15 signed by a qualified actuary, which sets forth 

16 a description of the extent to which contribution 

17 rates are adequate to provide for the payment 

18 of all obligations and the maintenance of re19 quired reserves under the plan for the 12- 

20 month period beginning with such date within 

21 such 120-day period, taking into account the 

22 expected coverage and experience of the plan. If 

23 the contribution rates are not fully adequate, 

24 the statement of actuarial opinion shall indicate 


rfrederick on DSKD9S0YB1PROD with BILLS
108 

•HR 4529 IH

1 the extent to which the rates are inadequate 

2 and the changes needed to ensure adequacy. 

3 ‘‘(C) CURRENT AND PROJECTED VALUE OF

4 ASSETS AND LIABILITIES.—A statement of ac5 tuarial opinion signed by a qualified actuary, 

6 which sets forth the current value of the assets 

7 and liabilities accumulated under the plan and 

8 a projection of the assets, liabilities, income, 

9 and expenses of the plan for the 12-month pe10 riod referred to in subparagraph (B). The in11 come statement shall identify separately the 

12 plan’s administrative expenses and claims. 

13 ‘‘(D) COSTS OF COVERAGE TO BE

14 CHARGED AND OTHER EXPENSES.—A state15 ment of the costs of coverage to be charged, in16 cluding an itemization of amounts for adminis17 tration, reserves, and other expenses associated 

18 with the operation of the plan. 

19 ‘‘(E) OTHER INFORMATION.—Any other 

20 information as may be determined by the appli21 cable authority, by regulation, as necessary to 

22 carry out the purposes of this part. 

23 ‘‘(c) FILING NOTICE OF CERTIFICATION WITH

24 STATES.—A certification granted under this part to an 

25 association health plan shall not be effective unless written 


rfrederick on DSKD9S0YB1PROD with BILLS
109 

•HR 4529 IH

1 notice of such certification is filed with the applicable 

2 State authority of each State in which at least 25 percent 

3 of the participants and beneficiaries under the plan are 

4 located. For purposes of this subsection, an individual 

5 shall be considered to be located in the State in which a 

6 known address of such individual is located or in which 

7 such individual is employed. 

8 ‘‘(d) NOTICE OF MATERIAL CHANGES.—In the case 

9 of any association health plan certified under this part, 

10 descriptions of material changes in any information which 

11 was required to be submitted with the application for the 

12 certification under this part shall be filed in such form 

13 and manner as shall be prescribed by the applicable au14 thority by regulation. The applicable authority may re15 quire by regulation prior notice of material changes with 

16 respect to specified matters which might serve as the basis 

17 for suspension or revocation of the certification. 

18 ‘‘(e) REPORTING REQUIREMENTS FOR CERTAIN AS19 SOCIATION HEALTH PLANS.—An association health plan 

20 certified under this part which provides benefit options in 

21 addition to health insurance coverage for such plan year 

22 shall meet the requirements of section 103 by filing an 

23 annual report under such section which shall include infor24 mation described in subsection (b)(6) with respect to the 

25 plan year and, notwithstanding section 104(a)(1)(A), shall 


rfrederick on DSKD9S0YB1PROD with BILLS
110 

•HR 4529 IH

1 be filed with the applicable authority not later than 90 

2 days after the close of the plan year (or on such later date 

3 as may be prescribed by the applicable authority). The ap4 plicable authority may require by regulation such interim 

5 reports as it considers appropriate. 

6 ‘‘(f) ENGAGEMENT OF QUALIFIED ACTUARY.—The 

7 board of trustees of each association health plan which 

8 provides benefits options in addition to health insurance 

9 coverage and which is applying for certification under this 

10 part or is certified under this part shall engage, on behalf 

11 of all participants and beneficiaries, a qualified actuary 

12 who shall be responsible for the preparation of the mate13 rials comprising information necessary to be submitted by 

14 a qualified actuary under this part. The qualified actuary 

15 shall utilize such assumptions and techniques as are nec16 essary to enable such actuary to form an opinion as to 

17 whether the contents of the matters reported under this 

18 part— 

19 ‘‘(1) are in the aggregate reasonably related to 

20 the experience of the plan and to reasonable expecta21 tions; and 

22 ‘‘(2) represent such actuary’s best estimate of 

23 anticipated experience under the plan. 

24 The opinion by the qualified actuary shall be made with 

25 respect to, and shall be made a part of, the annual report. 


rfrederick on DSKD9S0YB1PROD with BILLS
111 

•HR 4529 IH

1 ‘‘SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TER2 MINATION. 

3 ‘‘Except as provided in section 809(b), an association 

4 health plan which is or has been certified under this part 

5 may terminate (upon or at any time after cessation of ac6 cruals in benefit liabilities) only if the board of trustees, 

7 not less than 60 days before the proposed termination 

8 date— 

9 ‘‘(1) provides to the participants and bene10 ficiaries a written notice of intent to terminate stat11 ing that such termination is intended and the pro12 posed termination date; 

13 ‘‘(2) develops a plan for winding up the affairs 

14 of the plan in connection with such termination in 

15 a manner which will result in timely payment of all 

16 benefits for which the plan is obligated; and 

17 ‘‘(3) submits such plan in writing to the appli18 cable authority. 

19 Actions required under this section shall be taken in such 

20 form and manner as may be prescribed by the applicable 

21 authority by regulation. 

22 ‘‘SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMI23 NATION. 

24 ‘‘(a) ACTIONS TO AVOID DEPLETION OF RE25 SERVES.—An association health plan which is certified 

26 under this part and which provides benefits other than 


rfrederick on DSKD9S0YB1PROD with BILLS
112 

•HR 4529 IH

1 health insurance coverage shall continue to meet the re2 quirements of section 806, irrespective of whether such 

3 certification continues in effect. The board of trustees of 

4 such plan shall determine quarterly whether the require5 ments of section 806 are met. In any case in which the 

6 board determines that there is reason to believe that there 

7 is or will be a failure to meet such requirements, or the 

8 applicable authority makes such a determination and so 

9 notifies the board, the board shall immediately notify the 

10 qualified actuary engaged by the plan, and such actuary 

11 shall, not later than the end of the next following month, 

12 make such recommendations to the board for corrective 

13 action as the actuary determines necessary to ensure com14 pliance with section 806. Not later than 30 days after re15 ceiving from the actuary recommendations for corrective 

16 actions, the board shall notify the applicable authority (in 

17 such form and manner as the applicable authority may 

18 prescribe by regulation) of such recommendations of the 

19 actuary for corrective action, together with a description 

20 of the actions (if any) that the board has taken or plans 

21 to take in response to such recommendations. The board 

22 shall thereafter report to the applicable authority, in such 

23 form and frequency as the applicable authority may speci24 fy to the board, regarding corrective action taken by the 

25 board until the requirements of section 806 are met. 


rfrederick on DSKD9S0YB1PROD with BILLS
113 

•HR 4529 IH

1 ‘‘(b) MANDATORY TERMINATION.—In any case in 

2 which— 

3 ‘‘(1) the applicable authority has been notified 

4 under subsection (a) (or by an issuer of excess/stop 

5 loss insurance or indemnity insurance pursuant to 

6 section 806(a)) of a failure of an association health 

7 plan which is or has been certified under this part 

8 and is described in section 806(a)(2) to meet the re9 quirements of section 806 and has not been notified 

10 by the board of trustees of the plan that corrective 

11 action has restored compliance with such require12 ments; and 

13 ‘‘(2) the applicable authority determines that 

14 there is a reasonable expectation that the plan will 

15 continue to fail to meet the requirements of section 

16 806, 

17 the board of trustees of the plan shall, at the direction 

18 of the applicable authority, terminate the plan and, in the 

19 course of the termination, take such actions as the appli20 cable authority may require, including satisfying any 

21 claims referred to in section 806(a)(2)(B)(iii) and recov22 ering for the plan any liability under subsection 

23 (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 

24 that the affairs of the plan will be, to the maximum extent 


rfrederick on DSKD9S0YB1PROD with BILLS
114 

•HR 4529 IH

1 possible, wound up in a manner which will result in timely 

2 provision of all benefits for which the plan is obligated. 

3 ‘‘SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOL4 VENT ASSOCIATION HEALTH PLANS PRO5 VIDING HEALTH BENEFITS IN ADDITION TO 

6 HEALTH INSURANCE COVERAGE. 

7 ‘‘(a) APPOINTMENT OF SECRETARY AS TRUSTEE FOR

8 INSOLVENT PLANS.—Whenever the Secretary determines 

9 that an association health plan which is or has been cer10 tified under this part and which is described in section 

11 806(a)(2) will be unable to provide benefits when due or 

12 is otherwise in a financially hazardous condition, as shall 

13 be defined by the Secretary by regulation, the Secretary 

14 shall, upon notice to the plan, apply to the appropriate 

15 United States district court for appointment of the Sec16 retary as trustee to administer the plan for the duration 

17 of the insolvency. The plan may appear as a party and 

18 other interested persons may intervene in the proceedings 

19 at the discretion of the court. The court shall appoint such 

20 Secretary trustee if the court determines that the trustee21 ship is necessary to protect the interests of the partici22 pants and beneficiaries or providers of medical care or to 

23 avoid any unreasonable deterioration of the financial con24 dition of the plan. The trusteeship of such Secretary shall 

25 continue until the conditions described in the first senVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00114 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
115 

•HR 4529 IH

1 tence of this subsection are remedied or the plan is termi2 nated. 

3 ‘‘(b) POWERS AS TRUSTEE.—The Secretary, upon 

4 appointment as trustee under subsection (a), shall have 

5 the power— 

6 ‘‘(1) to do any act authorized by the plan, this 

7 title, or other applicable provisions of law to be done 

8 by the plan administrator or any trustee of the plan; 

9 ‘‘(2) to require the transfer of all (or any part) 

10 of the assets and records of the plan to the Sec11 retary as trustee; 

12 ‘‘(3) to invest any assets of the plan which the 

13 Secretary holds in accordance with the provisions of 

14 the plan, regulations prescribed by the Secretary, 

15 and applicable provisions of law; 

16 ‘‘(4) to require the sponsor, the plan adminis17 trator, any participating employer, and any employee 

18 organization representing plan participants to fur19 nish any information with respect to the plan which 

20 the Secretary as trustee may reasonably need in 

21 order to administer the plan; 

22 ‘‘(5) to collect for the plan any amounts due the 

23 plan and to recover reasonable expenses of the trust24 eeship; 


rfrederick on DSKD9S0YB1PROD with BILLS
116 

•HR 4529 IH

1 ‘‘(6) to commence, prosecute, or defend on be2 half of the plan any suit or proceeding involving the 

3 plan; 

4 ‘‘(7) to issue, publish, or file such notices, state5 ments, and reports as may be required by the Sec6 retary by regulation or required by any order of the 

7 court; 

8 ‘‘(8) to terminate the plan (or provide for its 

9 termination in accordance with section 809(b)) and 

10 liquidate the plan assets, to restore the plan to the 

11 responsibility of the sponsor, or to continue the 

12 trusteeship; 

13 ‘‘(9) to provide for the enrollment of plan par14 ticipants and beneficiaries under appropriate cov15 erage options; and 

16 ‘‘(10) to do such other acts as may be nec17 essary to comply with this title or any order of the 

18 court and to protect the interests of plan partici19 pants and beneficiaries and providers of medical 

20 care. 

21 ‘‘(c) NOTICE OF APPOINTMENT.—As soon as prac22 ticable after the Secretary’s appointment as trustee, the 

23 Secretary shall give notice of such appointment to— 

24 ‘‘(1) the sponsor and plan administrator; 

25 ‘‘(2) each participant; 


rfrederick on DSKD9S0YB1PROD with BILLS
117 

•HR 4529 IH

1 ‘‘(3) each participating employer; and 

2 ‘‘(4) if applicable, each employee organization 

3 which, for purposes of collective bargaining, rep4 resents plan participants. 

5 ‘‘(d) ADDITIONAL DUTIES.—Except to the extent in6 consistent with the provisions of this title, or as may be 

7 otherwise ordered by the court, the Secretary, upon ap8 pointment as trustee under this section, shall be subject 

9 to the same duties as those of a trustee under section 704 

10 of title 11, United States Code, and shall have the duties 

11 of a fiduciary for purposes of this title. 

12 ‘‘(e) OTHER PROCEEDINGS.—An application by the 

13 Secretary under this subsection may be filed notwith14 standing the pendency in the same or any other court of 

15 any bankruptcy, mortgage foreclosure, or equity receiver16 ship proceeding, or any proceeding to reorganize, conserve, 

17 or liquidate such plan or its property, or any proceeding 

18 to enforce a lien against property of the plan. 

19 ‘‘(f) JURISDICTION OF COURT.— 

20 ‘‘(1) IN GENERAL.—Upon the filing of an appli21 cation for the appointment as trustee or the issuance 

22 of a decree under this section, the court to which the 

23 application is made shall have exclusive jurisdiction 

24 of the plan involved and its property wherever lo25 cated with the powers, to the extent consistent with 


rfrederick on DSKD9S0YB1PROD with BILLS
118 

•HR 4529 IH

1 the purposes of this section, of a court of the United 

2 States having jurisdiction over cases under chapter 

3 11 of title 11, United States Code. Pending an adju4 dication under this section such court shall stay, and 

5 upon appointment by it of the Secretary as trustee, 

6 such court shall continue the stay of, any pending 

7 mortgage foreclosure, equity receivership, or other 

8 proceeding to reorganize, conserve, or liquidate the 

9 plan, the sponsor, or property of such plan or spon10 sor, and any other suit against any receiver, conser11 vator, or trustee of the plan, the sponsor, or prop12 erty of the plan or sponsor. Pending such adjudica13 tion and upon the appointment by it of the Sec14 retary as trustee, the court may stay any proceeding 

15 to enforce a lien against property of the plan or the 

16 sponsor or any other suit against the plan or the 

17 sponsor. 

18 ‘‘(2) VENUE.—An action under this section 

19 may be brought in the judicial district where the 

20 sponsor or the plan administrator resides or does 

21 business or where any asset of the plan is situated. 

22 A district court in which such action is brought may 

23 issue process with respect to such action in any 

24 other judicial district. 


rfrederick on DSKD9S0YB1PROD with BILLS
119 

•HR 4529 IH

1 ‘‘(g) PERSONNEL.—In accordance with regulations 

2 which shall be prescribed by the Secretary, the Secretary 

3 shall appoint, retain, and compensate accountants, actu4 aries, and other professional service personnel as may be 

5 necessary in connection with the Secretary’s service as 

6 trustee under this section. 

7 ‘‘SEC. 811. STATE ASSESSMENT AUTHORITY. 

8 ‘‘(a) IN GENERAL.—Notwithstanding section 514, a 

9 State may impose by law a contribution tax on an associa10 tion health plan described in section 806(a)(2), if the plan 

11 commenced operations in such State after the date of the 

12 enactment of this part. 

13 ‘‘(b) CONTRIBUTION TAX.—For purposes of this sec14 tion, the term ‘contribution tax’ imposed by a State on 

15 an association health plan means any tax imposed by such 

16 State if— 

17 ‘‘(1) such tax is computed by applying a rate to 

18 the amount of premiums or contributions, with re19 spect to individuals covered under the plan who are 

20 residents of such State, which are received by the 

21 plan from participating employers located in such 

22 State or from such individuals; 

23 ‘‘(2) the rate of such tax does not exceed the 

24 rate of any tax imposed by such State on premiums 

25 or contributions received by insurers or health mainVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00119 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
120 

•HR 4529 IH

1 tenance organizations for health insurance coverage 

2 offered in such State in connection with a group 

3 health plan; 

4 ‘‘(3) such tax is otherwise nondiscriminatory; 

5 and 

6 ‘‘(4) the amount of any such tax assessed on 

7 the plan is reduced by the amount of any tax or as8 sessment otherwise imposed by the State on pre9 miums, contributions, or both received by insurers or 

10 health maintenance organizations for health insur11 ance coverage, aggregate excess/stop loss insurance 

12 (as defined in section 806(g)(1)), specific excess/stop 

13 loss insurance (as defined in section 806(g)(2)), 

14 other insurance related to the provision of medical 

15 care under the plan, or any combination thereof pro16 vided by such insurers or health maintenance organi17 zations in such State in connection with such plan. 

18 ‘‘SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION. 

19 ‘‘(a) DEFINITIONS.—For purposes of this part— 

20 ‘‘(1) GROUP HEALTH PLAN.—The term ‘group 

21 health plan’ has the meaning provided in section 

22 733(a)(1) (after applying subsection (b) of this sec23 tion). 

24 ‘‘(2) MEDICAL CARE.—The term ‘medical care’ 

25 has the meaning provided in section 733(a)(2). 


rfrederick on DSKD9S0YB1PROD with BILLS
121 

•HR 4529 IH

1 ‘‘(3) HEALTH INSURANCE COVERAGE.—The 

2 term ‘health insurance coverage’ has the meaning 

3 provided in section 733(b)(1). 

4 ‘‘(4) HEALTH INSURANCE ISSUER.—The term 

5 ‘health insurance issuer’ has the meaning provided 

6 in section 733(b)(2). 

7 ‘‘(5) APPLICABLE AUTHORITY.—The term ‘ap8 plicable authority’ means the Secretary, except that, 

9 in connection with any exercise of the Secretary’s 

10 authority regarding which the Secretary is required 

11 under section 506(d) to consult with a State, such 

12 term means the Secretary, in consultation with such 

13 State. 

14 ‘‘(6) HEALTH STATUS-RELATED FACTOR.—The 

15 term ‘health status-related factor’ has the meaning 

16 provided in section 733(d)(2). 

17 ‘‘(7) INDIVIDUAL MARKET.— 

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

19 market’ means the market for health insurance 

20 coverage offered to individuals other than in 

21 connection with a group health plan. 

22 ‘‘(B) TREATMENT OF VERY SMALL

23 GROUPS.— 

24 ‘‘(i) IN GENERAL.—Subject to clause 

25 (ii), such term includes coverage offered in 


rfrederick on DSKD9S0YB1PROD with BILLS
122 

•HR 4529 IH

1 connection with a group health plan that 

2 has fewer than 2 participants as current 

3 employees or participants described in sec4 tion 732(d)(3) on the first day of the plan 

5 year. 

6 ‘‘(ii) STATE EXCEPTION.—Clause (i) 

7 shall not apply in the case of health insur8 ance coverage offered in a State if such 

9 State regulates the coverage described in 

10 such clause in the same manner and to the 

11 same extent as coverage in the small group 

12 market (as defined in section 2791(e)(5) of 

13 the Public Health Service Act) is regulated 

14 by such State. 

15 ‘‘(8) PARTICIPATING EMPLOYER.—The term 

16 ‘participating employer’ means, in connection with 

17 an association health plan, any employer, if any indi18 vidual who is an employee of such employer, a part19 ner in such employer, or a self-employed individual 

20 who is such employer (or any dependent, as defined 

21 under the terms of the plan, of such individual) is 

22 or was covered under such plan in connection with 

23 the status of such individual as such an employee, 

24 partner, or self-employed individual in relation to the 

25 plan. 


rfrederick on DSKD9S0YB1PROD with BILLS
123 

•HR 4529 IH

1 ‘‘(9) APPLICABLE STATE AUTHORITY.—The 

2 term ‘applicable State authority’ means, with respect 

3 to a health insurance issuer in a State, the State in4 surance commissioner or official or officials des5 ignated by the State to enforce the requirements of 

6 title XXVII of the Public Health Service Act for the 

7 State involved with respect to such issuer. 

8 ‘‘(10) QUALIFIED ACTUARY.—The term ‘quali9 fied actuary’ means an individual who is a member 

10 of the American Academy of Actuaries. 

11 ‘‘(11) AFFILIATED MEMBER.—The term ‘affili12 ated member’ means, in connection with a sponsor— 

13 ‘‘(A) a person who is otherwise eligible to 

14 be a member of the sponsor but who elects an 

15 affiliated status with the sponsor, 

16 ‘‘(B) in the case of a sponsor with mem17 bers which consist of associations, a person who 

18 is a member of any such association and elects 

19 an affiliated status with the sponsor, or 

20 ‘‘(C) in the case of an association health 

21 plan in existence on the date of the enactment 

22 of this part, a person eligible to be a member 

23 of the sponsor or one of its member associa24 tions. 


rfrederick on DSKD9S0YB1PROD with BILLS
124 

•HR 4529 IH

1 ‘‘(12) LARGE EMPLOYER.—The term ‘large em2 ployer’ means, in connection with a group health 

3 plan with respect to a plan year, an employer who 

4 employed an average of at least 51 employees on 

5 business days during the preceding calendar year 

6 and who employs at least 2 employees on the first 

7 day of the plan year. 

8 ‘‘(13) SMALL EMPLOYER.—The term ‘small em9 ployer’ means, in connection with a group health 

10 plan with respect to a plan year, an employer who 

11 is not a large employer. 

12 ‘‘(b) RULES OF CONSTRUCTION.— 

13 ‘‘(1) EMPLOYERS AND EMPLOYEES.—For pur14 poses of determining whether a plan, fund, or pro15 gram is an employee welfare benefit plan which is an 

16 association health plan, and for purposes of applying 

17 this title in connection with such plan, fund, or pro18 gram so determined to be such an employee welfare 

19 benefit plan— 

20 ‘‘(A) in the case of a partnership, the term 

21 ‘employer’ (as defined in section 3(5)) includes 

22 the partnership in relation to the partners, and 

23 the term ‘employee’ (as defined in section 3(6)) 

24 includes any partner in relation to the partner25 ship; and 


rfrederick on DSKD9S0YB1PROD with BILLS
125 

•HR 4529 IH

1 ‘‘(B) in the case of a self-employed indi2 vidual, the term ‘employer’ (as defined in sec3 tion 3(5)) and the term ‘employee’ (as defined 

4 in section 3(6)) shall include such individual. 

5 ‘‘(2) PLANS, FUNDS, AND PROGRAMS TREATED

6 AS EMPLOYEE WELFARE BENEFIT PLANS.—In the 

7 case of any plan, fund, or program which was estab8 lished or is maintained for the purpose of providing 

9 medical care (through the purchase of insurance or 

10 otherwise) for employees (or their dependents) cov11 ered thereunder and which demonstrates to the Sec12 retary that all requirements for certification under 

13 this part would be met with respect to such plan, 

14 fund, or program if such plan, fund, or program 

15 were a group health plan, such plan, fund, or pro16 gram shall be treated for purposes of this title as an 

17 employee welfare benefit plan on and after the date 

18 of such demonstration.’’. 

19 (2) CONFORMING AMENDMENTS TO PREEMP20 TION RULES.— 

21 (A) Section 514(b)(6) of such Act (29 

22 U.S.C. 1144(b)(6)) is amended by adding at 

23 the end the following new subparagraph: 

24 ‘‘(E) The preceding subparagraphs of this paragraph 

25 do not apply with respect to any State law in the case 


rfrederick on DSKD9S0YB1PROD with BILLS
126 

•HR 4529 IH

1 of an association health plan which is certified under part 

2 8.’’. 

3 (B) Section 514 of such Act (29 U.S.C. 

4 1144) is amended— 

5 (i) in subsection (b)(4), by striking 

6 ‘‘Subsection (a)’’ and inserting ‘‘Sub7 sections (a) and (d)’’; 

8 (ii) in subsection (b)(5), by striking 

9 ‘‘subsection (a)’’ in subparagraph (A) and 

10 inserting ‘‘subsection (a) of this section 

11 and subsections (a)(2)(B) and (b) of sec12 tion 805’’, and by striking ‘‘subsection (a)’’ 

13 in subparagraph (B) and inserting ‘‘sub14 section (a) of this section or subsection 

15 (a)(2)(B) or (b) of section 805’’; 

16 (iii) by redesignating subsection (d) as 

17 subsection (e); and 

18 (iv) by inserting after subsection (c) 

19 the following new subsection: 

20 ‘‘(d)(1) Except as provided in subsection (b)(4), the 

21 provisions of this title shall supersede any and all State 

22 laws insofar as they may now or hereafter preclude, or 

23 have the effect of precluding, a health insurance issuer 

24 from offering health insurance coverage in connection with 


rfrederick on DSKD9S0YB1PROD with BILLS
127 

•HR 4529 IH

1 an association health plan which is certified under part 

2 8. 

3 ‘‘(2) Except as provided in paragraphs (4) and (5) 

4 of subsection (b) of this section— 

5 ‘‘(A) In any case in which health insurance cov6 erage of any policy type is offered under an associa7 tion health plan certified under part 8 to a partici8 pating employer operating in such State, the provi9 sions of this title shall supersede any and all laws 

10 of such State insofar as they may preclude a health 

11 insurance issuer from offering health insurance cov12 erage of the same policy type to other employers op13 erating in the State which are eligible for coverage 

14 under such association health plan, whether or not 

15 such other employers are participating employers in 

16 such plan. 

17 ‘‘(B) In any case in which health insurance cov18 erage of any policy type is offered in a State under 

19 an association health plan certified under part 8 and 

20 the filing, with the applicable State authority (as de21 fined in section 812(a)(9)), of the policy form in 

22 connection with such policy type is approved by such 

23 State authority, the provisions of this title shall su24 persede any and all laws of any other State in which 

25 health insurance coverage of such type is offered, inVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00127 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
128 

•HR 4529 IH

1 sofar as they may preclude, upon the filing in the 

2 same form and manner of such policy form with the 

3 applicable State authority in such other State, the 

4 approval of the filing in such other State. 

5 ‘‘(3) Nothing in subsection (b)(6)(E) or the preceding 

6 provisions of this subsection shall be construed, with re7 spect to health insurance issuers or health insurance cov8 erage, to supersede or impair the law of any State— 

9 ‘‘(A) providing solvency standards or similar 

10 standards regarding the adequacy of insurer capital, 

11 surplus, reserves, or contributions, or 

12 ‘‘(B) relating to prompt payment of claims. 

13 ‘‘(4) For additional provisions relating to association 

14 health plans, see subsections (a)(2)(B) and (b) of section 

15 805. 

16 ‘‘(5) For purposes of this subsection, the term ‘asso17 ciation health plan’ has the meaning provided in section 

18 801(a), and the terms ‘health insurance coverage’, ‘par19 ticipating employer’, and ‘health insurance issuer’ have 

20 the meanings provided such terms in section 812, respec21 tively.’’. 

22 (C) Section 514(b)(6)(A) of such Act (29 

23 U.S.C. 1144(b)(6)(A)) is amended— 

24 (i) in clause (i)(II), by striking ‘‘and’’ 

25 at the end; 


rfrederick on DSKD9S0YB1PROD with BILLS
129 

•HR 4529 IH

1 (ii) in clause (ii), by inserting ‘‘and 

2 which does not provide medical care (with3 in the meaning of section 733(a)(2)),’’ 

4 after ‘‘arrangement,’’, and by striking 

5 ‘‘title.’’ and inserting ‘‘title, and’’; and 

6 (iii) by adding at the end the fol7 lowing new clause: 

8 ‘‘(iii) subject to subparagraph (E), in the case 

9 of any other employee welfare benefit plan which is 

10 a multiple employer welfare arrangement and which 

11 provides medical care (within the meaning of section 

12 733(a)(2)), any law of any State which regulates in13 surance may apply.’’. 

14 (D) Section 514(e) of such Act (as redesig15 nated by subparagraph (B)(iii)) is amended— 

16 (i) by striking ‘‘Nothing’’ and insert17 ing ‘‘(1) Except as provided in paragraph 

18 (2), nothing’’; and 

19 (ii) by adding at the end the following 

20 new paragraph: 

21 ‘‘(2) Nothing in any other provision of law enacted 

22 on or after the date of the enactment of part 8 shall be 

23 construed to alter, amend, modify, invalidate, impair, or 

24 supersede any provision of this title, except by specific 

25 cross-reference to the affected section.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
130 

•HR 4529 IH

1 (3) PLAN SPONSOR.—Section 3(16)(B) of such 

2 Act (29 U.S.C. 102(16)(B)) is amended by adding 

3 at the end the following new sentence: ‘‘Such term 

4 also includes a person serving as the sponsor of an 

5 association health plan under part 8.’’. 

6 (4) DISCLOSURE OF SOLVENCY PROTECTIONS

7 RELATED TO SELF-INSURED AND FULLY INSURED

8 OPTIONS UNDER ASSOCIATION HEALTH PLANS.— 

9 Section 102(b) of such Act (29 U.S.C. 102(b)) is 

10 amended by adding at the end the following: ‘‘An as11 sociation health plan shall include in its summary 

12 plan description, in connection with each benefit op13 tion, a description of the form of solvency or guar14 antee fund protection secured pursuant to this Act 

15 or applicable State law, if any.’’. 

16 (5) SAVINGS CLAUSE.—Section 731(c) of such 

17 Act is amended by inserting ‘‘or part 8’’ after ‘‘this 

18 part’’. 

19 (6) REPORT TO THE CONGRESS REGARDING

20 CERTIFICATION OF SELF-INSURED ASSOCIATION

21 HEALTH PLANS.—Not later than January 1, 2012, 

22 the Secretary of Labor shall report to the Committee 

23 on Education and the Workforce of the House of 

24 Representatives and the Committee on Health, Edu25 cation, Labor, and Pensions of the Senate the effect 


rfrederick on DSKD9S0YB1PROD with BILLS
131 

•HR 4529 IH

1 association health plans have had, if any, on reduc2 ing the number of uninsured individuals. 

3 (7) CLERICAL AMENDMENT.—The table of con4 tents in section 1 of the Employee Retirement In5 come Security Act of 1974 is amended by inserting 

6 after the item relating to section 734 the following 

7 new items: 

‘‘PART 8—RULES GOVERNING ASSOCIATION HEALTH PLANS

‘‘801. Association health plans. 

‘‘802. Certification of association health plans. 

‘‘803. Requirements relating to sponsors and boards of trustees. 

‘‘804. Participation and coverage requirements. 

‘‘805. Other requirements relating to plan documents, contribution rates, and 

benefit options. 

‘‘806. Maintenance of reserves and provisions for solvency for plans providing 

health benefits in addition to health insurance coverage. 

‘‘807. Requirements for application and related requirements. 

‘‘808. Notice requirements for voluntary termination. 

‘‘809. Corrective actions and mandatory termination. 

‘‘810. Trusteeship by the Secretary of insolvent association health plans providing health benefits in addition to health insurance coverage. 

‘‘811. State assessment authority. 

‘‘812. Definitions and rules of construction.’’. 

8 (b) CLARIFICATION OF TREATMENT OF SINGLE EM9 PLOYER ARRANGEMENTS.—Section 3(40)(B) of the Em10 ployee Retirement Income Security Act of 1974 (29 

11 U.S.C. 1002(40)(B)) is amended— 

12 (1) in clause (i), by inserting after ‘‘control 

13 group,’’ the following: ‘‘except that, in any case in 

14 which the benefit referred to in subparagraph (A) 

15 consists of medical care (as defined in section 

16 812(a)(2)), two or more trades or businesses, wheth17 er or not incorporated, shall be deemed a single emVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00131 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
132 

•HR 4529 IH

1 ployer for any plan year of such plan, or any fiscal 

2 year of such other arrangement, if such trades or 

3 businesses are within the same control group during 

4 such year or at any time during the preceding 1-year 

5 period,’’; 

6 (2) in clause (iii), by striking ‘‘(iii) the deter7 mination’’ and inserting the following: 

8 ‘‘(iii)(I) in any case in which the benefit re9 ferred to in subparagraph (A) consists of medical 

10 care (as defined in section 812(a)(2)), the deter11 mination of whether a trade or business is under 

12 ‘common control’ with another trade or business 

13 shall be determined under regulations of the Sec14 retary applying principles consistent and coextensive 

15 with the principles applied in determining whether 

16 employees of two or more trades or businesses are 

17 treated as employed by a single employer under sec18 tion 4001(b), except that, for purposes of this para19 graph, an interest of greater than 25 percent may 

20 not be required as the minimum interest necessary 

21 for common control, or 

22 ‘‘(II) in any other case, the determination’’; 

23 (3) by redesignating clauses (iv) and (v) as 

24 clauses (v) and (vi), respectively; and 


rfrederick on DSKD9S0YB1PROD with BILLS
133 

•HR 4529 IH

1 (4) by inserting after clause (iii) the following 

2 new clause: 

3 ‘‘(iv) in any case in which the benefit referred 

4 to in subparagraph (A) consists of medical care (as 

5 defined in section 812(a)(2)), in determining, after 

6 the application of clause (i), whether benefits are 

7 provided to employees of two or more employers, the 

8 arrangement shall be treated as having only one par9 ticipating employer if, after the application of clause 

10 (i), the number of individuals who are employees and 

11 former employees of any one participating employer 

12 and who are covered under the arrangement is 

13 greater than 75 percent of the aggregate number of 

14 all individuals who are employees or former employ15 ees of participating employers and who are covered 

16 under the arrangement,’’. 

17 (c) ENFORCEMENT PROVISIONS RELATING TO ASSO18 CIATION HEALTH PLANS.— 

19 (1) CRIMINAL PENALTIES FOR CERTAIN WILL20 FUL MISREPRESENTATIONS.—Section 501 of the 

21 Employee Retirement Income Security Act of 1974 

22 (29 U.S.C. 1131) is amended— 

23 (A) by inserting ‘‘(a)’’ after ‘‘Sec. 501.’’; 

24 and 


rfrederick on DSKD9S0YB1PROD with BILLS
134 

•HR 4529 IH

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

2 subsection: 

3 ‘‘(b) Any person who willfully falsely represents, to 

4 any employee, any employee’s beneficiary, any employer, 

5 the Secretary, or any State, a plan or other arrangement 

6 established or maintained for the purpose of offering or 

7 providing any benefit described in section 3(1) to employ8 ees or their beneficiaries as— 

9 ‘‘(1) being an association health plan which has 

10 been certified under part 8; 

11 ‘‘(2) having been established or maintained 

12 under or pursuant to one or more collective bar13 gaining agreements which are reached pursuant to 

14 collective bargaining described in section 8(d) of the 

15 National Labor Relations Act (29 U.S.C. 158(d)) or 

16 paragraph Fourth of section 2 of the Railway Labor 

17 Act (45 U.S.C. 152, paragraph Fourth) or which are 

18 reached pursuant to labor-management negotiations 

19 under similar provisions of State public employee re20 lations laws; or 

21 ‘‘(3) being a plan or arrangement described in 

22 section 3(40)(A)(i), 

23 shall, upon conviction, be imprisoned not more than 5 

24 years, be fined under title 18, United States Code, or 

25 both.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
135 

•HR 4529 IH

1 (2) CEASE ACTIVITIES ORDERS.—Section 502 

2 of such Act (29 U.S.C. 1132) is amended by adding 

3 at the end the following new subsection: 

4 ‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE5 SIST ORDERS.— 

6 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

7 upon application by the Secretary showing the oper8 ation, promotion, or marketing of an association 

9 health plan (or similar arrangement providing bene10 fits consisting of medical care (as defined in section 

11 733(a)(2))) that— 

12 ‘‘(A) is not certified under part 8, is sub13 ject under section 514(b)(6) to the insurance 

14 laws of any State in which the plan or arrange15 ment offers or provides benefits, and is not li16 censed, registered, or otherwise approved under 

17 the insurance laws of such State; or 

18 ‘‘(B) is an association health plan certified 

19 under part 8 and is not operating in accordance 

20 with the requirements under part 8 for such 

21 certification, 

22 a district court of the United States shall enter an 

23 order requiring that the plan or arrangement cease 

24 activities. 


rfrederick on DSKD9S0YB1PROD with BILLS
136 

•HR 4529 IH

1 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

2 apply in the case of an association health plan or 

3 other arrangement if the plan or arrangement shows 

4 that— 

5 ‘‘(A) all benefits under it referred to in 

6 paragraph (1) consist of health insurance cov7 erage; and 

8 ‘‘(B) with respect to each State in which 

9 the plan or arrangement offers or provides ben10 efits, the plan or arrangement is operating in 

11 accordance with applicable State laws that are 

12 not superseded under section 514. 

13 ‘‘(3) ADDITIONAL EQUITABLE RELIEF.—The 

14 court may grant such additional equitable relief, in15 cluding any relief available under this title, as it 

16 deems necessary to protect the interests of the pub17 lic and of persons having claims for benefits against 

18 the plan.’’. 

19 (3) RESPONSIBILITY FOR CLAIMS PROCE20 DURE.—Section 503 of such Act (29 U.S.C. 1133) 

21 is amended by inserting ‘‘(a) IN GENERAL.—’’ be22 fore ‘‘In accordance’’, and by adding at the end the 

23 following new subsection: 

24 ‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 

25 each association health plan which is or has been certified 


rfrederick on DSKD9S0YB1PROD with BILLS
137 

•HR 4529 IH

1 under part 8 shall require the board of trustees or the 

2 named fiduciary (as applicable) to ensure that the require3 ments of this section are met in connection with claims 

4 filed under the plan.’’. 

5 (d) COOPERATION BETWEEN FEDERAL AND STATE

6 AUTHORITIES.—Section 506 of the Employee Retirement 

7 Income Security Act of 1974 (29 U.S.C. 1136) is amended 

8 by adding at the end the following new subsection: 

9 ‘‘(d) CONSULTATION WITH STATES WITH RESPECT

10 TO ASSOCIATION HEALTH PLANS.— 

11 ‘‘(1) AGREEMENTS WITH STATES.—The Sec12 retary shall consult with the State recognized under 

13 paragraph (2) with respect to an association health 

14 plan regarding the exercise of— 

15 ‘‘(A) the Secretary’s authority under sec16 tions 502 and 504 to enforce the requirements 

17 for certification under part 8; and 

18 ‘‘(B) the Secretary’s authority to certify 

19 association health plans under part 8 in accord20 ance with regulations of the Secretary applica21 ble to certification under part 8. 

22 ‘‘(2) RECOGNITION OF PRIMARY DOMICILE

23 STATE.—In carrying out paragraph (1), the Sec24 retary shall ensure that only one State will be recog25 nized, with respect to any particular association 


rfrederick on DSKD9S0YB1PROD with BILLS
138 

•HR 4529 IH

1 health plan, as the State with which consultation is 

2 required. In carrying out this paragraph— 

3 ‘‘(A) in the case of a plan which provides 

4 health insurance coverage (as defined in section 

5 812(a)(3)), such State shall be the State with 

6 which filing and approval of a policy type of7 fered by the plan was initially obtained, and 

8 ‘‘(B) in any other case, the Secretary shall 

9 take into account the places of residence of the 

10 participants and beneficiaries under the plan 

11 and the State in which the trust is main12 tained.’’. 

13 (e) EFFECTIVE DATE AND TRANSITIONAL AND

14 OTHER RULES.— 

15 (1) EFFECTIVE DATE.—The amendments made 

16 by this section shall take effect 1 year after the date 

17 of the enactment of this Act. The Secretary of Labor 

18 shall first issue all regulations necessary to carry out 

19 such amendments within 1 year after the date of the 

20 enactment of this Act. 

21 (2) TREATMENT OF CERTAIN EXISTING

22 HEALTH BENEFITS PROGRAMS.— 

23 (A) IN GENERAL.—In any case in which, 

24 as of the date of the enactment of this Act, an 

25 arrangement is maintained in a State for the 


rfrederick on DSKD9S0YB1PROD with BILLS
139 

•HR 4529 IH

1 purpose of providing benefits consisting of med2 ical care for the employees and beneficiaries of 

3 its participating employers, at least 200 partici4 pating employers make contributions to such 

5 arrangement, such arrangement has been in ex6 istence for at least 10 years, and such arrange7 ment is licensed under the laws of one or more 

8 States to provide such benefits to its partici9 pating employers, upon the filing with the ap10 plicable authority (as defined in section 

11 812(a)(5) of the Employee Retirement Income 

12 Security Act of 1974 (as amended by this sub13 title)) by the arrangement of an application for 

14 certification of the arrangement under part 8 of 

15 subtitle B of title I of such Act— 

16 (i) such arrangement shall be deemed 

17 to be a group health plan for purposes of 

18 title I of such Act; 

19 (ii) the requirements of sections 

20 801(a) and 803(a) of the Employee Retire21 ment Income Security Act of 1974 shall be 

22 deemed met with respect to such arrange23 ment; 

24 (iii) the requirements of section 

25 803(b) of such Act shall be deemed met, if 


rfrederick on DSKD9S0YB1PROD with BILLS
140 

•HR 4529 IH

1 the arrangement is operated by a board of 

2 directors which— 

3 (I) is elected by the participating 

4 employers, with each employer having 

5 one vote; and 

6 (II) has complete fiscal control 

7 over the arrangement and which is re8 sponsible for all operations of the ar9 rangement; 

10 (iv) the requirements of section 

11 804(a) of such Act shall be deemed met 

12 with respect to such arrangement; and 

13 (v) the arrangement may be certified 

14 by any applicable authority with respect to 

15 its operations in any State only if it oper16 ates in such State on the date of certifi17 cation. 

18 The provisions of this subparagraph shall cease 

19 to apply with respect to any such arrangement 

20 at such time after the date of the enactment of 

21 this Act as the applicable requirements of this 

22 subparagraph are not met with respect to such 

23 arrangement. 

24 (B) DEFINITIONS.—For purposes of this 

25 paragraph, the terms ‘‘group health plan’’, 


rfrederick on DSKD9S0YB1PROD with BILLS
141 

•HR 4529 IH

1 ‘‘medical care’’, and ‘‘participating employer’’ 

2 shall have the meanings provided in section 812 

3 of the Employee Retirement Income Security 

4 Act of 1974, except that the reference in para5 graph (7) of such section to an ‘‘association 

6 health plan’’ shall be deemed a reference to an 

7 arrangement referred to in this paragraph. 

8 SEC. 133. REPEAL OF CERTAIN TAX EXEMPTIONS FOR 

9 HEALTH INSURANCE PAYMENTS. 

10 (a) FICA DEFINITION OF WAGES.—Paragraphs (2) 

11 and (4) of sections 3121(a)of the Internal Revenue Code 

12 of 1986 (relating to tax on employers and employees) are 

13 hereby repealed. 

14 (b) CONFORMING AMENDMENTS.—Section 3401 of 

15 the Internal Revenue Code of 1986 (relating to the collec16 tion of wages at source) is amended by striking paragraph 

17 (20) and redesignating paragraphs (21), (22), and (23)as 

18 paragraphs (20), (21), and (22), respectively. 

19 (c) APPLICABLE DATE.—The amendments made by 

20 this section shall apply to taxable years beginning after 

21 December 31, 2010. 


rfrederick on DSKD9S0YB1PROD with BILLS
142 

•HR 4529 IH

1 Subtitle C—Health Care Services 

2 Commission 

3 PART I—ESTABLISHMENT AND GENERAL DUTIES 

4 SEC. 141. ESTABLISHMENT. 

5 (a) IN GENERAL.—There is hereby established a 

6 Health Care Services Commission (in this subtitle referred 

7 to as the ‘‘Commission’’) to be composed of five commis8 sioners (in this subtitle referred to as the ‘‘Commis9 sioners’’) to be appointed by the President by and with 

10 the advice and consent of the Senate. Not more than three 

11 of such commissioners shall be members of the same polit12 ical party, and in making appointments members of dif13 ferent political parties shall be appointed alternately as 

14 nearly as may be practicable. No commissioner shall en15 gage in any other business, vocation, or employment than 

16 that of serving as commissioner. Each commissioner shall 

17 hold office for a term of five years and until his successor 

18 is appointed and has qualified, except that he shall not 

19 so continue to serve beyond the expiration of the next ses20 sion of Congress subsequent to the expiration of said fixed 

21 term of office, and except (1) any commissioner appointed 

22 to fill a vacancy occurring prior to the expiration of the 

23 term for which his predecessor was appointed shall be ap24 pointed for the remainder of such term, and (2) the terms 

25 of office of the commissioners first taking office after the 


rfrederick on DSKD9S0YB1PROD with BILLS
143 

•HR 4529 IH

1 enactment of this subtitle shall expire as designated by 

2 the President at the time of nomination, one at the end 

3 of one year, one at the end of two years, one at the end 

4 of three years, one at the end of four years, and one at 

5 the end of five years, after the date of the enactment of 

6 this Act. 

7 (b) PURPOSE.—The purpose of the Commission is to 

8 enhance the quality, appropriateness, and effectiveness of 

9 health care services, and access to such services, through 

10 the establishment of a broad base of scientific research 

11 and through the promotion of improvements in clinical 

12 practice and in the organization, financing, and delivery 

13 of health care services. 

14 (c) APPOINTMENT OF CHAIRMAN.—The President 

15 shall, from among the Commissioners appointed under 

16 subsection (a), designate an individual to serve as the 

17 Chairman of the Commission. 

18 SEC. 142. GENERAL AUTHORITIES AND DUTIES. 

19 (a) IN GENERAL.—In carrying out section 141(b), 

20 the Commissioners shall conduct and support research, 

21 demonstration projects, evaluations, training, guideline de22 velopment, and the dissemination of information, on 

23 health care services and on systems for the delivery of 

24 such services, including activities with respect to— 


rfrederick on DSKD9S0YB1PROD with BILLS
144 

•HR 4529 IH

1 (1) the effectiveness, efficiency, and quality of 

2 health care services; 

3 (2) subject to subsection (b), the outcomes of 

4 health care services and procedures; 

5 (3) clinical practice, including primary care and 

6 practice-oriented research; 

7 (4) health care technologies, facilities, and 

8 equipment; 

9 (5) health care costs, productivity, and market 

10 forces; 

11 (6) health promotion and disease prevention; 

12 (7) health statistics and epidemiology; and 

13 (8) medical liability. 

14 (b) REQUIREMENTS WITH RESPECT TO RURAL

15 AREAS AND UNDERSERVED POPULATIONS.—In carrying 

16 out subsection (a), the Commissioners shall undertake and 

17 support research, demonstration projects, and evaluations 

18 with respect to— 

19 (1) the delivery of health care services in rural 

20 areas (including frontier areas); and 

21 (2) the health of low-income groups, minority 

22 groups, and the elderly. 

23 SEC. 143. DISSEMINATION. 

24 (a) IN GENERAL.—The Commissioners shall— 


rfrederick on DSKD9S0YB1PROD with BILLS
145 

•HR 4529 IH

1 (1) promptly publish, make available, and oth2 erwise disseminate, in a form understandable and on 

3 as broad a basis as practicable so as to maximize its 

4 use, the results of research, demonstration projects, 

5 and evaluations conducted or supported under this 

6 subtitle and the guidelines, standards, and review 

7 criteria developed under this subtitle; 

8 (2) promptly make available to the public data 

9 developed in such research, demonstration projects, 

10 and evaluations; and 

11 (3) as appropriate, provide technical assistance 

12 to State and local government and health agencies 

13 and conduct liaison activities to such agencies to fos14 ter dissemination. 

15 (b) PROHIBITION AGAINST RESTRICTIONS.—Except 

16 as provided in subsection (c), the Commissioners may not 

17 restrict the publication or dissemination of data from, or 

18 the results of, projects conducted or supported under this 

19 subtitle. 

20 (c) LIMITATION ON USE OF CERTAIN INFORMA21 TION.—No information, if an establishment or person sup22 plying the information or described in it is identifiable, 

23 obtained in the course of activities undertaken or sup24 ported under this subtitle may be used for any purpose 

25 other than the purpose for which it was supplied unless 


rfrederick on DSKD9S0YB1PROD with BILLS
146 

•HR 4529 IH

1 such establishment or person has consented (as deter2 mined under regulations of the Secretary) to its use for 

3 such other purpose. Such information may not be pub4 lished or released in other form if the person who supplied 

5 the information or who is described in it is identifiable 

6 unless such person has consented (as determined under 

7 regulations of the Secretary) to its publication or release 

8 in other form. 

9 (d) CERTAIN INTERAGENCY AGREEMENT.—The 

10 Commissioners and the Director of the National Library 

11 of Medicine shall enter into an agreement providing for 

12 the implementation of subsection (a)(1). 

13 PART II—FORUM FOR QUALITY AND 

14 EFFECTIVENESS IN HEALTH CARE 

15 SEC. 151. ESTABLISHMENT OF OFFICE. 

16 There is established within the Commission an office 

17 to be known as the Office of the Forum for Quality and 

18 Effectiveness in Health Care. The office shall be headed 

19 by a director (referred to in this subtitle as the ‘‘Direc20 tor’’), who shall be appointed by the Commissioners. 

21 SEC. 152. MEMBERSHIP. 

22 (a) IN GENERAL.—The Office of the Forum for Qual23 ity and Effectiveness in Health Care shall be composed 

24 of 15 individuals nominated by private sector health care 


rfrederick on DSKD9S0YB1PROD with BILLS
147 

•HR 4529 IH

1 organizations and appointed by the Commission and shall 

2 include representation from at least the following: 

3 (1) Health insurance industry. 

4 (2) Health care provider groups. 

5 (3) Non-profit organizations. 

6 (4) Rural health organizations. 

7 (b) TERMS.— 

8 (1) IN GENERAL.—Except as provided in sub9 paragraph (B), members of the Office of the Forum 

10 for Quality and Effectiveness in Health Care shall 

11 serve for a term of 5 years. 

12 (2) STAGGERED ROTATION.—Of the members 

13 first appointed to the Office of the Forum for Qual14 ity and Effectiveness in Health Care, the Commis15 sion shall appoint 5 members to serve for a term of 

16 2 years, 5 members to serve for a term of 3 years, 

17 and 5 members to serve for a term of 4 years. 

18 (c) TREATMENT OF OTHER EMPLOYMENT.—Each 

19 member of the Office of the Forum for Quality and Effec20 tiveness in Health Care shall serve the Office independ21 ently from any other position of employment. 

22 SEC. 153. DUTIES. 

23 (a) ESTABLISHMENT OF FORUM PROGRAM.—The 

24 Commissioners, acting through the Director, shall estab25 lish a program to be known as the Forum for Quality and 


rfrederick on DSKD9S0YB1PROD with BILLS
148 

•HR 4529 IH

1 Effectiveness in Health Care. For the purpose of pro2 moting transparency in price, quality, appropriateness, 

3 and effectiveness of health care, the Director, using the 

4 process set forth in section 154, shall arrange for the de5 velopment and periodic review and updating of standards 

6 of quality, performance measures, and medical review cri7 teria through which health care providers and other appro8 priate entities may assess or review the provision of health 

9 care and assure the quality of such care. 

10 (b) CERTAIN REQUIREMENTS.—Guidelines, stand11 ards, performance measures, and review criteria under 

12 subsection (a) shall— 

13 (1) be based on the best available research and 

14 professional judgment regarding the effectiveness 

15 and appropriateness of health care services and pro16 cedures; and 

17 (2) be presented in formats appropriate for use 

18 by physicians, health care practitioners, providers, 

19 medical educators, and medical review organizations 

20 and in formats appropriate for use by consumers of 

21 health care. 

22 (c) AUTHORITY FOR CONTRACTS.—In carrying out 

23 this part, the Director may enter into contracts with pub24 lic or nonprofit private entities. 


rfrederick on DSKD9S0YB1PROD with BILLS
149 

•HR 4529 IH

1 (d) PUBLIC DISCLOSURE OF RECOMMENDATIONS.— 

2 For each fiscal year beginning with 2010, the Director 

3 shall make publicly available the following: 

4 (1) quarterly reports for public comment that 

5 include proposed recommendations for guidelines, 

6 standards, performance measures, and review cri7 teria under subsection (a) and any updates to such 

8 guidelines, standards, performance measures, and 

9 review criteria; and 

10 (2) after consideration of such comments, a 

11 final report that contains final recommendations for 

12 such guidelines, standards, performance measures, 

13 review criteria, and updates. 

14 (e) DATE CERTAIN FOR INITIAL GUIDELINES AND

15 STANDARDS.—The Commissioners, by not later than Jan16 uary 1, 2012, shall assure the development of an initial 

17 set of guidelines, standards, performance measures, and 

18 review criteria under subsection (a). 

19 SEC. 154. ADOPTION AND ENFORCEMENT OF GUIDELINES 

20 AND STANDARDS. 

21 (a) ADOPTION OF RECOMMENDATIONS OF FORUM

22 FOR QUALITY AND EFFECTIVENESS IN HEALTH CARE.— 

23 For each fiscal year, the Commissioners shall adopt the 

24 recommendations made for such year in the final report 

25 under subsection (d)(2) of section 153 for guidelines, 


rfrederick on DSKD9S0YB1PROD with BILLS
150 

•HR 4529 IH

1 standards, performance measures, and review criteria de2 scribed in subsection (a) of such section. 

3 (b) ENFORCEMENT AUTHORITY.—The Commis4 sioners , in consultation with the Secretary of Health and 

5 Human Services, have the authority to make recommenda6 tions to the Secretary to enforce compliance of health care 

7 providers with the guidelines, standards, performance 

8 measures, and review criteria adopted under subsection 

9 (a). Such recommendations may include the following, 

10 with respect to a health care provider who is not in compli11 ance with such guidelines, standards, measures, and cri12 teria: 

13 (1) Exclusion from participation in Federal 

14 health care programs (as defined in section 

15 1128B(f) of the Social Security Act). 

16 (2) Imposition of a civil money penalty on such 

17 provider. 

18 SEC. 155. ADDITIONAL REQUIREMENTS. 

19 (a) PROGRAM AGENDA.—The Commissioners shall 

20 provide for an agenda for the development of the guide21 lines, standards, performance measures, and review cri22 teria described in section 153(a), including with respect 

23 to the standards, performance measures, and review cri24 teria, identifying specific aspects of health care for which 

25 the standards, performance measures, and review criteria 


rfrederick on DSKD9S0YB1PROD with BILLS
151 

•HR 4529 IH

1 are to be developed and those that are to be given priority 

2 in the development of the standards, performance meas3 ures, and review criteria. 

4 PART III—GENERAL PROVISIONS 

5 SEC. 161. CERTAIN ADMINISTRATIVE AUTHORITIES. 

6 The Commissioners, in carrying out this subtitle, may 

7 accept voluntary and uncompensated services. 

8 SEC. 162. FUNDING. 

9 For the purpose of carrying out this subtitle, there 

10 are authorized to be appropriated such sums as may be 

11 necessary for fiscal years 2011 through 2015. 

12 SEC. 163. DEFINITIONS. 

13 For purposes of this subtitle: 

14 (1) The term ‘‘Commissioners’’ means the Com15 missioners of the Health Care Services Commission. 

16 (2) The term ‘‘Commission’’ means the Health 

17 Care Services Commission. 

18 (3) The term ‘‘Director’’ means the Director of 

19 the Office of the Forum for Quality and Effective20 ness in Health Care. 

21 (4) The term ‘‘Secretary’’ means the Secretary 

22 of Health and Human Services. 


rfrederick on DSKD9S0YB1PROD with BILLS
152 

•HR 4529 IH

1 PART IV—TERMINATIONS AND TRANSITION 

2 SEC. 171. TERMINATION OF AGENCY FOR HEALTHCARE RE3 SEARCH AND QUALITY. 

4 As of the date of the enactment of this Act, the Agen5 cy for Healthcare Research and Quality is terminated, and 

6 title IX of the Public Health Service Act is repealed. 

7 SEC. 172. TRANSITION. 

8 All orders, grants, contracts, privileges, and other de9 terminations or actions of the Agency for Healthcare Re10 search and Quality that are effective as of the date before 

11 the date of the enactment of this Act, shall be transferred 

12 to the Secretary and shall continue in effect according to 

13 their terms unless changed pursuant to law. 

14 PART V—INDEPENDENT HEALTH RECORD TRUST 

15 SEC. 181. SHORT TITLE OF PART. 

16 This part may be cited as the ‘‘Independent Health 

17 Record Trust Act of 2008’’. 

18 SEC. 182. PURPOSE. 

19 It is the purpose of this part to provide for the estab20 lishment of a nationwide health information technology 

21 network that— 

22 (1) improves health care quality, reduces med23 ical errors, increases the efficiency of care, and ad24 vances the delivery of appropriate, evidence-based 

25 health care services; 


rfrederick on DSKD9S0YB1PROD with BILLS
153 

•HR 4529 IH

1 (2) promotes wellness, disease prevention, and 

2 the management of chronic illnesses by increasing 

3 the availability and transparency of information re4 lated to the health care needs of an individual; 

5 (3) ensures that appropriate information nec6 essary to make medical decisions is available in a us7 able form at the time and in the location that the 

8 medical service involved is provided; 

9 (4) produces greater value for health care ex10 penditures by reducing health care costs that result 

11 from inefficiency, medical errors, inappropriate care, 

12 and incomplete information; 

13 (5) promotes a more effective marketplace, 

14 greater competition, greater systems analysis, in15 creased choice, enhanced quality, and improved out16 comes in health care services; 

17 (6) improves the coordination of information 

18 and the provision of such services through an effec19 tive infrastructure for the secure and authorized ex20 change and use of health information; and 

21 (7) ensures that the health information privacy, 

22 security, and confidentiality of individually identifi23 able health information is protected. 

24 SEC. 183. DEFINITIONS. 

25 In this part: 


rfrederick on DSKD9S0YB1PROD with BILLS
154 

•HR 4529 IH

1 (1) ACCESS.—The term ‘‘access’’ means, with 

2 respect to an electronic health record, entering infor3 mation into such account as well as retrieving infor4 mation from such account. 

5 (2) ACCOUNT.—The term ‘‘account’’ means an 

6 electronic health record of an individual contained in 

7 an independent health record trust. 

8 (3) AFFIRMATIVE CONSENT.—The term ‘‘af9 firmative consent’’ means, with respect to an elec10 tronic health record of an individual contained in an 

11 IHRT, express consent given by the individual for 

12 the use of such record in response to a clear and 

13 conspicuous request for such consent or at the indi14 vidual’s own initiative. 

15 (4) AUTHORIZED EHR DATA USER.—The term 

16 ‘‘authorized EHR data user’’ means, with respect to 

17 an electronic health record of an IHRT participant 

18 contained as part of an IHRT, any entity (other 

19 than the participant) authorized (in the form of af20 firmative consent) by the participant to access the 

21 electronic health record. 

22 (5) CONFIDENTIALITY.—The term ‘‘confiden23 tiality’’ means, with respect to individually identifi24 able health information of an individual, the obligaVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00154 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
155 

•HR 4529 IH

1 tion of those who receive such information to respect 

2 the health information privacy of the individual. 

3 (6) ELECTRONIC HEALTH RECORD.—The term 

4 ‘‘electronic health record’’ means a longitudinal col5 lection of information concerning a single individual, 

6 including medical records and personal health infor7 mation, that is stored electronically. 

8 (7) HEALTH INFORMATION PRIVACY.—The 

9 term ‘‘health information privacy’’ means, with re10 spect to individually identifiable health information 

11 of an individual, the right of such individual to con12 trol the acquisition, uses, or disclosures of such in13 formation. 

14 (8) HEALTH PLAN.—The term ‘‘health plan’’ 

15 means a group health plan (as defined in section 

16 2208(1) of the Public Health Service Act (42 U.S.C. 

17 300bb–8(1))) as well as a plan that offers health in18 surance coverage in the individual market. 

19 (9) HIPAA PRIVACY REGULATIONS.—The term 

20 ‘‘HIPAA privacy regulations’’ means the regulations 

21 promulgated under section 264(c) of the Health In22 surance Portability and Accountability Act of 1996 

23 (42 U.S.C. 1320d–2 note). 

24 (10) INDEPENDENT HEALTH RECORD TRUST; 

25 IHRT.—The terms ‘‘independent health record trust’’ 


rfrederick on DSKD9S0YB1PROD with BILLS
156 

•HR 4529 IH

1 and ‘‘IHRT’’ mean a legal arrangement under the 

2 administration of an IHRT operator that meets the 

3 requirements of this part with respect to electronic 

4 health records of individuals participating in the 

5 trust or IHRT. 

6 (11) IHRT OPERATOR.—The term ‘‘IHRT op7 erator’’ means, with respect to an IHRT, the organi8 zation that is responsible for the administration and 

9 operation of the IHRT in accordance with this part. 

10 (12) IHRT PARTICIPANT.—The term ‘‘IHRT 

11 participant’’ means, with respect to an IHRT, an in12 dividual who has a participation agreement in effect 

13 with respect to the maintenance of the individual’s 

14 electronic health record by the IHRT. 

15 (13) INDIVIDUALLY IDENTIFIABLE HEALTH IN16 FORMATION.—The term ‘‘individually identifiable 

17 health information’’ has the meaning given such 

18 term in section 1171(6) of the Social Security Act 

19 (42 U.S.C. 1320d(6)). 

20 (14) SECURITY.—The term ‘‘security’’ means, 

21 with respect to individually identifiable health infor22 mation of an individual, the physical, technological, 

23 or administrative safeguards or tools used to protect 

24 such information from unwarranted access or disclo25 sure. 


rfrederick on DSKD9S0YB1PROD with BILLS
157 

•HR 4529 IH

1 SEC. 184. ESTABLISHMENT, CERTIFICATION, AND MEMBER2 SHIP OF INDEPENDENT HEALTH RECORD 

3 TRUSTS. 

4 (a) ESTABLISHMENT.—Not later than one year after 

5 the date of the enactment of this Act, the Federal Trade 

6 Commission, in consultation with the National Committee 

7 on Vital and Health Statistics, shall prescribe standards 

8 for the establishment, certification, operation, and inter9 operability of IHRTs to carry out the purposes described 

10 in section 182 in accordance with the provisions of this 

11 part. 

12 (b) CERTIFICATION.— 

13 (1) CERTIFICATION BY FTC.—The Federal 

14 Trade Commission shall provide for the certification 

15 of IHRTs. No IHRT may be certified unless the 

16 IHRT is determined to meet the standards for cer17 tification established under subsection (a). 

18 (2) DECERTIFICATION.—The Federal Trade 

19 Commission shall establish a process for the revoca20 tion of certification of an IHRT under this section 

21 in the case that the IHRT violates the standards es22 tablished under subsection (a). 

23 (c) MEMBERSHIP.— 

24 (1) IN GENERAL.—To be eligible to be a partic25 ipant in an IHRT, an individual shall— 


rfrederick on DSKD9S0YB1PROD with BILLS
158 

•HR 4529 IH

1 (A) submit to the IHRT information as re2 quired by the IHRT to establish an electronic 

3 health record with the IHRT; and 

4 (B) enter into a privacy protection agree5 ment described in section 186(b)(1) with the 

6 IHRT. 

7 The process to determine eligibility of an individual 

8 under this subsection shall allow for the establish9 ment by such individual of an electronic health 

10 record as expeditiously as possible if such individual 

11 is determined so eligible. 

12 (2) NO LIMITATION ON MEMBERSHIP.—Nothing 

13 in this subsection shall be construed to permit an 

14 IHRT to restrict membership, including on the basis 

15 of health condition. 

16 SEC. 185. DUTIES OF IHRT TO IHRT PARTICIPANTS. 

17 (a) FIDUCIARY DUTY OF IHRT; PENALTIES FOR

18 VIOLATIONS OF FIDUCIARY DUTY.— 

19 (1) FIDUCIARY DUTY.—With respect to the 

20 electronic health record of an IHRT participant 

21 maintained by an IHRT, the IHRT shall have a fi22 duciary duty to act for the benefit and in the inter23 ests of such participant and of the IHRT as a whole. 

24 Such duty shall include obtaining the affirmative 

25 consent of such participant prior to the release of inVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00158 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
159 

•HR 4529 IH

1 formation in such participant’s electronic health 

2 record in accordance with the requirements of this 

3 part. 

4 (2) PENALTIES.—If the IHRT knowingly or 

5 recklessly breaches the fiduciary duty described in 

6 paragraph (1), the IHRT shall be subject to the fol7 lowing penalties: 

8 (A) Loss of certification of the IHRT. 

9 (B) A fine that is not in excess of $50,000. 

10 (C) A term of imprisonment for the indi11 viduals involved of not more than 5 years. 

12 (b) ELECTRONIC HEALTH RECORD DEEMED TO BE

13 HELD IN TRUST BY IHRT.—With respect to an indi14 vidual, an electronic health record maintained by an IHRT 

15 shall be deemed to be held in trust by the IHRT for the 

16 benefit of the individual and the IHRT shall have no legal 

17 or equitable interest in such electronic health record. 

18 SEC. 186. AVAILABILITY AND USE OF INFORMATION FROM 

19 RECORDS IN IHRT CONSISTENT WITH PRI20 VACY PROTECTIONS AND AGREEMENTS. 

21 (a) PROTECTED ELECTRONIC HEALTH RECORDS

22 USE AND ACCESS.— 

23 (1) GENERAL RIGHTS REGARDING USES OF IN24 FORMATION.— 


rfrederick on DSKD9S0YB1PROD with BILLS
160 

•HR 4529 IH

1 (A) IN GENERAL.—With respect to the 

2 electronic health record of an IHRT participant 

3 maintained by an IHRT, subject to paragraph 

4 (2)(C), primary uses and secondary uses (de5 scribed in subparagraphs (B) and (C), respec6 tively) of information within such record (other 

7 than by such participant) shall be permitted 

8 only upon the authorization of such use, prior 

9 to such use, by such participant. 

10 (B) PRIMARY USES.—For purposes of sub11 paragraph (A) and with respect to an electronic 

12 health record of an individual, a primary use is 

13 a use for purposes of the individual’s self-care 

14 or care by health care professionals. 

15 (C) SECONDARY USES.—For purposes of 

16 subparagraph (B) and with respect to an elec17 tronic health record of an individual, a sec18 ondary use is any use not described in subpara19 graph (B) and includes a use for purposes of 

20 public health research or other related activi21 ties. Additional authorization is required for a 

22 secondary use extending beyond the original 

23 purpose of the secondary use authorized by the 

24 IHRT participant involved. Nothing in this 

25 paragraph shall be construed as requiring auVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00160 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
161 

•HR 4529 IH

1 thorization for every secondary use that is with2 in the authorized original purpose. 

3 (2) RULES FOR PRIMARY USE OF RECORDS FOR

4 HEALTH CARE PURPOSES.—With respect to the elec5 tronic health record of an IHRT participant (or 

6 specified parts of such electronic health record) 

7 maintained by an IHRT standards for access to 

8 such record shall provide for the following: 

9 (A) ACCESS BY IHRT PARTICIPANTS TO

10 THEIR ELECTRONIC HEALTH RECORDS.— 

11 (i) OWNERSHIP.—The participant 

12 maintains ownership over the entire elec13 tronic health record (and all portions of 

14 such record) and shall have the right to 

15 electronically access and review the con16 tents of the entire record (and any portion 

17 of such record) at any time, in accordance 

18 with this subparagraph. 

19 (ii) ADDITION OF PERSONAL INFOR20 MATION.—The participant may add per21 sonal health information to the health 

22 record of that participant, except that such 

23 participant shall not alter information that 

24 is entered into the electronic health record 

25 by any authorized EHR data user. Such 


rfrederick on DSKD9S0YB1PROD with BILLS
162 

•HR 4529 IH

1 participant shall have the right to propose 

2 an amendment to information that is en3 tered by an authorized EHR data user 

4 pursuant to standards prescribed by the 

5 Federal Trade Commission for purposes of 

6 amending such information. 

7 (iii) IDENTIFICATION OF INFORMA8 TION ENTERED BY PARTICIPANT.—Any ad9 ditions or amendments made by the partic10 ipant to the health record shall be identi11 fied and disclosed within such record as 

12 being made by such participant. 

13 (B) ACCESS BY ENTITIES OTHER THAN

14 IHRT PARTICIPANT.— 

15 (i) AUTHORIZED ACCESS ONLY.—Ex16 cept as provided under subparagraph (C) 

17 and paragraph (4), access to the electronic 

18 health record (or any portion of the 

19 record)— 

20 (I) may be made only by author21 ized EHR data users and only to such 

22 portions of the record as specified by 

23 the participant; and 

24 (II) may be limited by the partic25 ipant for purposes of entering inforVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00162 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
163 

•HR 4529 IH

1 mation into such record, retrieving in2 formation from such record, or both. 

3 (ii) IDENTIFICATION OF ENTITY THAT

4 ENTERS INFORMATION.—Any information 

5 that is added by an authorized EHR data 

6 user to the health record shall be identified 

7 and disclosed within such record as being 

8 made by such user. 

9 (iii) SATISFACTION OF HIPAA PRIVACY

10 REGULATIONS.—In the case of a record of 

11 a covered entity (as defined for purposes of 

12 HIPAA privacy regulations), with respect 

13 to an individual, if such individual is an 

14 IHRT participant with an independent 

15 health record trust and such covered entity 

16 is an authorized EHR data user, the re17 quirement under the HIPAA privacy regu18 lations for such entity to provide the 

19 record to the participant shall be deemed 

20 met if such entity, without charge to the 

21 IHRT or the participant— 

22 (I) forwards to the trust an ap23 propriately formatted electronic copy 

24 of the record (and updates to such 

25 records) for inclusion in the electronic 


rfrederick on DSKD9S0YB1PROD with BILLS
164 

•HR 4529 IH

1 health record of the participant main2 tained by the trust; 

3 (II) enters such record into the 

4 electronic health record of the partici5 pant so maintained; or 

6 (III) otherwise makes such 

7 record available for electronic access 

8 by the IHRT or the individual in a 

9 manner that permits such record to 

10 be included in the account of the indi11 vidual contained in the IHRT. 

12 (iv) NOTIFICATION OF SENSITIVE IN13 FORMATION.—Any information, with re14 spect to the participant, that is sensitive 

15 information, as specified by the Federal 

16 Trade Commission, shall not be forwarded 

17 or entered by an authorized EHR data 

18 user into the electronic health record of the 

19 participant maintained by the trust unless 

20 the user certifies that the participant has 

21 been notified of such information. 

22 (C) DEEMED AUTHORIZATION FOR ACCESS

23 FOR EMERGENCY HEALTH CARE.— 

24 (i) FINDINGS.—Congress finds that— 


rfrederick on DSKD9S0YB1PROD with BILLS
165 

•HR 4529 IH

1 (I) given the size and nature of 

2 visits to emergency departments in 

3 the United States, readily available 

4 health information could make the dif5 ference between life and death; and 

6 (II) because of the case mix and 

7 volume of patients treated, emergency 

8 departments are well positioned to 

9 provide information for public health 

10 surveillance, community risk assess11 ment, research, education, training, 

12 quality improvement, and other uses. 

13 (ii) USE OF INFORMATION.—With re14 spect to the electronic health record of an 

15 IHRT participant (or specified parts of 

16 such electronic health record) maintained 

17 by an IHRT, the participant shall be 

18 deemed as providing authorization (in the 

19 form of affirmative consent) for health 

20 care providers to access, in connection with 

21 providing emergency care services to the 

22 participant, a limited, authenticated infor23 mation set concerning the participant for 

24 emergency response purposes, unless the 

25 participant specifies that such information 


rfrederick on DSKD9S0YB1PROD with BILLS
166 

•HR 4529 IH

1 set (or any portion of such information 

2 set) may not be so accessed. Such limited 

3 information set may include information— 

4 (I) patient identification data, as 

5 determined appropriate by the partici6 pant; 

7 (II) provider identification that 

8 includes the use of unique provider 

9 identifiers; 

10 (III) payment information; 

11 (IV) information related to the 

12 individual’s vitals, allergies, and medi13 cation history; 

14 (V) information related to exist15 ing chronic problems and active clin16 ical conditions of the participant; and 

17 (VI) information concerning 

18 physical examinations, procedures, re19 sults, and diagnosis data. 

20 (3) RULES FOR SECONDARY USES OF RECORDS

21 FOR RESEARCH AND OTHER PURPOSES.— 

22 (A) IN GENERAL.—With respect to the 

23 electronic health record of an IHRT participant 

24 (or specified parts of such electronic health 

25 record) maintained by an IHRT, the IHRT 


rfrederick on DSKD9S0YB1PROD with BILLS
167 

•HR 4529 IH

1 may sell such record (or specified parts of such 

2 record) only if— 

3 (i) the transfer is authorized by the 

4 participant pursuant to an agreement be5 tween the participant and the IHRT and is 

6 in accordance with the privacy protection 

7 agreement described in subsection (b)(1) 

8 entered into between such participant and 

9 such IHRT; 

10 (ii) such agreement includes param11 eters with respect to the disclosure of in12 formation involved and a process for the 

13 authorization of the further disclosure of 

14 information in such record; 

15 (iii) the information involved is to be 

16 used for research or other activities only as 

17 provided for in the agreement; 

18 (iv) the recipient of the information 

19 provides assurances that the information 

20 will not be further transferred or reused in 

21 violation of such agreement; and 

22 (v) the transfer otherwise meets the 

23 requirements and standards prescribed by 

24 the Federal Trade Commission. 


rfrederick on DSKD9S0YB1PROD with BILLS
168 

•HR 4529 IH

1 (B) TREATMENT OF PUBLIC HEALTH RE2 PORTING.—Nothing in this paragraph shall be 

3 construed as prohibiting or limiting the use of 

4 health care information of an individual, includ5 ing an individual who is an IHRT participant, 

6 for public health reporting (or other research) 

7 purposes prior to the inclusion of such informa8 tion in an electronic health record maintained 

9 by an IHRT. 

10 (4) LAW ENFORCEMENT CLARIFICATION.— 

11 Nothing in this part shall prevent an IHRT from 

12 disclosing information contained in an electronic 

13 health record maintained by the IHRT when re14 quired for purposes of a lawful investigation or offi15 cial proceeding inquiring into a violation of, or fail16 ure to comply with, any criminal or civil statute or 

17 any regulation, rule, or order issued pursuant to 

18 such a statute. 

19 (5) RULE OF CONSTRUCTION.—Nothing in this 

20 section shall be construed to require a health care 

21 provider that does not utilize electronic methods or 

22 appropriate levels of health information technology 

23 on the date of the enactment of this Act to adopt 

24 such electronic methods or technology as a require25 ment for participation or compliance under this part. 


rfrederick on DSKD9S0YB1PROD with BILLS
169 

•HR 4529 IH

1 (b) PRIVACY PROTECTION AGREEMENT; TREATMENT

2 OF STATE PRIVACY AND SECURITY LAWS.— 

3 (1) PRIVACY PROTECTION AGREEMENT.—A pri4 vacy protection agreement described in this sub5 section is an agreement, with respect to an electronic 

6 health record of an IHRT participant to be main7 tained by an independent health record trust, be8 tween the participant and the trust— 

9 (A) that is consistent with the standards 

10 described in subsection (a)(2); 

11 (B) under which the participant specifies 

12 the portions of the record that may be accessed, 

13 under what circumstances such portions may be 

14 accessed, any authorizations for indicated au15 thorized EHR data users to access information 

16 contained in the record, and the purposes for 

17 which the information (or portions of the infor18 mation) in the record may be used; 

19 (C) which provides a process for the au20 thorization of the transfer of information con21 tained in the record to a third party, including 

22 for the sale of such information for purposes of 

23 research, by an authorized EHR data user and 

24 reuse of such information by such third party, 

25 including a provision requiring that such transVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00169 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
170 

•HR 4529 IH

1 fer and reuse is not in violation of any privacy 

2 or transfer restrictions placed by the partici3 pant on the independent health record of such 

4 participant; and 

5 (D) under which the trust provides assur6 ances that the trust will not transfer, disclose, 

7 or provide access to the record (or any portion 

8 of the record) in violation of the parameters es9 tablished in the agreement or to any person or 

10 entity who has not agreed to use and transfer 

11 such record (or portion of such record) in ac12 cordance with such agreement. 

13 (2) TREATMENT OF STATE LAWS.— 

14 (A) IN GENERAL.—Except as provided 

15 under subparagraph (B), the provisions of a 

16 privacy protection agreement entered into be17 tween an IHRT and an IHRT participant shall 

18 preempt any provision of State law (or any 

19 State regulation) relating to the privacy and 

20 confidentiality of individually identifiable health 

21 information or to the security of such health in22 formation. 

23 (B) EXCEPTION FOR PRIVILEGED INFOR24 MATION.—The provisions of a privacy protec25 tion agreement shall not preempt any provision 


rfrederick on DSKD9S0YB1PROD with BILLS
171 

•HR 4529 IH

1 of State law (or any State regulation) that rec2 ognizes privileged communications between phy3 sicians, health care practitioners, and patients 

4 of such physicians or health care practitioners, 

5 respectively. 

6 (C) STATE DEFINED.—For purposes of 

7 this section, the term ‘‘State’’ has the meaning 

8 given such term when used in title XI of the 

9 Social Security Act, as provided under section 

10 1101(a) of such Act (42 U.S.C. 1301(a)). 

11 SEC. 187. VOLUNTARY NATURE OF TRUST PARTICIPATION 

12 AND INFORMATION SHARING. 

13 (a) IN GENERAL.—Participation in an independent 

14 health record trust, or authorizing access to information 

15 from such a trust, is voluntary. No employer, health insur16 ance issuer, group health plan, health care provider, or 

17 other person may require, as a condition of employment, 

18 issuance of a health insurance policy, coverage under a 

19 group health plan, the provision of health care services, 

20 payment for such services, or otherwise, that an individual 

21 participate in, or authorize access to information from, an 

22 independent health record trust. 

23 (b) ENFORCEMENT.—The penalties provided for in 

24 subsection (a) of section 1177 of the Social Security Act 

25 (42 U.S.C. 1320d–6) shall apply to a violation of subVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00171 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
172 

•HR 4529 IH

1 section (a) in the same manner as such penalties apply 

2 to a person in violation of subsection (a) of such section. 

3 SEC. 188. FINANCING OF ACTIVITIES. 

4 (a) IN GENERAL.—Except as provided in subsection 

5 (b), an IHRT may generate revenue to pay for the oper6 ations of the IHRT through— 

7 (1) charging IHRT participants account fees 

8 for use of the trust; 

9 (2) charging authorized EHR data users for ac10 cessing electronic health records maintained in the 

11 trust; 

12 (3) the sale of information contained in the 

13 trust (as provided for in section 186(a)(3)(A)); and 

14 (4) any other activity determined appropriate 

15 by the Federal Trade Commission. 

16 (b) PROHIBITION AGAINST ACCESS FEES FOR

17 HEALTH CARE PROVIDERS.—For purposes of providing 

18 incentives to health care providers to access information 

19 maintained in an IHRT, as authorized by the IHRT par20 ticipants involved, the IHRT may not charge a fee for 

21 services specified by the IHRT. Such services shall include 

22 the transmittal of information from a health care provider 

23 to be included in an independent electronic health record 

24 maintained by the IHRT (or permitting such provider to 

25 input such information into the record), including the 


rfrederick on DSKD9S0YB1PROD with BILLS
173 

•HR 4529 IH

1 transmission of or access to information described in sec2 tion 186(a)(2)(C)(ii) by appropriate emergency respond3 ers. 

4 (c) REQUIRED DISCLOSURES.—The sources and 

5 amounts of revenue derived under subsection (a) for the 

6 operations of an IHRT shall be fully disclosed to each 

7 IHRT participant of such IHRT and to the public. 

8 (d) TREATMENT OF INCOME.—For purposes of the 

9 Internal Revenue Code of 1986, any revenue described in 

10 subsection (a) shall not be included in gross income of any 

11 IHRT, IHRT participant, or authorized EHR data user. 

12 SEC. 189. REGULATORY OVERSIGHT. 

13 (a) IN GENERAL.—In carrying out this part, the Fed14 eral Trade Commission shall promulgate regulations for 

15 independent health record trusts. 

16 (b) ESTABLISHMENT OF INTERAGENCY STEERING

17 COMMITTEE.— 

18 (1) IN GENERAL.—The Secretary of Health and 

19 Human Services shall establish an Interagency 

20 Steering Committee in accordance with this sub21 section. 

22 (2) CHAIRPERSON.—The Secretary of Health 

23 and Human Services shall serve as the chairperson 

24 of the Interagency Steering Committee. 


rfrederick on DSKD9S0YB1PROD with BILLS
174 

•HR 4529 IH

1 (3) MEMBERSHIP.—The members of the Inter2 agency Steering Committee shall consist of the At3 torney General, the Chairperson of the Federal 

4 Trade Commission, the Chairperson for the National 

5 Committee for Vital and Health Statistics, a rep6 resentative of the Federal Reserve, and other Fed7 eral officials determined appropriate by the Sec8 retary of Health and Human Services. 

9 (4) DUTIES.—The Interagency Steering Com10 mittee shall coordinate the implementation of this 

11 part, including the implementation of policies de12 scribed in subsection (d) based upon the rec13 ommendations provided under such subsection, and 

14 regulations promulgated under this part. 

15 (c) FEDERAL ADVISORY COMMITTEE.— 

16 (1) IN GENERAL.—The National Committee for 

17 Vital and Health Statistics shall serve as an advisory 

18 committee for the IHRTs. The membership of such 

19 advisory committee shall include a representative 

20 from the Federal Trade Commission and the chair21 person of the Interagency Steering Committee. Not 

22 less than 60 percent of such membership shall con23 sist of representatives of nongovernment entities, at 

24 least one of whom shall be a representative from an 

25 organization representing health care consumers. 


rfrederick on DSKD9S0YB1PROD with BILLS
175 

•HR 4529 IH

1 (2) DUTIES.—The National Committee for 

2 Vital and Health Statistics shall issue periodic re3 ports and review policies concerning IHRTs based 

4 on each of the following factors: 

5 (A) Privacy and security policies. 

6 (B) Economic progress. 

7 (C) Interoperability standards. 

8 (d) POLICIES RECOMMENDED BY FEDERAL TRADE

9 COMMISSION.—The Federal Trade Commission, in con10 sultation with the National Committee for Vital and 

11 Health Statistics, shall recommend policies to— 

12 (1) provide assistance to encourage the growth 

13 of independent health record trusts; 

14 (2) track economic progress as it pertains to 

15 operators of independent health records trusts and 

16 individuals receiving nontaxable income with respect 

17 to accounts; 

18 (3) conduct public education activities regarding 

19 the creation and usage of the independent health 

20 records trusts; 

21 (4) establish standards for the interoperability 

22 of health information technology to ensure that in23 formation contained in such record may be shared 

24 between the trust involved, the participant, and au25 thorized EHR data users, including for the standVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00175 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
176 

•HR 4529 IH

1 ardized collection and transmission of individual 

2 health records (or portions of such records) to au3 thorized EHR data users through a common inter4 face and for the portability of such records among 

5 independent health record trusts; and 

6 (5) carry out any other activities determined 

7 appropriate by the Federal Trade Commission. 

8 (e) REGULATIONS PROMULGATED BY FEDERAL

9 TRADE COMMISSION.—The Federal Trade Commission 

10 shall promulgate regulations based on, at a minimum, the 

11 following factors: 

12 (1) Requiring that an IHRT participant, who 

13 has an electronic health record that is maintained by 

14 an IHRT, be notified of a security breech with re15 spect to such record, and any corrective action taken 

16 on behalf of the participant. 

17 (2) Requiring that information sent to, or re18 ceived from, an IHRT that has been designated as 

19 high-risk should be authenticated through the use of 

20 methods such as the periodic changing of passwords, 

21 the use of biometrics, the use of tokens or other 

22 technology as determined appropriate by the council. 

23 (3) Requiring a delay in releasing sensitive 

24 health care test results and other similar informaVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00176 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
177 

•HR 4529 IH

1 tion to patients directly in order to give physicians 

2 time to contact the patient. 

3 (4) Recommendations for entities operating 

4 IHRTs, including requiring analysis of the potential 

5 risk of health transaction security breeches based on 

6 set criteria. 

7 (5) The conduct of audits of IHRTs to ensure 

8 that they are in compliance with the requirements 

9 and standards established under this part. 

10 (6) Disclosure to IHRT participants of the 

11 means by which such trusts are financed, including 

12 revenue from the sale of patient data. 

13 (7) Prevention of certification of an entity seek14 ing independent heath record trust certification 

15 based on— 

16 (A) the potential for conflicts between the 

17 interests of such entity and the security of the 

18 health information involved; and 

19 (B) the involvement of the entity in any 

20 activity that is contrary to the best interests of 

21 a patient. 

22 (8) Prevention of the use of revenue sources 

23 that are contrary to a patient’s interests. 


rfrederick on DSKD9S0YB1PROD with BILLS
178 

•HR 4529 IH

1 (9) Public disclosure of audits in a manner 

2 similar to financial audits required for publicly trad3 ed stock companies. 

4 (10) Requiring notification to a participating 

5 entity that the information contained in such record 

6 may not be representative of the complete or accu7 rate electronic health record of such account holder. 

8 (f) COMPLIANCE REPORT.—Not later than 1 year 

9 after the date of the enactment of this Act, and annually 

10 thereafter, the Commission shall submit to the Committee 

11 on Health, Education, Labor, and Pensions and the Com12 mittee on Finance of the Senate and the Committee on 

13 Energy and Commerce and the Committee on Ways and 

14 Means of the House of Representatives, a report on com15 pliance by and progress of independent health record 

16 trusts with this part. Such report shall describe the fol17 lowing: 

18 (1) The number of complaints submitted about 

19 independent health record trusts, which shall be di20 vided by complaints related to security breaches, and 

21 complaints not related to security breaches, and may 

22 include other categories as the Interagency Steering 

23 Committee established under subsection (b) deter24 mines appropriate. 


rfrederick on DSKD9S0YB1PROD with BILLS
179 

•HR 4529 IH

1 (2) The number of enforcement actions under2 taken by the Commission against independent health 

3 record trusts in response to complaints under para4 graph (1), which shall be divided by enforcement ac5 tions related to security breaches and enforcement 

6 actions not related to security breaches and may in7 clude other categories as the Interagency Steering 

8 Committee established under subsection (b) deter9 mines appropriate. 

10 (3) The economic progress of the individual 

11 owner or institution operator as achieved through 

12 independent health record trust usage and existing 

13 barriers to such usage. 

14 (4) The progress in security auditing as pro15 vided for by the Interagency Steering Committee 

16 council under subsection (b). 

17 (5) The other core responsibilities of the Com18 mission as described in subsection (a). 

19 (g) INTERAGENCY MEMORANDUM OF UNDER20 STANDING.—The Interagency Steering Committee shall 

21 ensure, through the execution of an interagency memo22 randum of understanding, that— 

23 (1) regulations, rulings, and interpretations 

24 issued by Federal officials relating to the same mat25 ter over which 2 or more such officials have responVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00179 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
180 

•HR 4529 IH

1 sibility under this part are administered so as to 

2 have the same effect at all times; and 

3 (2) the memorandum provides for the coordina4 tion of policies related to enforcing the same require5 ments through such officials in order to have coordi6 nated enforcement strategy that avoids duplication 

7 of enforcement efforts and assigns priorities in en8 forcement. 

9 TITLE II—FAIRNESS FOR EVERY 

10 AMERICAN PATIENT 

11 Subtitle A—Medicaid 

12 Modernization 

13 SEC. 201. MEDICAID MODERNIZATION. 

14 (a) IN GENERAL.—Effective January 1, 2011, title 

15 XIX of the Social Security Act (42 U.S.C. 1396 et seq.) 

16 is amended to read as follows: 

17 ‘‘TITLE XIX—GRANTS TO STATES 

18 FOR MEDICAL ASSISTANCE 

19 PROGRAMS 

‘‘TABLE OF CONTENTS OF TITLE 

‘‘Sec. 1900. References to pre-modernized Medicaid provisions; continuity for 

commonwealths and territories. 

‘‘PART A—GRANTS TO STATES FOR ACUTE CARE FOR INDIVIDUALS WITH

DISABILITIES AND CERTAIN LOW-INCOME INDIVIDUALS

‘‘Sec. 1901. Purpose; appropriation. 

‘‘Sec. 1902. Payments to States for acute care medical assistance. 

‘‘Sec. 1903. Definitions of eligible individuals and acute care medical assistance. 

‘‘Sec. 1904. State plan requirements for acute care medical assistance. 

‘‘Sec. 1905. Definitions. 


rfrederick on DSKD9S0YB1PROD with BILLS
181 

•HR 4529 IH

‘‘Sec. 1906. Enrollment of individuals under group health plans and other arrangements. 

‘‘Sec. 1907. Drug rebates. 

‘‘Sec. 1908. Managed care. 

‘‘Sec. 1909. Annual reports. 

‘‘PART B—GRANTS TO STATES FOR LONG-TERM CARE SERVICES AND

SUPPORTS

‘‘Sec. 1911. Purpose. 

‘‘Sec. 1912. State plan. 

‘‘Sec. 1913. State allotments. 

‘‘Sec. 1914. Use of grants. 

‘‘Sec. 1915. Administrative provisions. 

‘‘Sec. 1916. Definition of long-term care services and supports. 

‘‘Sec. 1917. Provision requirements for long-term care services and supports, 

including option for self-directed services and supports. 

‘‘Sec. 1918. Treatment of income and resources for certain institutionalized 

spouses. 

‘‘Sec. 1919. Annual reports. 

‘‘PART C—GRANTS TO STATES FOR SURVEY AND CERTIFICATION OF

MEDICAL FACILITIES AND OTHER REQUIREMENTS

‘‘Sec. 1931. Authorization of appropriations. 

‘‘Sec. 1932. Application of certain requirements under pre-modernized Medicaid. 

‘‘PART D—GRANTS TO STATES FOR PROGRAM INTEGRITY

‘‘Sec. 1941. Authorization of appropriations. 

‘‘Sec. 1942. Application of certain requirements under pre-modernized Medicaid. 

‘‘PART E—GRANTS TO STATES FOR ADMINISTRATION

‘‘Sec. 1951. Authorization of appropriations; payments to states. 

‘‘Sec. 1952. Cost-sharing protections. 

‘‘Sec. 1953. Application of certain requirements under pre-modernized Medicaid. 

‘‘PART F—OTHER PROVISIONS

‘‘Sec. 1961. Application of certain requirements under pre-modernized Medicaid. 

1 ‘‘SEC. 1900. REFERENCES TO PRE-MODERNIZED MEDICAID 

2 PROVISIONS; CONTINUITY FOR COMMON3 WEALTHS AND TERRITORIES. 

4 ‘‘(a) IN GENERAL.—In this title, if a reference to this 

5 title or to a provision of this title is prefaced by the term 


rfrederick on DSKD9S0YB1PROD with BILLS
182 

•HR 4529 IH

1 ‘old’, such reference is to this title or a provision of this 

2 title as in effect on December 31, 2010. 

3 ‘‘(b) REGULATIONS.—The Secretary shall promul4 gate regulations to bring requirements imposed under an 

5 old provision of this title that applies under this title after 

6 December 31, 2010, into conformity with the policies em7 bodied in this title as in effect on and after January 1, 

8 2011. 

9 ‘‘(c) CONTINUITY FOR COMMONWEALTHS AND TER10 RITORIES.—In the case of Puerto Rico, the United States 

11 Virgin Islands, Guam, the Northen Mariana Islands, and 

12 American Samoa, this title as in effect on and after Janu13 ary 1, 2011, shall not apply to such commonwealths and 

14 territories, and old title XIX shall apply to a Medicaid pro15 gram operated by such commonwealths or territories on 

16 and after that date. 

17 ‘‘PART A—GRANTS TO STATES FOR ACUTE CARE 

18 FOR INDIVIDUALS WITH DISABILITIES AND 

19 CERTAIN LOW-INCOME INDIVIDUALS 

20 ‘‘SEC. 1901. PURPOSE; APPROPRIATION. 

21 ‘‘(a) PURPOSE.—It is the purpose of this part to en22 able each State, as far as practicable under the conditions 

23 in the State, to provide acute care medical assistance to 

24 eligible individuals described in section 1903 whose income 

25 and resources are insufficient to meet the costs of necVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00182 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
183 

•HR 4529 IH

1 essary medical services, and (2) rehabilitation and other 

2 services to help such individuals attain or retain capability 

3 for independence or self-care. 

4 ‘‘(b) APPROPRIATION.—For the purpose of making 

5 payments to States under this part, there is appropriated 

6 out of any money in the Treasury not otherwise appro7 priated, such sums as are necessary for fiscal year 2011 

8 and each fiscal year thereafter. 

9 ‘‘SEC. 1902. PAYMENTS TO STATES FOR ACUTE CARE MED10 ICAL ASSISTANCE. 

11 ‘‘(a) IN GENERAL.—From the amounts appropriated 

12 under section 1901 for a fiscal year, the Secretary shall 

13 pay to each State which has a plan approved under this 

14 part, for each quarter, beginning with the quarter com15 mencing January 1, 2011, an amount equal to the Federal 

16 medical assistance percentage (as defined in section 

17 1905(b)) of the total amount expended during such quar18 ter as acute care medical assistance under the State plan 

19 under this part. 

20 ‘‘(b) ADMINISTRATIVE EXPENSES.—Each State with 

21 a plan approved under this part shall receive a payment 

22 determined in accordance with part E for administrative 

23 expenses incurred in carrying out the plan under this part 

24 and part B (if the State has a plan approved under that 

25 part). 


rfrederick on DSKD9S0YB1PROD with BILLS
184 

•HR 4529 IH

1 ‘‘SEC. 1903. DEFINITIONS OF ELIGIBLE INDIVIDUALS AND 

2 ACUTE CARE MEDICAL ASSISTANCE. 

3 ‘‘(a) ELIGIBLE INDIVIDUALS.— 

4 ‘‘(1) IN GENERAL.—In this part, the term ‘eli5 gible individual’ means an individual— 

6 ‘‘(A) who is— 

7 ‘‘(i) a blind or disabled individual; or 

8 ‘‘(ii) an individual described in para9 graph (2); and 

10 ‘‘(B) who the State determines satisfies— 

11 ‘‘(i) the income and resources eligi12 bility requirements established by the State 

13 under the State plan under this part; and 

14 ‘‘(ii) such other requirements for as15 sistance as are imposed under this title, in16 cluding documentation of citizenship or 

17 status as a qualified alien under title IV of 

18 the Personal Responsibility and Work Op19 portunity Reconciliation Act of 1996. 

20 ‘‘(2) INDIVIDUALS DESCRIBED.—For purposes 

21 of paragraph (1)(A)(ii), the following individuals are 

22 described in this paragraph: 

23 ‘‘(A) A child in foster care under the re24 sponsibility of the State. 


rfrederick on DSKD9S0YB1PROD with BILLS
185 

•HR 4529 IH

1 ‘‘(B) A low-income woman with breast or 

2 cervical cancer described in old section 

3 1902(aa). 

4 ‘‘(C) Certain TB-infected individuals de5 scribed in old section 1902(z)(1). 

6 ‘‘(3) GRANDFATHERED INDIVIDUALS.—An indi7 vidual shall be an eligible individual under the State 

8 plan under this part if— 

9 ‘‘(A) the individual is described in para10 graph (1)(A); 

11 ‘‘(B) the individual satisfies the docu12 mentation requirements referred to in para13 graph (1)(B)(ii); and 

14 ‘‘(C) the State would have provided med15 ical assistance under the State plan under old 

16 title XIX to the individual, but only so long as 

17 the individual continues to satisfy such old eligi18 bility requirements. 

19 ‘‘(4) CONCURRENT ELIGIBILITY FOR PART B.— 

20 An eligible individual under this part may be eligible 

21 under part B, but only if the individual satisfies the 

22 eligibility requirements of part B in addition to sat23 isfying the requirements for eligibility under this 

24 part. 


rfrederick on DSKD9S0YB1PROD with BILLS
186 

•HR 4529 IH

1 ‘‘(5) PRESUMPTIVE ELIGIBILITY FOR CERTAIN

2 BREAST OR CERVICAL CANCER PATIENTS.—Old sec3 tion 1920B (relating to presumptive eligibility for 

4 certain breast or cervical cancer patients) shall apply 

5 under this part. 

6 ‘‘(b) BENEFITS.—Subject to paragraph (3), in this 

7 part, the term ‘acute care medical assistance’ means the 

8 following: 

9 ‘‘(1) MANDATORY BENEFITS.—The care and 

10 services listed in paragraphs (1) through (5), (17), 

11 and (21) of old section 1905(a) (but, in the case of 

12 paragraph (4)(A) of such section, without regard to 

13 any limitation based on age or services in an institu14 tion for mental diseases). 

15 ‘‘(2) OPTIONAL BENEFITS.—Any care or serv16 ices listed in a paragraph of old section 1905(a) 

17 (other than paragraph (16)). 

18 ‘‘(3) EXCEPTIONS.— 

19 ‘‘(A) CERTAIN SERVICES LIMITED TO PART

20 B.—Services described in paragraphs (15), 

21 (22), (23), (24), and (26) of old section 

22 1905(a) shall only be provided under the State 

23 plan under part B. 

24 ‘‘(B) LIMIT ON PROVISION OF LONG-TERM

25 CARE SERVICES AND SUPPORTS.—A care or 


rfrederick on DSKD9S0YB1PROD with BILLS
187 

•HR 4529 IH

1 service that the Secretary determines is a long2 term care service and support (including nurs3 ing facility services described in old section 

4 1905(a)(4)(A)) shall not be provided to an indi5 vidual under the State plan under this part for 

6 more than 30 days within any 12-month period. 

7 ‘‘(C) EXCLUSIONS.—Such term shall not 

8 include any payments with respect to care or 

9 services for any individual who is an inmate of 

10 a public institution or a patient in an institu11 tion for mental diseases (regardless of age). 

12 ‘‘SEC. 1904. STATE PLAN REQUIREMENTS FOR ACUTE CARE 

13 MEDICAL ASSISTANCE. 

14 ‘‘(a) IN GENERAL.—In order to receive payments 

15 under this part, a State shall have an approved State plan 

16 for acute care medical assistance. For purposes of this 

17 part, such assistance includes payments for preventive 

18 care, primary care, diagnosis and treatment of acute and 

19 chronic health conditions, emergency care, diagnosis and 

20 treatment of mental illnesses and related conditions, and 

21 rehabilitation and other services to help eligible individuals 

22 attain or retain capability for independence or self-care. 

23 A State medical assistance plan shall include a descrip24 tion, consistent with the requirements of this part of— 


rfrederick on DSKD9S0YB1PROD with BILLS
188 

•HR 4529 IH

1 ‘‘(1) eligibility standards, including income and 

2 asset standards; 

3 ‘‘(2) benefits, including the amount, duration, 

4 and scope of covered items and services; 

5 ‘‘(3) strategies for improving access and quality 

6 of care; and 

7 ‘‘(4) methods of service delivery. 

8 ‘‘(b) PUBLIC AVAILABILITY OF STATE PLAN.—The 

9 State shall make available to the public the State plan 

10 under this part and any amendments submitted by the 

11 State to the plan. 

12 ‘‘(c) AMOUNT, DURATION, AND SCOPE.—The State 

13 plan shall provide that the acute care medical assistance 

14 made available to any eligible individual shall not be less 

15 in amount, duration, or scope than the acute care medical 

16 assistance made available to any other eligible individual. 

17 ‘‘(d) APPLICATION OF CERTAIN PRE-MODERNIZED

18 MEDICAID REQUIREMENTS.— 

19 ‘‘(1) OLD STATE PLAN REQUIREMENTS.—The 

20 following provisions of old section 1902 shall apply 

21 to the State plans under this part: 

22 ‘‘(A) Old section 1902(a)(10)(C) (relating 

23 to certain eligibility and other requirements). 

24 ‘‘(B) Old section 1902(a)(10)(D) (relating 

25 to home health services). 


rfrederick on DSKD9S0YB1PROD with BILLS
189 

•HR 4529 IH

1 ‘‘(C) Old section 1902(a)(10)(G) (relating 

2 to nonapplication of certain supplemental secu3 rity income eligibility criteria). 

4 ‘‘(D) The subclauses in the flush matter 

5 following old section 1902(a)(10)(G) (relating 

6 to the provision of certain services) other than 

7 subclauses (V), (VII), (VIII), and (IX). 

8 ‘‘(E) Old section 1902(a)(17) (relating to 

9 reasonable standards for determining eligi10 bility). 

11 ‘‘(F) Old section 1902(a)(19) (relating to 

12 eligibility safeguards). 

13 ‘‘(G) Old section 1902(a)(34) (relating to 

14 eligibility beginning with the third month prior 

15 to the month of application). 

16 ‘‘(H) Subparagraphs (A), (B), and (C) of 

17 old section 1902(a)(43) (relating to early and 

18 periodic screening, diagnostic, and treatment 

19 services). 

20 ‘‘(I) Old section 1902(a)(46)(A) (relating 

21 to compliance with section 1137 requirements). 

22 ‘‘(J) The fourth and sixth sentences of old 

23 section 1902(a) (relating to eligibility for cer24 tain individuals). 

25 ‘‘(2) OTHER OLD TITLE XIX REQUIREMENTS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
190 

•HR 4529 IH

1 ‘‘(A) Old section 1902(e)(3) (relating to 

2 optional eligibility for certain disabled individ3 uals). 

4 ‘‘(B) Old section 1902(e)(9) (relating to 

5 optional respiratory care services). 

6 ‘‘(C) Old section 1902(f) (relating to eligi7 bility of certain aged, blind, or disabled individ8 uals). 

9 ‘‘(D) Old section 1902(m) (relating to eli10 gibility of certain aged or disabled individuals), 

11 other than paragraph (4). 

12 ‘‘(E) Old section 1902(o) (relating to dis13 regard of certain supplemental security income 

14 benefits). 

15 ‘‘(F) Old section 1902(v) (relating to eligi16 bility determinations of blind or disabled indi17 viduals). 

18 ‘‘(e) OTHER REQUIREMENTS.—The State plan under 

19 this part shall— 

20 ‘‘(1) comply with the requirements of the other 

21 parts of this title; and 

22 ‘‘(2) provide that the State will make the con23 tributions specified under section 340A–1(e) of the 

24 Public Health Service Act . 


rfrederick on DSKD9S0YB1PROD with BILLS
191 

•HR 4529 IH

1 ‘‘SEC. 1905. DEFINITIONS. 

2 ‘‘(a) IN GENERAL.—The definitions specified in this 

3 section shall apply for purposes of this part and, to the 

4 extent applicable and consistent with the policy embodied 

5 in such part, parts B, C, D, E, and F. 

6 ‘‘(b) FEDERAL MEDICAL ASSISTANCE PERCENT7 AGE.—The term ‘Federal medical assistance percentage’ 

8 for any State shall be 100 percent less the State percent9 age; and the State percentage shall be that percentage 

10 which bears the same ratio to 45 percent as the square 

11 of the per capita income of such State bears to the square 

12 of the per capita income of the continental United States 

13 (including Alaska) and Hawaii, except that the Federal 

14 medical assistance percentage shall in no case be less than 

15 50 percent or more than 83 percent. The Federal medical 

16 assistance percentage for any State shall be determined 

17 and promulgated in accordance with the provisions of sec18 tion 1101(a)(8)(B). 

19 ‘‘(c) APPLICATION OF CERTAIN PRE-MODERNIZED

20 MEDICAID PROVISIONS.—The following old provisions 

21 shall apply under this part: 

22 ‘‘(1) OLD SECTION 1905 PROVISIONS.—The fol23 lowing provisions of old section 1905: 

24 ‘‘(A) Old section 1905(d) (relating to the 

25 definition of an intermediate care facility for 

26 the mentally retarded). 


rfrederick on DSKD9S0YB1PROD with BILLS
192 

•HR 4529 IH

1 ‘‘(B) Old section 1905(e) (relating to the 

2 definition of physicians services). 

3 ‘‘(C) Old section 1905(f) (relating to the 

4 definition of nursing facility services). 

5 ‘‘(D) Old section 1905(g) (relating to the 

6 provision of chiropractors’ services). 

7 ‘‘(E) Old section 1905(j) (relating to State 

8 supplementary payments). 

9 ‘‘(F) Old section 1905(k) (relating to sup10 plemental security income benefits payable pur11 suant to section 211 of Public Law 93–66). 

12 ‘‘(G) Old section 1905(l)(1) (relating to 

13 rural health clinic services). 

14 ‘‘(H) Old section 1905(o) (relating to hos15 pice care). 

16 ‘‘(I) Old section 1905(q) (relating to the 

17 definition of a qualified severely impaired indi18 vidual). 

19 ‘‘(J) Old section 1905(r) (relating to the 

20 definition of early and periodic screening, diag21 nostic, and treatment services). 

22 ‘‘(K) Old section 1905(s) (relating to the 

23 definition of a qualified disabled and working 

24 individual). 


rfrederick on DSKD9S0YB1PROD with BILLS
193 

•HR 4529 IH

1 ‘‘(L) Old section 1905(t) (relating to the 

2 definition of primary care case management 

3 services). 

4 ‘‘(M) Old section 1905(v) (relating to the 

5 definition of an employed individual with a 

6 medically improved disability). 

7 ‘‘(N) Paragraphs (1) and (3) of old section 

8 1905(w) (relating to the definition of an inde9 pendent foster care adolescent). 

10 ‘‘(O) Old section 1905(x) (relating to 

11 strategies, treatment, and services for individ12 uals with Sickle Cell Disease). 

13 ‘‘(2) OTHER OLD PROVISIONS.— 

14 ‘‘(A) Old section 1903(m) (relating to the 

15 definition of a medicaid managed care organiza16 tion). 

17 ‘‘SEC. 1906. ENROLLMENT OF INDIVIDUALS UNDER GROUP 

18 HEALTH PLANS AND OTHER ARRANGEMENTS. 

19 ‘‘The following old provisions shall apply under this 

20 part: 

21 ‘‘(1) Old section 1906 (relating to enrollment of 

22 individuals under group health plans). 

23 ‘‘(2) Old section 1902(a)(70) (relating to State 

24 option to establish a non-emergency medical trans25 portation brokerage program). 


rfrederick on DSKD9S0YB1PROD with BILLS
194 

•HR 4529 IH

1 ‘‘(3) Paragraphs (2) and (11) of old section 

2 1902(e) (relating to eligibility for individuals en3 rolled with a group health plan or under a managed 

4 care arrangement during a minimum enrollment pe5 riod). 

6 ‘‘SEC. 1907. DRUG REBATES. 

7 ‘‘Old sections 1902(a)(54) and 1927 (relating to pay8 ment for covered outpatient drugs and rebates) shall apply 

9 under this part. 

10 ‘‘SEC. 1908. MANAGED CARE. 

11 ‘‘The following old provisions shall apply under this 

12 part: 

13 ‘‘(1) Old section 1932 (relating to managed 

14 care), other than subsection (a)(2) of such section. 

15 ‘‘(2) Old section 1903(k) (relating to technical 

16 and actuarial assistance for States). 

17 ‘‘SEC. 1909. ANNUAL REPORTS. 

18 ‘‘(a) IN GENERAL.—Each State that receives pay19 ments under this part shall submit an annual report to 

20 the Secretary, in such form and manner as the Secretary 

21 shall specify. 

22 ‘‘(b) APPLICATION OF OLD EPSDT REPORTING RE23 QUIREMENTS.—Each annual report shall include the in24 formation required to be reported under old section 

25 1902(a)(43)(D)(iv). 


rfrederick on DSKD9S0YB1PROD with BILLS
195 

•HR 4529 IH

1 ‘‘PART B—GRANTS TO STATES FOR LONG-TERM 

2 CARE SERVICES AND SUPPORTS 

3 ‘‘SEC. 1911. PURPOSE. 

4 ‘‘(a) IN GENERAL.—The purpose of this part is to 

5 increase the flexibility of States in operating a system of 

6 long-term care services and supports designed to— 

7 ‘‘(1) provide assistance to needy families so that 

8 individuals with disabilities and low-income senior 

9 citizens may be served and supported in their own 

10 homes and communities; 

11 ‘‘(2) emphasize the independence and dignity of 

12 the person served by public programs; 

13 ‘‘(3) end the institutional bias that existed 

14 under the Medicaid program prior to January 1, 

15 2011; 

16 ‘‘(4) provide stable and predictable funding for 

17 States as they rebalance their long-term care sys18 tems from institutions to communities; 

19 ‘‘(5) provide flexibility to States to adopt new 

20 and innovative service delivery methods; and 

21 ‘‘(6) promote independence and support activi22 ties that will enable individuals to return or main23 tain ties to the community, including through em24 ployment. 

25 ‘‘(b) NO INDIVIDUAL ENTITLEMENT.—No individual 

26 determined eligible for long-term care services and supVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00195 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
196 

•HR 4529 IH

1 ports under this part shall be entitled to a specific service 

2 or type of delivery of service. 

3 ‘‘SEC. 1912. STATE PLAN. 

4 ‘‘(a) IN GENERAL.—In order to receive payments 

5 under this part, a State must have an approved State plan 

6 for long-term care services and supports. A State long 

7 term care services and supports plan shall include a de8 scription, consistent with the requirements of this part, 

9 of— 

10 ‘‘(1) income and assets eligibility standards and 

11 spousal impoverishment protections consistent with 

12 subsection (b); 

13 ‘‘(2) the standardized assessments tools used to 

14 determine eligibility for specific long-term care serv15 ices and supports; 

16 ‘‘(3) the person-centered plans used to provide 

17 such services and supports; 

18 ‘‘(4) the proposed uses of funding, if applicable, 

19 to provide targeted methods to meet individual level 

20 of support needs including tiering (preventive, emer21 gency, low, medium, high); and 

22 ‘‘(5) the long-term care services and supports to 

23 be available under the plan based on individual as24 sessment of need in accordance with sections 1916 

25 and 1917. 


rfrederick on DSKD9S0YB1PROD with BILLS
197 

•HR 4529 IH

1 ‘‘(b) MINIMUM ELIGIBILITY STANDARDS.— 

2 ‘‘(1) POPULATIONS COVERED.—The State plan 

3 shall specify the disabled and elderly populations 

4 who are eligible for long-term care services and sup5 ports. 

6 ‘‘(2) NEEDS-BASED CRITERIA.—The plan shall 

7 include a description of the needs-based criteria the 

8 State will use to assess an individual’s need for spe9 cific services and supports available under the State 

10 plan. 

11 ‘‘(3) OTHER ELIGIBILITY REQUIREMENTS.— 

12 ‘‘(A) INCOME AND ASSETS.—A State may 

13 use different income and asset standards and 

14 methodologies for determining eligibility than 

15 those used for determining eligibility for acute 

16 care medical assistance under part A. A State 

17 may not make eligibility standards related to 

18 income, asset, and spousal impoverishment pro19 tection more restrictive than the Federal min20 imum requirements of December 31, 2008. 

21 ‘‘(B) APPLICATION OF SPOUSAL IMPOVER22 ISHMENT PROTECTIONS.—The State plan shall 

23 provide that the State shall comply with the re24 quirements of section 1918 (relating to spousal 

25 impoverishment protections). 


rfrederick on DSKD9S0YB1PROD with BILLS
198 

•HR 4529 IH

1 ‘‘(C) STATEWIDENESS.—The State plan 

2 shall provide that, except with respect to meth3 ods used for determining homestead exemp4 tions, the income and asset standards and 

5 methodologies shall be in effect in all political 

6 subdivisions of the State. 

7 ‘‘(4) TRANSITION ASSISTANCE.—The State plan 

8 shall specify how the State will provide transition as9 sistance for individuals who, on December 31, 2010, 

10 are enrolled under the State plan under old title 

11 XIX (or under a waiver of that plan) and receiving 

12 long-term care services or supports on that date. 

13 The State shall provide such assistance to individ14 uals who are and are not likely to be determined eli15 gible for long-term care services and supports under 

16 the State plan under this part, as in effect on Janu17 ary 1, 2011 (or the first day on which the State plan 

18 is in effect under this part). 

19 ‘‘(c) PAYMENT METHODOLOGIES TO PROVIDERS.— 

20 ‘‘(1) IN GENERAL.—The State plan shall de21 scribe the methodologies used to determine payments 

22 to providers. Such methodologies— 

23 ‘‘(A) may be varied to assist in 

24 transitioning from facilities-based to commu25 nity-based care; and 


rfrederick on DSKD9S0YB1PROD with BILLS
199 

•HR 4529 IH

1 ‘‘(B) shall not be subject to Secretarial ap2 proval. 

3 ‘‘(2) TRANSPARENCY.—The State plan shall 

4 provide that the State shall make publicly avail5 able— 

6 ‘‘(A) the payment methodologies applicable 

7 under the plan; and 

8 ‘‘(B) the name of any provider that re9 ceives $1,000,000 or more in any 12-month pe10 riod and the actual amount paid to the provider 

11 during that period. 

12 ‘‘(d) COORDINATION OF EFFORT WITH OTHER RE13 LATED PUBLIC AND PRIVATE PROGRAMS.—The plan shall 

14 include a description of the State’s efforts to coordinate 

15 the delivery of services and supports under the plan with 

16 other related public and private programs that serve indi17 viduals with disabilities or aged populations that need or 

18 may be at risk of needing long term care. 

19 ‘‘(e) PUBLIC AVAILABILITY OF STATE PLAN.—The 

20 State shall make available to the public the State plan 

21 under this part and any amendments submitted by the 

22 State to the plan. 

23 ‘‘(f) APPLICATION OF OLD TITLE XIX REQUIRE24 MENTS.—The following old title XIX provisions shall 

25 apply to a State plan under this part: 


rfrederick on DSKD9S0YB1PROD with BILLS
200 

•HR 4529 IH

1 ‘‘(1) Subsections (a)(50) and (q) of old section 

2 1902 (relating to a monthly personal needs allow3 ance for certain institutionalized individuals and 

4 couples). 

5 ‘‘(2) Old section 1902(a)(67) (relating to pay6 ment for certain services furnished to a PACE pro7 gram eligible individual). 

8 ‘‘(3) Paragraph (1) of old section 1902(r) (re9 lating to the post-eligibility treatment of income for 

10 certain individuals) and paragraph (2) of such sec11 tion (relating to methodologies for determining in12 come and resource eligibility for individuals, but only 

13 with respect to individuals who are eligible under 

14 this part on or after January 1, 2011). 

15 ‘‘(4) Old section 1905(i) (relating to the defini16 tion of an institution for mental diseases). 

17 ‘‘(g) OTHER REQUIREMENTS OF OTHER PARTS.— 

18 The State plan under this part shall— 

19 ‘‘(1) comply with the requirements of the other 

20 parts of this title; and 

21 ‘‘(2) provide that the State will make the con22 tributions specified under section 340A–1(e) of the 

23 Public Health Service Act. 


rfrederick on DSKD9S0YB1PROD with BILLS
201 

•HR 4529 IH

1 ‘‘SEC. 1913. STATE ALLOTMENTS. 

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

3 allotments to States under this section, there is appro4 priated out of any money in the Treasury not otherwise 

5 appropriated— 

6 ‘‘(1) for fiscal year 2011, $65,274,560,000; 

7 ‘‘(2) for fiscal year 2012, $67,885,540,000; 

8 ‘‘(3) for fiscal year 2013, $70,600,964,100; 

9 ‘‘(4) for fiscal year 2014, $73,425,000,000; 

10 ‘‘(5) for fiscal year 2015, $76,362,000,000; 

11 ‘‘(6) for fiscal year 2016, $79,416,480,000; 

12 ‘‘(7) for fiscal year 2017, $82,593,140,000; 

13 ‘‘(8) for fiscal year 2018, $85,896,870,000; and 

14 ‘‘(9) for fiscal year 2019, $89,332,743,000. 

15 ‘‘(b) ALLOTMENTS TO 50 STATES AND THE DISTRICT

16 OF COLUMBIA.— 

17 ‘‘(1) FISCAL YEAR 2011 ALLOTMENTS.—Subject 

18 to subsection (e), the Secretary shall allot to each 

19 State with a long term care plan approved under 

20 this title an amount in fiscal year 2011 equal to the 

21 Federal expenditures made by the State for long22 term care as defined in section 1916 in fiscal year 

23 2008, increased by 8 percent. 

24 ‘‘(2) SUBSEQUENT FISCAL YEAR ALLOT25 MENTS.—For fiscal year 2012 and each subsequent 

26 fiscal year through fiscal year 2019, the allotment 


rfrederick on DSKD9S0YB1PROD with BILLS
202 

•HR 4529 IH

1 for a State under this section is equal to the allot2 ment for the State determined for the preceding fis3 cal year, increased by 4 percent. 

4 ‘‘(c) LIMITATION.— 

5 ‘‘(1) IN GENERAL.—Except as provided in para6 graph (2), no other Federal funds are available 

7 under this title for expenditures incurred for long8 term care services and supports after December 31, 

9 2010, except as provided under a State plan ap10 proved under this part. 

11 ‘‘(2) EXCEPTION.— 

12 ‘‘(A) IN GENERAL.—If a State does not 

13 have an approved State plan by October 1, 

14 2010, the Secretary may make payments equal 

15 to 85 percent of the State’s estimated quarterly 

16 allotment until June 30, 2011. 

17 ‘‘(B) FULL FUNDING.—A State shall re18 ceive 100 percent of its allotment for fiscal year 

19 2011 if the State has a plan approved under 

20 this part by June 30, 2011. 

21 ‘‘(d) MAINTENANCE OF EFFORT.—In order to qualify 

22 for the grant payable under this section, the State must 

23 demonstrate in each fiscal year that it made long-term 

24 care service and supports expenditures (including funding 

25 from local government sources) equal to the amount of 


rfrederick on DSKD9S0YB1PROD with BILLS
203 

•HR 4529 IH

1 not less than 95 percent of the nonfederal share amount 

2 spent in fiscal year 2009 under the State plan under old 

3 title XIX on long term care services and supports (as de4 fined in section 1916). Expenditures not made under this 

5 part shall not be recognized by the Secretary for purposes 

6 of this requirement. 

7 ‘‘(e) GRANTS REDUCED IF INSUFFICIENT APPRO8 PRIATIONS.— 

9 ‘‘(1) IN GENERAL.—If the amount appropriated 

10 for fiscal year 2011 under subsection (a)(1) is less 

11 than the amount necessary to fund each State’s al12 lotment for that fiscal year, the Secretary shall re13 duce the allotment for each State for that fiscal year 

14 based on the applicable percentage determined for 

15 the State under paragraph (2) provide a reduced 

16 percentage basis as follows: Each state shall receive 

17 a percentage of its allotment based on the ratio of 

18 non-institutional spending to total long term care 

19 spending in FY 2009. 

20 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

21 of paragraph (1), the applicable percentage deter22 mined with respect to a State is as follows: 

‘‘If the ratio of the State’s non-institutional 

spending to total long-term care spending 

for fiscal year 2009 is: 

The applicable 

percentage is: 

50 percent or greater ............................................. 100 

at least 46, but less than 50 percent ..................... 99 

at least 40, but less than 46 percent ..................... 98 

at least 36, but less than 40 .................................. 97 


rfrederick on DSKD9S0YB1PROD with BILLS
204 

•HR 4529 IH

at least 30, but less than 36 .................................. 96 

less than 30 percent ............................................... 95. 

1 ‘‘(f) ADMINISTRATIVE EXPENSES.— 

2 ‘‘(1) IN GENERAL.—Each State with a plan ap3 proved under this part shall receive a payment deter4 mined in accordance with amounts appropriated for 

5 part E for administrative expenses incurred in car6 rying out the plan under this part and part A. 

7 ‘‘(2) ASSESSMENT-RELATED COSTS.—Costs at8 tributable to providing an individualized needs-based 

9 assessment for purposes of identifying the long-term 

10 care services and supports to be provided under the 

11 State plan to an individual shall be considered a 

12 long-term care service and support and shall not be 

13 treated as an administrative expense. 

14 ‘‘SEC. 1914. USE OF GRANTS. 

15 ‘‘(a) IN GENERAL.—A State shall use funds for long16 term care services and supports as defined in section 

17 1916. 

18 ‘‘(b) SELF-DIRECTION.—A State shall offer individ19 uals the opportunity to self-direct their long-term care 

20 services and supports. 

21 ‘‘SEC. 1915. ADMINISTRATIVE PROVISIONS. 

22 ‘‘(a) FUNDING ON A QUARTERLY BASIS.—The Sec23 retary shall make payments to States in equal amounts 

24 of a State’s annual allotment on a quarterly basis. Each 


rfrederick on DSKD9S0YB1PROD with BILLS
205 

•HR 4529 IH

1 quarterly payment shall remain available for use by the 

2 State for twelve succeeding fiscal year quarters. 

3 ‘‘(b) PUBLICATION.—The Secretary shall public each 

4 State’s applicable allotment. 

5 ‘‘SEC. 1916. DEFINITION OF LONG-TERM CARE SERVICES 

6 AND SUPPORTS. 

7 ‘‘(a) DEFINITION.— 

8 ‘‘(1) IN GENERAL.—Subject to subsection (e), 

9 in this part, the term ‘long-term care services and 

10 supports’ means any of the services or supports 

11 specified in paragraphs (2) or (3) that may be pro12 vided in a nursing facility, an institution, a home, or 

13 other setting. 

14 ‘‘(2) SERVICES AND SUPPORTS DESCRIBED.— 

15 For purposes of paragraph (1), the services and sup16 ports described in this paragraph include assistive 

17 technology, adaptive equipment, remote monitoring 

18 equipment, case management for the aged, case 

19 management for individuals with disabilities, nursing 

20 home services, long-term rehabilitative services nec21 essary to restore functional abilities, services pro22 vided in intermediate care facilities for people with 

23 disabilities, habilitation services (including adult day 

24 care programs), community treatment teams for in25 dividuals with mental illness, home health services, 


rfrederick on DSKD9S0YB1PROD with BILLS
206 

•HR 4529 IH

1 services provided in an institution for mental dis2 ease, a Program of All-Inclusive Care for the Elderly 

3 (PACE), personal care (including personal assist4 ance services), recovery support including peer coun5 seling, supportive employment, training skills nec6 essary to assist the individual in achieving or main7 taining independence, training of family members in8 cluding foster parents in supportive and behavioral 

9 modification skills, ongoing and periodic training to 

10 maintain life skills, transitional care including room 

11 and board not to exceed 60 days within a 12-month 

12 period. 

13 ‘‘(3) INCLUSION OF CERTAIN BENEFITS UNDER

14 OLD TITLE XIX.—Such services and supports may 

15 include any of the following services: 

16 ‘‘(A) Old section 1905(a)(15) (relating to 

17 services in an intermediate care facility for the 

18 mentally retarded). 

19 ‘‘(B) Services described in subsections 

20 (a)(16) and (h) of old section 1905, but without 

21 regard to any restriction on such services on 

22 the basis of age (relating to inpatient psy23 chiatric hospital services). 

24 ‘‘(C) Old section 1905(a)(22) (relating to 

25 home and community care (to the extent alVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00206 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
207 

•HR 4529 IH

1 lowed and as defined in old section 1929) for 

2 functionally disabled elderly individuals). 

3 ‘‘(D) Old section 1905(a)(23) (relating to 

4 community supported living arrangements serv5 ices (to the extent allowed and as defined in old 

6 section 1930)). 

7 ‘‘(E) Subject to subsection (e), old section 

8 1905(a)(24) but without regard to any restric9 tion on furnishing services to patients or resi10 dents of facilities or institutions (relating to 

11 personal care services). 

12 ‘‘(F) Old sections 1905(a)(26) and 1934 

13 (relating to services furnished under a PACE 

14 program under old section 1934 to PACE pro15 gram eligible individuals enrolled under the pro16 gram under such old section). 

17 ‘‘(G) Old section 1915(c)(5) (relating to 

18 the definition of habilitation services). 

19 ‘‘(4) LIMITATION.—Long-term care services 

20 and supports cannot be used for services and admin21 istrative costs provided through the foster care (with 

22 the exception of training of foster care parents), 

23 child welfare, adult protective services, juvenile jus24 tice, public guardianship, or correctional systems. 


rfrederick on DSKD9S0YB1PROD with BILLS
208 

•HR 4529 IH

1 ‘‘(b) REHABILITATIVE CARE.—For purposes of reha2 bilitation due to acute care medical needs, a State may 

3 claim rehabilitative services provided in an institutional 

4 setting, nursing home, or as part of home health expendi5 tures as acute care benefits under the State plan under 

6 part A rather than under the State plan under this part 

7 for a cumulative period of 30 days within a 12-month pe8 riod if such care is directly related to the onset of an acute 

9 care need. A State shall demonstrate the services were 

10 provided as a direct result of an acute care need. 

11 ‘‘(c) MANAGED CARE.—If a State provides long-term 

12 care services and supports through managed care, the 

13 State shall submit a methodology for determining the level 

14 of expenditures attributed to long term care for approval 

15 by the Secretary. 

16 ‘‘(d) APPLICATION OF PART A DEFINITIONS.—A def17 inition specified in section 1905 shall apply to the same 

18 term used in this part, unless the Secretary determines 

19 that the application of such definition would be incon20 sistent with the purpose of this part. 

21 ‘‘(e) EXCLUSION.—No payments shall be made under 

22 the State plan under this part with respect to long-term 

23 care supports and services provided for any individual who 

24 is an inmate of a public institution. Nothing in the pre25 ceding sentence shall be construed as precluding the proviVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00208 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
209 

•HR 4529 IH

1 sion of long-term care services and supports under the 

2 State plan under this part to an individual who is a pa3 tient in an institution for mental diseases. 

4 ‘‘SEC. 1917. PROVISION REQUIREMENTS FOR LONG-TERM 

5 CARE SERVICES AND SUPPORT, INCLUDING 

6 OPTION FOR SELF-DIRECTED SERVICES AND 

7 SUPPORTS. 

8 ‘‘(a) REQUIREMENTS FOR THE PROVISION OF LONG9 TERM CARE SERVICES AND SUPPORTS.— 

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

11 provisions of this subsection, a State may provide 

12 through a State plan amendment for the provision 

13 of long-term care services and supports for individ14 uals eligible under the State plan under this part, 

15 subject to the following requirements: 

16 ‘‘(A) NEEDS-BASED CRITERIA FOR ELIGI17 BILITY FOR, AND RECEIPT OF, LONG-TERM

18 CARE SERVICES AND SUPPORTS.—The State es19 tablishes needs-based criteria for determining 

20 an individual’s eligibility under the State plan 

21 for medical assistance for such long-term care 

22 services and supports, and if the individual is 

23 eligible for such services and supports, the spe24 cific services and supports that will be available 

25 under the State plan to the individual. 


rfrederick on DSKD9S0YB1PROD with BILLS
210 

•HR 4529 IH

1 ‘‘(B) CRITERIA FOR INSTITUTIONALIZED

2 VERSUS NON-INSTITUTIONALIZED SERVICES.— 

3 In establishing needs-based criteria, the State 

4 may establish criteria for determining eligibility 

5 for, and receipt of, services and supports pro6 vided in a facility or institution that are more 

7 stringent that the criteria established for eligi8 bility and receipt of services and supports in a 

9 non-facility or non-institutionalized setting. 

10 ‘‘(C) AUTHORITY TO LIMIT NUMBER OF

11 ELIGIBLE INDIVIDUALS.—A State may limit the 

12 number of individuals who are eligible for such 

13 services and supports and may establish waiting 

14 lists for the receipt of such services and sup15 ports. 

16 ‘‘(D) CRITERIA BASED ON INDIVIDUAL AS17 SESSMENT.— 

18 ‘‘(i) IN GENERAL.—The criteria estab19 lished by the State shall require an assess20 ment of an individual’s support needs and 

21 capabilities, and may take into account the 

22 inability of the individual to perform 2 or 

23 more activities of daily living (as defined in 

24 section 7702B(c)(2)(B) of the Internal 

25 Revenue Code of 1986) or the need for sigVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00210 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
211 

•HR 4529 IH

1 nificant assistance to perform such activi2 ties, and such other risk factors as the 

3 State determines to be appropriate. 

4 ‘‘(ii) ADJUSTMENT AUTHORITY.—The 

5 State plan amendment provides the State 

6 with the option to modify the criteria es7 tablished under subparagraph (A) (without 

8 having to obtain prior approval from the 

9 Secretary) in the event that the enrollment 

10 of individuals eligible for services exceeds 

11 the projected enrollment, but only if— 

12 ‘‘(I) the State provides at least 

13 60 days notice to the Secretary and 

14 the public of the proposed modifica15 tion; 

16 ‘‘(II) the State deems an indi17 vidual receiving long-term care serv18 ices and supports on the basis of the 

19 most recent version of the criteria in 

20 effect prior to the effective date of the 

21 modification to be eligible for such 

22 services and supports for a period of 

23 at least 12 months beginning on the 

24 date the individual first received medVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00211 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
212 

•HR 4529 IH

1 ical assistance for such services and 

2 supports; and 

3 ‘‘(III) after the effective date of 

4 such modification, the State, at a 

5 minimum, applies the criteria for de6 termining whether an individual re7 quires the level of care provided in a 

8 facility or institutionalized setting 

9 which applied under the State plan 

10 immediately prior to the application of 

11 the modified criteria. 

12 ‘‘(E) INDEPENDENT EVALUATION AND AS13 SESSMENT.— 

14 ‘‘(i) ELIGIBILITY DETERMINATION.— 

15 The State uses an independent evaluation 

16 for making the determinations described in 

17 subparagraph (A). 

18 ‘‘(ii) ASSESSMENT.—In the case of an 

19 individual who is determined to be eligible 

20 for long-term care services and supports, 

21 the State uses an independent assessment, 

22 based on the needs of the individual to— 

23 ‘‘(I) determine a necessary level 

24 of services and supports to be proVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00212 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
213 

•HR 4529 IH

1 vided, consistent with an individual’s 

2 physical and mental capacity; 

3 ‘‘(II) prevent the provision of un4 necessary or inappropriate care; and 

5 ‘‘(III) establish an individualized 

6 care plan for the individual in accord7 ance with subparagraph (G). 

8 ‘‘(F) ASSESSMENT.—The independent as9 sessment required under subparagraph (E)(ii) 

10 shall include the following: 

11 ‘‘(i) An objective evaluation of an in12 dividual’s inability to perform 2 or more 

13 activities of daily living (as defined in sec14 tion 7702B(c)(2)(B) of the Internal Rev15 enue Code of 1986) or the need for signifi16 cant assistance to perform such activities. 

17 ‘‘(ii) A face-to-face evaluation of the 

18 individual by an individual trained in the 

19 assessment and evaluation of individuals 

20 whose physical or mental conditions trigger 

21 a potential need for long-term care services 

22 and supports. 

23 ‘‘(iii) Where appropriate, consultation 

24 with the individual’s family, spouse, guard25 ian, or other responsible individual. 


rfrederick on DSKD9S0YB1PROD with BILLS
214 

•HR 4529 IH

1 ‘‘(iv) Consultation with appropriate 

2 treating and consulting health and support 

3 professionals caring for the individual. 

4 ‘‘(v) An examination of the individ5 ual’s relevant history, medical records, and 

6 care and support needs, guided by best 

7 practices and research on effective strate8 gies that result in improved health and 

9 quality of life outcomes. 

10 ‘‘(vi) An evaluation of the ability of 

11 the individual or the individual’s represent12 ative to self-direct the purchase of, or con13 trol the receipt of, such services and sup14 ports if the individual so elects. 

15 ‘‘(G) INDIVIDUALIZED CARE PLAN.— 

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

17 individual who is determined to be eligible 

18 for long-term care services and supports, 

19 the State uses the independent assessment 

20 required under subparagraph (E)(ii) to es21 tablish a written individualized care plan 

22 for the individual. 

23 ‘‘(ii) PLAN REQUIREMENTS.—The 

24 State ensures that the individualized care 

25 plan for an individual— 


rfrederick on DSKD9S0YB1PROD with BILLS
215 

•HR 4529 IH

1 ‘‘(I) is developed— 

2 ‘‘(aa) in consultation with 

3 the individual, the individual’s 

4 treating physician, health care or 

5 support professional, or other ap6 propriate individuals, as defined 

7 by the State, and, where appro8 priate the individual’s family, 

9 caregiver, or representative; and 

10 ‘‘(bb) taking into account 

11 the extent of, and need for, any 

12 family or other supports for the 

13 individual; 

14 ‘‘(II) identifies the long-term care 

15 services and supports to be furnished 

16 to the individual (or, if the individual 

17 elects to self-direct the purchase of, or 

18 control the receipt of, such services 

19 and supports, funded for the indi20 vidual); and 

21 ‘‘(III) is reviewed at least annu22 ally and as needed when there is a 

23 significant change in the individual’s 

24 circumstances. 


rfrederick on DSKD9S0YB1PROD with BILLS
216 

•HR 4529 IH

1 ‘‘(iii) STATE REQUIREMENT TO OFFER

2 ELECTION FOR SELF-DIRECTED SERVICES

3 AND SUPPORTS.— 

4 ‘‘(I) INDIVIDUAL CHOICE.—The 

5 State shall allow an individual or the 

6 individual’s representative the oppor7 tunity to elect to receive self-directed 

8 long-term care services and supports 

9 in a manner which gives them the 

10 most control over such services and 

11 supports consistent with the individ12 ual’s abilities and the requirements of 

13 subclauses (II) and (III). 

14 ‘‘(II) SELF-DIRECTED.—The 

15 term ‘self-directed’ means, with re16 spect to the long-term care services 

17 and supports offered under the State 

18 plan amendment, such services and 

19 supports for the individual which are 

20 planned and purchased under the di21 rection and control of such individual 

22 or the individual’s authorized rep23 resentative, including the amount, du24 ration, scope, provider, and location of 

25 such services and supports, under the 


rfrederick on DSKD9S0YB1PROD with BILLS
217 

•HR 4529 IH

1 State plan consistent with the fol2 lowing requirements: 

3 ‘‘(aa) ASSESSMENT.—There 

4 is an assessment of the needs, ca5 pabilities, and preferences of the 

6 individual with respect to such 

7 services and supports. 

8 ‘‘(bb) SERVICE PLAN.— 

9 Based on such assessment, there 

10 is developed jointly with such in11 dividual or the individual’s au12 thorized representative a plan for 

13 such services and supports for 

14 such individual that is approved 

15 by the State and that satisfies 

16 the requirements of subclause 

17 (III). 

18 ‘‘(III) PLAN REQUIREMENTS.— 

19 For purposes of subclause (II)(bb), 

20 the requirements of this subclause are 

21 that the plan— 

22 ‘‘(aa) specifies those services 

23 and supports which the individual 

24 or the individual’s authorized 


rfrederick on DSKD9S0YB1PROD with BILLS
218 

•HR 4529 IH

1 representative would be respon2 sible for directing; 

3 ‘‘(bb) identifies the methods 

4 by which the individual or the in5 dividual’s authorized representa6 tive will select, manage, and dis7 miss providers of such services 

8 and supports; 

9 ‘‘(cc) specifies the role of 

10 family members and others whose 

11 participation is sought by the in12 dividual or the individual’s au13 thorized representative with re14 spect to such services and sup15 ports; 

16 ‘‘(dd) is developed through a 

17 person-centered process that is 

18 directed by the individual or the 

19 individual’s authorized represent20 ative, builds upon the individual’s 

21 capacity to engage in activities 

22 that promote community life and 

23 that respects the individual’s 

24 preferences, choices, and abilities, 

25 and involves families, friends, 


rfrederick on DSKD9S0YB1PROD with BILLS
219 

•HR 4529 IH

1 and professionals as desired or 

2 required by the individual or the 

3 individual’s authorized represent4 ative; 

5 ‘‘(ee) includes appropriate 

6 risk management techniques that 

7 recognize the roles and sharing of 

8 responsibilities in obtaining serv9 ices and supports in a self-di10 rected manner and assure the ap11 propriateness of such plan based 

12 upon the resources and capabili13 ties of the individual or the indi14 vidual’s authorized representa15 tive; and 

16 ‘‘(ff) may include an individ17 ualized budget which identifies 

18 the dollar value of the services 

19 and supports under the control 

20 and direction of the individual or 

21 the individual’s authorized rep22 resentative. 

23 ‘‘(IV) BUDGET PROCESS.—With 

24 respect to individualized budgets deVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00219 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
220 

•HR 4529 IH

1 scribed in subclause (III)(ff), the 

2 State plan amendment— 

3 ‘‘(aa) describes the method 

4 for calculating the dollar values 

5 in such budgets based on reliable 

6 costs and service utilization; 

7 ‘‘(bb) defines a process for 

8 making adjustments in such dol9 lar values to reflect changes in 

10 individual assessments and serv11 ice plans; and 

12 ‘‘(cc) provides a procedure 

13 to evaluate expenditures under 

14 such budgets. 

15 ‘‘(H) QUALITY ASSURANCE; CONFLICT OF

16 INTEREST STANDARDS.— 

17 ‘‘(i) QUALITY ASSURANCE.—The 

18 State ensures that the provision of long19 term care services and supports meets 

20 Federal and State guidelines for quality 

21 assurance. 

22 ‘‘(ii) CONFLICT OF INTEREST STAND23 ARDS.—The State establishes standards 

24 for the conduct of the independent evaluaVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00220 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
221 

•HR 4529 IH

1 tion and the independent assessment to 

2 safeguard against conflicts of interest. 

3 ‘‘(I) REDETERMINATIONS AND APPEALS.— 

4 The State allows for at least annual redeter5 minations of eligibility, and appeals in accord6 ance with the frequency of, and manner in 

7 which, redeterminations and appeals of eligi8 bility are made under the State plan. 

9 ‘‘(J) PRESUMPTIVE ELIGIBILITY FOR AS10 SESSMENT.—The State, at its option, elects to 

11 provide for a period of presumptive eligibility 

12 (not to exceed a period of 60 days) only for 

13 those individuals that the State has reason to 

14 believe may be eligible for long-term care serv15 ices and supports. Such presumptive eligibility 

16 shall be limited to medical assistance for car17 rying out the independent evaluation and as18 sessment under subparagraph (E) to determine 

19 an individual’s eligibility for such services and 

20 if the individual is so eligible, the specific long21 term care services and supports that the indi22 vidual will receive. 

23 ‘‘(2) DEFINITION OF INDIVIDUAL’S REP24 RESENTATIVE.—In this section, the term ‘individ25 ual’s representative’ means, with respect to an indiVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00221 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
222 

•HR 4529 IH

1 vidual, a parent, a family member, or a guardian of 

2 the individual, an advocate for the individual, or any 

3 other individual who is authorized to represent the 

4 individual. 

5 ‘‘(b) SELF-DIRECTED PERSONAL ASSISTANCE SERV6 ICES.—If a State includes personal care or personal assist7 ance services in the long-term care services and supports 

8 available under the State plan, the State shall comply with 

9 the requirements of old section 1915(j) in the case of an 

10 individual who elects to self-direct the receipt of such care 

11 or services. 

12 ‘‘SEC. 1918. TREATMENT OF INCOME AND RESOURCES FOR 

13 CERTAIN INSTITUTIONALIZED SPOUSES. 

14 ‘‘Old section 1924 (relating to treatment of income 

15 and resources for certain institutionalized spouses), other 

16 than paragraphs (2) and (4)(A) of subsection (a) of such 

17 section, shall apply under this part. 

18 ‘‘SEC. 1919. ANNUAL REPORTS. 

19 ‘‘(a) IN GENERAL.—Each State that receives pay20 ments under this part shall submit an annual report to 

21 the Secretary, in such form and manner as the Secretary 

22 shall specify. 

23 ‘‘(b) REQUIREMENTS.—The report shall include the 

24 following with respect to the most recent fiscal year ended: 


rfrederick on DSKD9S0YB1PROD with BILLS
223 

•HR 4529 IH

1 ‘‘(1) The number of individuals served under 

2 the plan. 

3 ‘‘(2) The number of individuals served by tier 

4 (preventive, emergency, low, medium, and high 

5 needs). 

6 ‘‘(3) The number of individuals known to the 

7 State on waiting list for services (if any) and type 

8 of disability (physical, developmental, mental health) 

9 or aged. 

10 ‘‘(4) Expenditures by service category. 

11 ‘‘PART C—GRANTS TO STATES FOR SURVEY AND 

12 CERTIFICATION OF MEDICAL FACILITIES 

13 AND OTHER REQUIREMENTS 

14 ‘‘SEC. 1931. AUTHORIZATION OF APPROPRIATIONS. 

15 ‘‘For the purpose of carrying our Federal activities 

16 and providing grants to States for expenses necessary to 

17 carry out this part, there is authorized to be appro18 priated— 

19 ‘‘(1) for fiscal year 2011, $300,000,000; and 

20 ‘‘(2) for each succeeding fiscal year, the amount 

21 authorized under this section for the preceding fiscal 

22 year, increased by 5 percent. 


rfrederick on DSKD9S0YB1PROD with BILLS
224 

•HR 4529 IH

1 ‘‘SEC. 1932. APPLICATION OF CERTAIN REQUIREMENTS 

2 UNDER PRE-MODERNIZED MEDICAID. 

3 ‘‘The following old provisions shall apply under this 

4 part: 

5 ‘‘(1) Old section 1902(a)(9) (relating to health 

6 standards and applicable requirements for laboratory 

7 services). 

8 ‘‘(2) Old section 1902(a)(28) (relating to nurs9 ing facilities and nursing facility services). 

10 ‘‘(3) Old sections 1902(a)(29) and 1908 (relat11 ing to a State program for the licensing of adminis12 trators of nursing homes). 

13 ‘‘(4) Old section 1902(a)(33)(B) (relating to li14 censing health institutions). 

15 ‘‘(5) Old section 1902(d) (relating to medical or 

16 utilization review functions). 

17 ‘‘(6) Old section 1902(i) (relating to inter18 mediate care facilities for the mentally retarded). 

19 ‘‘(7) Old section 1902(y) (relating to psy20 chiatric hospitals). 

21 ‘‘(8) Paragraphs (2) and (6) of old section 

22 1903(g) (relating to the Secretarial requirement to 

23 conduct sample onsite surveys of private and public 

24 institutions and recertifications for the need for cer25 tain services). 


rfrederick on DSKD9S0YB1PROD with BILLS
225 

•HR 4529 IH

1 ‘‘(9) Old section 1903(q)(4)(B) (relating to the 

2 definition of a board and care facility). 

3 ‘‘(10) Old section 1910 (relating to certification 

4 and approval of rural health clinics and intermediate 

5 care facilities for the mentally retarded). 

6 ‘‘(11) Old section 1911 (relating to Indian 

7 Health Service facilities). 

8 ‘‘(12) Old section 1913 (relating to hospital 

9 providers of nursing facility services). 

10 ‘‘(13) Old section 1919 (relating to require11 ments for nursing facilities). 

12 ‘‘PART D—GRANTS TO STATES FOR PROGRAM 

13 INTEGRITY 

14 ‘‘SEC. 1941. AUTHORIZATION OF APPROPRIATIONS. 

15 ‘‘(a) IN GENERAL.—For the purpose of carrying out 

16 Federal activities under this part and providing grants to 

17 States for expenses necessary to carry out this part, there 

18 is authorized to be appropriated— 

19 ‘‘(1) for fiscal year 2011, $100,000,000; and 

20 ‘‘(2) for each succeeding fiscal year, the amount 

21 authorized under this section for the preceding fiscal 

22 year, increased by 5 percent. 

23 ‘‘(b) AVAILABILITY; AUTHORITY FOR USE OF

24 FUNDS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
226 

•HR 4529 IH

1 ‘‘(1) AVAILABILITY.—Amounts appropriated 

2 pursuant to subsection (a) shall remain available 

3 until expended. 

4 ‘‘(2) AUTHORITY FOR USE OF FUNDS FOR

5 TRANSPORTATION AND TRAVEL EXPENSES FOR

6 ATTENDEES AT EDUCATION, TRAINING, OR CON7 SULTATIVE ACTIVITIES.— 

8 ‘‘(A) IN GENERAL.—The Secretary may 

9 use amounts appropriated pursuant to sub10 section (a) to pay for transportation and the 

11 travel expenses, including per diem in lieu of 

12 subsistence, at rates authorized for employees 

13 of agencies under subchapter I of chapter 57 of 

14 title 5, United States Code, while away from 

15 their homes or regular places of business, of in16 dividuals described in subsection (b)(4) who at17 tend education, training, or consultative activi18 ties conducted under the authority of that sub19 section. 

20 ‘‘(B) PUBLIC DISCLOSURE.—The Secretary 

21 shall make available on a website of the Centers 

22 for Medicare & Medicaid Services that is acces23 sible to the public— 

24 ‘‘(i) the total amount of funds ex25 pended for each conference conducted 


rfrederick on DSKD9S0YB1PROD with BILLS
227 

•HR 4529 IH

1 under the authority of subsection (b)(4); 

2 and 

3 ‘‘(ii) the amount of funds expended 

4 for each such conference that were for 

5 transportation and for travel expenses. 

6 ‘‘(c) ANNUAL REPORT.—Not later than 180 days 

7 after the end of each fiscal year, the Secretary shall sub8 mit a report to Congress which identifies— 

9 ‘‘(1) the use of funds appropriated pursuant to 

10 subsection (a); and 

11 ‘‘(2) the effectiveness of the use of such funds. 

12 ‘‘SEC. 1942. APPLICATION OF CERTAIN REQUIREMENTS 

13 UNDER PRE-MODERNIZED MEDICAID. 

14 ‘‘The following old provisions shall apply under this 

15 part: 

16 ‘‘(1) Old subsections (a)(25) (other than sub17 paragraph (E)) and (g) of section 1902 and section 

18 1903(o) (relating to third party liability). 

19 ‘‘(2) Old section 1902(a)(30)(B) (relating to 

20 hospital, intermediate care facility for the mentally 

21 retarded, or hospital for mental diseases admission 

22 screening and review requirements). 

23 ‘‘(3) Old section 1902(a)(32) (relating to cer24 tain payment requirements). 


rfrederick on DSKD9S0YB1PROD with BILLS
228 

•HR 4529 IH

1 ‘‘(4) Old section 1902(a)(35) (relating to dis2 closing entities under section 1124). 

3 ‘‘(5) Old section 1902(a)(37) and the fifth sen4 tence (relating to claims payment procedures). 

5 ‘‘(6) Old section 1902(a)(44) (relating to pay6 ment for inpatient hospital services, services in an 

7 intermediate care facility for the mentally retarded, 

8 or inpatient mental hospital services). 

9 ‘‘(7) Old sections 1902(a)(45) and 1912 (relat10 ing to assignment of rights of payment). 

11 ‘‘(8) Old sections 1902(a)(49) and 1921 (relat12 ing to information and access to information con13 cerning sanctions taken by State licensing authori14 ties against health care practitioners and providers). 

15 ‘‘(9) Old sections 1902(a)(61) and 1903(q) (re16 lating to requirements for a medicaid fraud and 

17 abuse control unit). 

18 ‘‘(10) Old section 1902(a)(64) (relating to re19 ports from beneficiaries and others and data com20 pilation requirements concerning alleged instances of 

21 waste, fraud, and abuse). 

22 ‘‘(11) Old section 1902(a)(65) (relating to pro23 vider number and surety bond requirement for sup24 pliers of durable medical equipment). 


rfrederick on DSKD9S0YB1PROD with BILLS
229 

•HR 4529 IH

1 ‘‘(12) Old section 1902(a)(68) (relating to re2 quirements for certain entities). 

3 ‘‘(13) Old sections 1902(a)(69) and 1936 (re4 lating to the Medicaid Integrity Program) other 

5 than paragraphs (1), (2)(A), and (3) of old section 

6 1936(e). 

7 ‘‘(14) Old section 1902(a)(70)(B)(iv) (relating 

8 to prohibitions on referrals and conflict of interest 

9 for certain brokers of non-emergency medical trans10 portation). 

11 ‘‘(15) Old sections 1902(a)(71) and 1940 (re12 lating to a required asset verification program). 

13 ‘‘(16) Old section 1902(p) (relating to exclusion 

14 of certain individuals or entities). 

15 ‘‘(17) Old section 1902(x) (relating to unique 

16 identifiers for physicians). 

17 ‘‘(18) Old section 1903(p) (relating to inter18 state collection of rights of support). 

19 ‘‘(19) Old section 1903(r)(2) (relating to re20 quirements for mechanized claims processing and in21 formation retrieval systems). 

22 ‘‘(20) Old section 1903(u) (relating to erro23 neous excess payments), other than clause (v) of 

24 paragraph (1)(D). 


rfrederick on DSKD9S0YB1PROD with BILLS
230 

•HR 4529 IH

1 ‘‘(21) Old section 1903(v) and the seventh sen2 tence of old section 1902(a) (relating to limitations 

3 on payments for services furnished to aliens), other 

4 than subparagraphs (A) and (B) of paragraph (4). 

5 ‘‘(22) Old section 1903(x) (relating to citizen6 ship documentation). 

7 ‘‘(23) Old section 1909 (relating to State false 

8 claims act requirements for increased State share of 

9 recoveries). 

10 ‘‘(24) Old section 1914 (relating to withholding 

11 of Federal share of payments for certain Medicare 

12 providers). 

13 ‘‘(25) Old section 1917 (relating to liens, ad14 justments and recoveries, and transfers of assets). 

15 ‘‘(26) Old section 1922 (relating to correction 

16 and reduction plans for intermediate care facilities 

17 for the mentally retarded). 

18 ‘‘PART E—GRANTS TO STATES FOR 

19 ADMINISTRATION 

20 ‘‘SEC. 1951. AUTHORIZATION OF APPROPRIATIONS; PAY21 MENTS TO STATES. 

22 ‘‘(a) IN GENERAL.—For the purpose of providing 

23 grants to States for administrative expenses necessary to 

24 carry out parts A and B, there is authorized to be appro25 priated— 


rfrederick on DSKD9S0YB1PROD with BILLS
231 

•HR 4529 IH

1 ‘‘(1) for fiscal year 2011, $7,000,000,000; and 

2 ‘‘(2) for each succeeding fiscal year, the amount 

3 authorized under this subsection for the preceding 

4 fiscal year, increased by 3 percent. 

5 ‘‘(b) PAYMENTS TO STATES.— 

6 ‘‘(1) IN GENERAL.—From the amount appro7 priated pursuant to subsection (a) for a fiscal year, 

8 the Secretary shall pay each State with approved 

9 plans under parts A and B for the fiscal year an 

10 amount equal to the product of the amount appro11 priated for the fiscal year and the ratio of the total 

12 amount of payments made to the State under para13 graphs (2) through (7) of section 1903(a) for fiscal 

14 year 2008 (as such section was in effect for that fis15 cal year) to the total amount of such payments made 

16 to all States for such fiscal year. 

17 ‘‘(2) PRO RATA ADJUSTMENT.—The Secretary 

18 shall make pro rata adjustments to the amounts de19 termined under paragraph (1) for a fiscal year as 

20 necessary so as to not exceed the amount appro21 priated pursuant to subsection (a) for the fiscal 

22 year. 

23 ‘‘SEC. 1952. COST-SHARING PROTECTIONS. 

24 ‘‘(a) IN GENERAL.—A State may impose cost-sharing 

25 for individuals provided acute care medical assistance 


rfrederick on DSKD9S0YB1PROD with BILLS
232 

•HR 4529 IH

1 under a State plan under part A or long-term care services 

2 and supports under a State plan under part B consistent 

3 with the following: 

4 ‘‘(1) The State may (in a uniform manner) re5 quire payment of monthly premiums or other cost6 sharing set on a sliding scale based on family in7 come. 

8 ‘‘(2) A premium or other cost-sharing require9 ment imposed under paragraph (1) may only apply 

10 to the extent that, in the case of an individual whose 

11 family income— 

12 ‘‘(A) exceeds 150 percent of the poverty 

13 line, the aggregate annual amount of such pre14 mium and other cost-sharing charges imposed 

15 under the plan does not exceed 5 percent of the 

16 individual’s annual income; and 

17 ‘‘(B) exceeds 250 percent of the poverty 

18 line, the aggregate annual amount of such pre19 mium and other cost-sharing charges do not ex20 ceed 7.5 percent of the individual’s annual in21 come. 

22 ‘‘(3) A State shall not require prepayment of 

23 any premium or cost-sharing imposed pursuant to 

24 paragraph (1) and shall not terminate eligibility of 

25 an individual under the State plan on the basis of 


rfrederick on DSKD9S0YB1PROD with BILLS
233 

•HR 4529 IH

1 failure to pay any such premium or cost-sharing 

2 until such failure continues for a period of at least 

3 60 days from the date on which the premium or 

4 cost-sharing became past due. The State may waive 

5 payment of any such premium or cost-sharing in any 

6 case where the State determines that requiring such 

7 payment would create an undue hardship. 

8 ‘‘(b) APPLICATION TO INSTITUTIONALIZED INDIVID9 UALS.—A State may impose cost-sharing consistent with 

10 subsection (a) to individuals who are patients in, or resi11 dents of, a medical institution or nursing facility except 

12 that rules relating to the post-eligibility treatment of in13 come (including a minium monthly personal needs allow14 ance) applicable to institutionalized individuals under old 

15 title XIX shall apply in the same manner to individuals 

16 eligible for long-term care services and supports under a 

17 State plan under part B. 

18 ‘‘(c) POVERTY LINE DEFINED.—In this section, the 

19 term ‘poverty line’ has the meaning given such term in 

20 section 673(2) of the Community Services Block Grant 

21 Act (42 U.S.C. 9902(2)), including any revision required 

22 by such section. 


rfrederick on DSKD9S0YB1PROD with BILLS
234 

•HR 4529 IH

1 ‘‘SEC. 1953. APPLICATION OF CERTAIN REQUIREMENTS 

2 UNDER PRE-MODERNIZED MEDICAID. 

3 ‘‘The following old provisions shall apply to the State 

4 plans under this title: 

5 ‘‘(1) OLD STATE PLAN REQUIREMENTS.— 

6 ‘‘(A) Old section 1902(a)(1) (relating to 

7 the requirement for plans to be in effect in all 

8 political subdivisions of the State). 

9 ‘‘(B) Old section 1902(a)(2) (relating to 

10 State financial participation). 

11 ‘‘(C) Old section 1902(a)(3) (relating to 

12 opportunity for a fair hearing). 

13 ‘‘(D) Old section 1902(a)(4) (relating to 

14 administration). 

15 ‘‘(E) Old section 1902(a)(5) (relating to 

16 designation of a single State agency). 

17 ‘‘(F) Old section 1902(a)(6) (relating to 

18 reporting requirements). 

19 ‘‘(G) Old section 1902(a)(7) (relating to 

20 restrictions on the use or disclosure of informa21 tion). 

22 ‘‘(H) Old section 1902(a)(8) (relating to 

23 applications for assistance). 

24 ‘‘(I) Old section 1902(a)(11) (relating to 

25 cooperative agreements with other State agen26 cies). 


rfrederick on DSKD9S0YB1PROD with BILLS
235 

•HR 4529 IH

1 ‘‘(J) Old section 1902(a)(12) (relating to 

2 determinations of blindness). 

3 ‘‘(K) Old section 1902(a)(13) (relating to 

4 determination of rates of payment for certain 

5 services), other than clause (iv) of subpara6 graph (A). 

7 ‘‘(L) Subsections (a)(15) and (bb) of old 

8 section 1902(a) (relating to payment for serv9 ices provided by rural health clinics and feder10 ally qualified health centers). 

11 ‘‘(M) Old section 1902(a)(16) (relating to 

12 furnishing services to individuals when absent 

13 from the State). 

14 ‘‘(N) Old section 1902(a)(22) (relating to 

15 certain administrative provisions). 

16 ‘‘(O) Paragraphs (23) and (25)(D) of old 

17 section 1902(a) (relating to any willing provider 

18 requirements). 

19 ‘‘(P) Old section 1902(a)(24) (relating to 

20 consultative services by other agencies). 

21 ‘‘(Q) Old section 1902(a)(26) (relating to 

22 review of need for inpatient mental hospital 

23 services and written plan of care requirements). 

24 ‘‘(R) Old section 1902(a)(27) (relating to 

25 provider record keeping requirements). 


rfrederick on DSKD9S0YB1PROD with BILLS
236 

•HR 4529 IH

1 ‘‘(S) Old section 1902(a)(30)(A) (relating 

2 to utilization review). 

3 ‘‘(T) Old section 1902(a)(31) (relating to 

4 written plan of care for services and review for 

5 intermediate care facility for the mentally re6 tarded services). 

7 ‘‘(U) Old section 1902(a)(33)(A) (relating 

8 to quality review requirements). 

9 ‘‘(V) Old section 1902(a)(36) (relating to 

10 public availability of facility surveys). 

11 ‘‘(W) Old section 1902(a)(38) (relating to 

12 the provision of information described in section 

13 1128(b)(9) by certain entities). 

14 ‘‘(X) Old section 1902(a)(39) (relating to 

15 the exclusion of certain entities). 

16 ‘‘(Y) Old section 1902(a)(40) (relating to 

17 requirement for uniform reporting systems). 

18 ‘‘(Z) Old section 1902(a)(41) (relating to 

19 notice to State medical licensing boards). 

20 ‘‘(AA) Old section 1902(a)(42) (relating to 

21 certain audit requirements). 

22 ‘‘(BB) Old section 1902(a)(48) (relating to 

23 eligibility cards). 

24 ‘‘(CC) Old section 1902(a)(55) (relating to 

25 the receipt and initial processing of applicaVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00236 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
237 

•HR 4529 IH

1 tions, but only to the extent such section is con2 sistent with the policy embodied in the State 

3 plans under parts A and B). 

4 ‘‘(DD) Subsections (a)(56) and (s) of old 

5 section 1902 (relating to adjusted payments for 

6 certain inpatient hospital services). 

7 ‘‘(EE) Old section 1902(a)(59) (relating to 

8 maintenance of list of participating physicians). 

9 ‘‘(FF) The second sentence of old section 

10 1902 (relating to designation of certain State 

11 agencies). 

12 ‘‘(GG) Old section 1902(b) (relating to 

13 limitations on approval of plans). 

14 ‘‘(HH) Old section 1902(j) (relating to ap15 plication of requirements to American Samoa 

16 and the Northern Mariana Islands). 

17 ‘‘(2) OTHER OLD TITLE XIX REQUIREMENTS.— 

18 ‘‘(A) Old section 1903(b)(4) (relating to 

19 limitations on payments to enrollment brokers). 

20 ‘‘(B) Old section 1903(c) (relating to fur21 nishing of services included in a program or 

22 plan under part B or C of the Individuals with 

23 Disabilities Education Act). 

24 ‘‘(C) Old section 1903(d) (relating to pay25 ments). 


rfrederick on DSKD9S0YB1PROD with BILLS
238 

•HR 4529 IH

1 ‘‘(D) Old section 1903(e) (relating to costs 

2 with respect to certain hospital services). 

3 ‘‘(E) Old section 1903(i) (relating to limi4 tations on payments). 

5 ‘‘(F) Old section 1903(r) (relating to re6 quirements for mechanized claims processing 

7 and information retrieval systems). 

8 ‘‘(G) Subsections (b)(5) and (w) of old sec9 tion 1903 (relating to limitations on payments 

10 related to provider taxes). 

11 ‘‘(H) Old section 1904 (relating to oper12 ation of State plans). 

13 ‘‘(I) Old sections 1902(a)(60) and 1908A 

14 (relating to medical child support). 

15 ‘‘(J) Paragraphs (32)(D) and (62) of old 

16 section 1902(a) and section 1928 (relating to 

17 program for distribution of pediatric vaccines). 

18 ‘‘PART F—OTHER PROVISIONS 

19 ‘‘SEC. 1961. APPLICATION OF CERTAIN REQUIREMENTS 

20 UNDER PRE-MODERNIZED MEDICAID. 

21 ‘‘The following old provisions shall apply under this 

22 part: 

23 ‘‘(1) The third sentence of old section 1902 (re24 lating to nonapplication of certain old provisions to 

25 a religious nonmedical health care institution). 


rfrederick on DSKD9S0YB1PROD with BILLS
239 

•HR 4529 IH

1 ‘‘(2) Old section 1918 (relating to application of 

2 provisions of title II relating to subpoenas). 

3 ‘‘(3) Old section 1939 (relating to references to 

4 laws directly affecting the Medicaid program.’’. 

5 (b) REPEAL OF TITLE XXI.—Effective January 1, 

6 2011, title XXI of the Social Security Act (42 U.S.C. 

7 1397aa et seq.) is repealed. 

8 SEC. 202. OUTREACH. 

9 (a) AUTHORIZATION OF APPROPRIATIONS.—The fol10 lowing amounts are authorized to be appropriated to the 

11 Secretary of Health and Human Services: 

12 (1) For fiscal year 2010, $100,000,000 for the 

13 design and implementation of a public outreach cam14 paign to inform the public about the changes to the 

15 programs under such titles that take effect on Janu16 ary 1, 2011, as a result of the amendment made by 

17 section 201. 

18 (2) For each of fiscal years 2011and 2012, 

19 $200,000,000 to carry out such public outreach 

20 campaign. 

21 (3) For fiscal year 2013, $50,000,000 to carry 

22 out such public outreach campaign. 

23 (b) AVAILABILITY.—Funds appropriated under sub24 section (a) shall remain available for expenditure through 

25 September 30, 2012. 


rfrederick on DSKD9S0YB1PROD with BILLS
240 

•HR 4529 IH

1 (c) AUTHORITY FOR USE OF FUNDS.—The Secretary 

2 may use funds made available under paragraphs (2) and 

3 (3) of subsection (a) to award grants to, or enter into con4 tracts with, public or private entities, including States, 

5 local governments, schools, churches, and community 

6 groups. 

7 SEC. 203. TRANSITION RULES; MISCELLANEOUS PROVI8 SIONS. 

9 (a) IN GENERAL.— 

10 (1) Not later than June 30, 2011, a State that 

11 is one of the 50 States or the District of Columbia 

12 shall inform all individuals enrolled in a State plan 

13 under title XIX or XXI of the Social Security Act 

14 on such date (and any new enrollees after such date) 

15 of the changes to the programs under such titles 

16 that take effect on January 1, 2012, as a result of 

17 the amendment made by section 201. 

18 (2) No State that is one of the 50 States or the 

19 District of Columbia shall approve any applications 

20 for medical assistance or child health assistance 

21 under a State plan under title XIX or XXI (as in 

22 effect for fiscal year 2011) after December 31, 

23 2011. 

24 (b) SUBMISSION OF LEGISLATIVE PROPOSAL FOR

25 TECHNICAL AND CONFORMING AMENDMENTS.—Not later 


rfrederick on DSKD9S0YB1PROD with BILLS
241 

•HR 4529 IH

1 than 6 months after the date of enactment of this Act, 

2 the Secretary of Health and Human Services shall submit 

3 to Congress a legislative proposal for such technical and 

4 conforming amendments as are necessary to carry out the 

5 amendments made by this Act. 

6 Subtitle B—Supplemental Health 

7 Care Assistance for Low-Income 

8 Families 

9 SEC. 211. SUPPLEMENTAL HEALTH CARE ASSISTANCE FOR 

10 LOW-INCOME FAMILIES. 

11 Part D of title III of the Public Health Service Act 

12 (42 U.S.C. 254b et seq.) is amended by adding at the end 

13 the following: 

14 ‘‘Subpart XI—Health Care Assistance to Low-income 

15 Families 

16 ‘‘SEC. 340A–1. FINANCIAL ASSISTANCE TO LOW-INCOME 

17 FAMILIES. 

18 ‘‘(a) IN GENERAL.—The Secretary shall supplement 

19 the costs of private health insurance for eligible low-in20 come families through the distribution of supplemental 

21 debit cards to eligible families, which may be used to pay 

22 for costs associated with health care for the members of 

23 such eligible families and provide direct support to such 

24 families in accessing health care. 

25 ‘‘(b) ELIGIBILITY.— 


rfrederick on DSKD9S0YB1PROD with BILLS
242 

•HR 4529 IH

1 ‘‘(1) ELIGIBLE FAMILIES.—To be eligible for fi2 nancial assistance under this section— 

3 ‘‘(A) a family shall— 

4 ‘‘(i) consist of 2 or more individuals 

5 living together who are related by mar6 riage, birth, adoption, or guardianship; 

7 ‘‘(ii) have a gross income that does 

8 not exceed 200 percent of the poverty line, 

9 as applicable to a family of the size in10 volved; and 

11 ‘‘(iii) include at least 1 individual who 

12 is a dependent under the age of 19; and 

13 ‘‘(B) no member of the family shall be cov14 ered by private health insurance. 

15 ‘‘(2) DETERMINATION OF GROSS INCOME.—The 

16 gross income of a family shall be determined by tak17 ing the sum of the income of each family member 

18 who is at least age 21 but not older than age 65, 

19 except that the income of any member of the family 

20 who qualifies for coverage under Medicaid Part A or 

21 B shall not be counted. 

22 ‘‘(3) LIMITATION ON INDIVIDUAL ELIGIBILITY; 

23 ASSISTANCE.— 

24 ‘‘(A) IN GENERAL.—No individual who is a 

25 member of an eligible family under paragraph 


rfrederick on DSKD9S0YB1PROD with BILLS
243 

•HR 4529 IH

1 (1) is eligible to qualify separately for financial 

2 assistance under this section. 

3 ‘‘(B) ALIENS.—The Secretary shall ensure 

4 that financial assistance under this section is 

5 not provided for costs associated with health 

6 care for any member of an eligible family who 

7 is an alien individual who is not a lawful per8 manent resident of the United States. 

9 ‘‘(c) SUPPLEMENTAL DEBIT CARD FOR HEALTH

10 CARE EXPENDITURES.— 

11 ‘‘(1) IN GENERAL.—The Secretary shall issue 

12 to each eligible family that enrolls in the program in 

13 accordance with subsection (f) a supplemental debit 

14 card with a dollar-amount value, in accordance with 

15 subsection (d), that may be used to pay for quali16 fying health care expenses. 

17 ‘‘(2) USE OF THE DEBIT CARD.— 

18 ‘‘(A) QUALIFYING HEALTH CARE EX19 PENSES.—A supplemental debit card issued 

20 under this section may be used by members of 

21 the eligible family to pay for— 

22 ‘‘(i) the purchase of health care insur23 ance for any member of the family; 

24 ‘‘(ii) cost sharing expenses related to 

25 health care, including deductibles, copayVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00243 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
244 

•HR 4529 IH

1 ments, and coinsurance, for any member of 

2 the family; and 

3 ‘‘(iii) the direct purchase of health 

4 care services and supplies for any member 

5 of the family. 

6 ‘‘(B) GEOGRAPHIC RANGE.—Each supple7 mental debit card may be used to pay for quali8 fying health care expenses incurred anywhere in 

9 the 50 States or the District of Columbia. 

10 ‘‘(C) LIMITATIONS.—No supplemental 

11 debit card shall be used to make a payment for 

12 any cost— 

13 ‘‘(i) incurred prior to the determina14 tion of the family’s eligibility for assistance 

15 under this section; or 

16 ‘‘(ii) that is not a health-related ex17 pense. 

18 ‘‘(3) ROLLOVER OF UNUSED AMOUNTS.—Not 

19 more than one-quarter of the annual dollar amount 

20 of a supplemental debit card that is unexpended at 

21 the end of each 12-month period may rollover— 

22 ‘‘(A) to the family’s supplemental debit 

23 card for expenditure during the subsequent 12- 

24 month period, provided that the family to which 

25 the supplemental debit card was issued in the 


rfrederick on DSKD9S0YB1PROD with BILLS
245 

•HR 4529 IH

1 previous 12-month period is eligible to receive a 

2 supplemental debit card in the subsequent 12- 

3 month period; or 

4 ‘‘(B) to the family’s health savings account 

5 (as defined in section 223(g)(2) of the Internal 

6 Revenue Code of 1986). 

7 ‘‘(4) MONTHLY STATEMENTS.—The Secretary 

8 shall issue a monthly statement to each family to 

9 which a supplemental debit card has been issued 

10 under this section, which shall state each payment 

11 made with the family’s supplemental debit card dur12 ing the month covered by the statement, the dollar 

13 amount of each such payment, and the provider to 

14 which each such payment was made. 

15 ‘‘(d) AMOUNT OF FINANCIAL ASSISTANCE.— 

16 ‘‘(1) AMOUNTS FOR CALENDAR YEAR 2011.— 

17 Subject to paragraph (5), the amount of financial 

18 assistance available to each eligible family during the 

19 calendar year 2011 shall be determined as follows: 

20 ‘‘(A) Each family whose annual income 

21 does not exceed 100 percent of the poverty 

22 level, as applicable to a family of the size in23 volved, shall receive $5,000. 

24 ‘‘(B) Each family whose annual income ex25 ceeds 100 percent, but does not exceed 200 perVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00245 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
246 

•HR 4529 IH

1 cent, of the poverty level, as applicable to a 

2 family of the size involved, shall receive an 

3 amount as follows: 

4 ‘‘(i) For families whose annual income 

5 exceeds 100 percent but does not exceed 

6 120 percent, of the poverty level, $4,000. 

7 ‘‘(ii) For families whose annual in8 come exceeds 120 percent but does not ex9 ceed 140 percent, of the poverty level, 

10 $3,500. 

11 ‘‘(iii) For families whose annual in12 come exceeds 140 percent but does not ex13 ceed 160 percent, of the poverty level, 

14 $3,000. 

15 ‘‘(iv) For families whose annual in16 come exceeds 160 percent but does not ex17 ceed 180 percent, of the poverty level, 

18 $2,500. 

19 ‘‘(v) For families whose annual in20 come exceeds 180 percent but does not ex21 ceed 200 percent, of the poverty level, 

22 $2,000. 

23 ‘‘(2) ADDITIONAL AMOUNTS.—In addition to 

24 the amounts under paragraph (1), subject to paraVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00246 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
247 

•HR 4529 IH

1 graph (5), the following amounts shall be added to 

2 the supplemental debit cards of qualifying families: 

3 ‘‘(A) For each pregnancy during which a 

4 pregnant woman’s family is eligible for assist5 ance under this section, an additional amount 

6 of $1,000 shall be added to the family’s supple7 mental debit card, except that no family shall 

8 receive such additional $1,000 for any preg9 nancy for which the family received such 

10 amount in the previous 12-month period. 

11 ‘‘(B) For each member of an eligible fam12 ily who is less than 1 year old on any day with13 in the calendar year in which the family is eligi14 ble for assistance, an additional amount of 

15 $500 shall be added to the family’s supple16 mental debit card. 

17 ‘‘(3) COST OF LIVING ADJUSTMENTS.—In the 

18 case of any taxable year beginning in a calendar 

19 year after 2011, each dollar amount contained in 

20 paragraphs (1) and (2) shall be increased in the 

21 same manner as the dollar amounts specified in sec22 tion 25E(b)(3) of the Internal Revenue Code of 

23 1986 are increased by the blended cost-of-living ad24 justment determined under subsection (k)(2) of secVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00247 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
248 

•HR 4529 IH

1 tion 25E of the Internal Revenue Code for the tax2 able year involved. 

3 ‘‘(4) STATE OPTION TO INCREASE AMOUNTS.— 

4 At the option of each State, amounts in excess of 

5 the annual dollar amounts under paragraphs (1) and 

6 (2) may be provided through the supplemental debit 

7 card to eligible families in that State, but no Federal 

8 funds shall be paid to any State for any amount pro9 vided in excess of such annual dollar amount. 

10 ‘‘(5) RISK ADJUSTMENT.—The Secretary may 

11 adjust the amount of financial assistance available to 

12 an eligible family for a calendar year under this sec13 tion based on age, health indicators, and other fac14 tors that represent distinct patterns of health care 

15 services utilization and costs. 

16 ‘‘(e) CONTRIBUTIONS OF STATES.— 

17 ‘‘(1) IN GENERAL.—As a condition for receiving 

18 Federal funds under Part A or Part B of Medicaid, 

19 each State shall contribute 50 percent of the total 

20 amount expended under the supplemental debit card 

21 program by the participating families that reside 

22 within the State during the time that the family re23 sides in that State. For purposes of this section, the 

24 residency of a family is determined by the residency 

25 the legally responsible head of the household. 


rfrederick on DSKD9S0YB1PROD with BILLS
249 

•HR 4529 IH

1 ‘‘(2) PAYMENTS FROM STATES.— 

2 ‘‘(A) BILLING NOTIFICATION.— 

3 ‘‘(i) TIMING.—On June 30th and De4 cember 31st of each year, the Secretary 

5 shall send written notification to each 

6 State of that State’s 50 percent share of 

7 expenses, as described in paragraph (1), 

8 for the 6-month period ending on the last 

9 day of the month previous to such notifica10 tion. 

11 ‘‘(ii) CONTENTS.—Each such notifica12 tion to a State shall clearly state— 

13 ‘‘(I) the payment amount due 

14 from the State; 

15 ‘‘(II) the name of each individual 

16 for whom payment was made through 

17 the supplemental debit card program; 

18 ‘‘(III) the health care provider to 

19 whom each payment was made; 

20 ‘‘(IV) the amount of each pay21 ment; and 

22 ‘‘(V) any other information, as 

23 the Secretary requires. 

24 ‘‘(B) PAYMENTS.—Each State shall make 

25 a payment to the Secretary, in the amount 


rfrederick on DSKD9S0YB1PROD with BILLS
250 

•HR 4529 IH

1 billed, not later than 30 days after the billing 

2 notification date, in accordance with subpara3 graph (A)(i). 

4 ‘‘(C) PENALTIES.—If a State fails to pay 

5 to the Secretary an amount required under sub6 paragraph (B), interest shall accrue on such 

7 amount at the rate provided under old section 

8 1903(d)(5) of the Social Security Act. The 

9 amount so owed and applicable interest shall be 

10 immediately offset against amounts otherwise 

11 payable to the State under this section, in ac12 cordance with the Federal Claims Collection Act 

13 of 1996 and applicable regulations. 

14 ‘‘(f) ENROLLMENT.— 

15 ‘‘(1) IN GENERAL.—The Secretary shall estab16 lish procedures and times for enrollment in the sup17 plemental debit card program. Open enrollment shall 

18 be available not less than 4 times per calendar year. 

19 ‘‘(2) TRANSITION OF INDIVIDUALS ENROLLED

20 IN MEDICAID OR THE STATE CHILDREN’S HEALTH

21 INSURANCE PROGRAM.— 

22 ‘‘(A) INFORMATION FROM THE STATES.— 

23 Each State shall— 

24 ‘‘(i) not later than June 30, 2011, in25 form all individuals then enrolled in MedVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00250 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
251 

•HR 4529 IH

1 icaid or the State Children’s Health Insur2 ance Program (SCHIP), of the changes in 

3 effect beginning on January 1, 2012; and 

4 ‘‘(ii) not later than October 31, 2011, 

5 redetermine the eligibility of each indi6 vidual enrolled in Medicaid or SCHIP, 

7 other than those individuals who qualify 

8 for Medicaid or SCHIP as disabled, elder9 ly, or a special population, for the supple10 mental debit card program, according to 

11 the eligibility criteria under subsection (b). 

12 ‘‘(B) AUTOMATIC ENROLLMENT.—The 

13 Secretary shall provide for the automatic enroll14 ment in the supplemental debit card program of 

15 all individuals who are enrolled in Medicaid or 

16 SCHIP and who have been redetermined by a 

17 State under subparagraph (A) to be eligible for 

18 Medicaid or SCHIP. Any individual who is de19 termined by a State not to qualify for the sup20 plemental debit card program may retain cov21 erage under Medicaid or SCHIP until June 30, 

22 2012. 

23 ‘‘(3) ASSISTANCE WITH QUALIFIED HEALTH IN24 SURANCE CREDIT.—Each State shall, to the extent 

25 practicable, provide individuals residing within the 


rfrederick on DSKD9S0YB1PROD with BILLS
252 

•HR 4529 IH

1 State with information regarding the qualified health 

2 insurance credit described in section 25E of the In3 ternal Revenue Code of 1986, including information 

4 regarding eligibility for, and how to claim, such 

5 credit. 

6 ‘‘(g) ADMINISTRATION.— 

7 ‘‘(1) NATIONAL SYSTEM.—The Secretary may 

8 enter into contracts or agreements with a State, a 

9 consortium of States, or a private entity, including 

10 a bank, enrollment broker, or similar entity, to es11 tablish and maintain a unified national system to 

12 support the processes and transactions necessary to 

13 administer this section. 

14 ‘‘(2) AUTOMATED SYSTEM.—The Secretary 

15 shall establish an automated means, such as an elec16 tronic benefit transfer system, by which the benefits 

17 under this section shall be transferred to eligible 

18 families. 

19 ‘‘(3) VERIFICATION OF APPLICANT INFORMA20 TION.—The Secretary may verify information pro21 vided by applicants with the appropriate Federal, 

22 State, and local agencies, including the Internal Rev23 enue Service, the Social Security Administration, the 

24 Department of Labor, and child support enforce25 ment agencies. 


rfrederick on DSKD9S0YB1PROD with BILLS
253 

•HR 4529 IH

1 ‘‘(4) CHOICE COUNSELING.—The Secretary 

2 may enter into contracts or agreements with a State, 

3 a consortium of a State, or a private entity, includ4 ing an enrollment broker or community organization 

5 or other organization, to educate eligible families 

6 about their options and to assist in their enrollment 

7 in the supplemental debit card plan. 

8 ‘‘(5) APPEALS.—The Secretary shall establish 

9 an independent appeals process, to be administered 

10 by an entity separate from the entity that makes ini11 tial eligibility determinations, which shall be avail12 able to individuals who are denied benefits under the 

13 supplemental debit card program. 

14 ‘‘(6) RESOLUTION OF ERRORS.—The Secretary 

15 shall provide for a reconciliation process with the 

16 States to resolve any errors and adjudicate disputes 

17 due to incomplete or false information in a family’s 

18 application or in the billing process described in sub19 section (e). 

20 ‘‘(7) PENALTIES FOR FALSE INFORMATION.— 

21 Any person who provides false information to qualify 

22 for the supplemental debit card program shall pay a 

23 penalty in the amount of 110 percent of the amount 

24 of assistance paid on behalf of such person and all 

25 members of such person’s family. 


rfrederick on DSKD9S0YB1PROD with BILLS
254 

•HR 4529 IH

1 ‘‘(h) IMPLEMENTATION PLAN.—Not later than 6 

2 months after the date of enactment of this section, the 

3 Secretary shall submit to Congress a plan for imple4 menting this program. 

5 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— 

6 ‘‘(1) ADMINISTRATION OF THE SUPPLEMENTAL

7 DEBIT CARD PROGRAM.—To administer the program 

8 under this section, there are authorized to be appro9 priated— 

10 ‘‘(A) for fiscal year 2009, $300,000,000, 

11 for the design of a unified, national system of 

12 conducting the supplemental debit card pro13 gram; 

14 ‘‘(B) for fiscal year 2010, $1,000,000,000 

15 for start-up costs, including, contracting, hiring 

16 and training employees, and testing the pro17 gram; and 

18 ‘‘(C) for fiscal year 2011 and each subse19 quent fiscal year, $3,000,000,000. 

20 ‘‘(2) AUTHORIZATION OF BENEFITS UNDER

21 THE SUPPLEMENTAL DEBIT CARD PROGRAM.—To 

22 provide the supplemental debit card benefits de23 scribed in this section, there are authorized to be ap24 propriated— 


rfrederick on DSKD9S0YB1PROD with BILLS
255 

•HR 4529 IH

1 ‘‘(A) for fiscal year 2011, 

2 $24,020,000,000; 

3 ‘‘(B) for fiscal year 2012, 

4 $25,220,000,000; 

5 ‘‘(C) for fiscal year 2013, 

6 $26,480,000,000; 

7 ‘‘(D) for fiscal year 2014, 

8 $27,810,000,000; and 

9 ‘‘(E) for fiscal year 2015, 

10 $29,200,000,000.’’. 

11 TITLE III—MEDICARE REFORM 

12 Subtitle A—New Medicare Program 

13 SEC. 301. BENEFIT CHANGES. 

14 Title XVIII of the Social Security Act is amended by 

15 inserting after section 1808 the following new section: 

16 ‘‘PROGRAM FOR NEW MEDICARE BENEFICIARIES

17 BEGINNING IN 2021

18 ‘‘SEC. 1810. (a) APPLICATION.— 

19 ‘‘(1) IN GENERAL.—Notwithstanding any other 

20 provision of law (including sections 226 and 226A), 

21 the provisions of this section shall apply to individ22 uals (other than individuals entitled to benefits only 

23 because of the application of section 1881(d)) who 

24 first become entitled to benefits under part A, or 

25 whose coverage period under part B begins, on or 

26 after January 1, 2021. 


rfrederick on DSKD9S0YB1PROD with BILLS
256 

•HR 4529 IH

1 ‘‘(2) NO IMPACT ON FICA/SECA TAX REVE2 NUES.—Nothing in this section shall be construed as 

3 affecting revenues through the payment of hospital 

4 insurance taxes under sections 1401(b), 3101(b), 

5 and 3111(b) of the Internal Revenue Code of 1986. 

6 ‘‘(3) NO IMPACT ON OTHER BENEFICIARIES.— 

7 ‘‘(A) IN GENERAL.—This section shall not 

8 apply to individuals not described in paragraph 

9 (1). 

10 ‘‘(B) NO IMPACT ON COMPUTATION OF

11 MEDICARE PREMIUMS FOR OLDER MEDICARE

12 BENEFICIARIES.—Premiums under parts A, B, 

13 and D shall be computed for individuals not de14 scribed in paragraph (1) based on the average 

15 costs that the Secretary estimates would have 

16 been applicable if this section did not apply. 

17 ‘‘(b) ALTERNATIVE BENEFITS.— 

18 ‘‘(1) IN GENERAL.—An individual described in 

19 subsection (a)(1) is only entitled to benefits under 

20 this title in accordance with this section. In the case 

21 of such an individual who has qualified health insur22 ance coverage, the individual is entitled under this 

23 section— 

24 ‘‘(A) to an income-related payment under 

25 subsection (c); and 


rfrederick on DSKD9S0YB1PROD with BILLS
257 

•HR 4529 IH

1 ‘‘(B) in the case of a low-income individual 

2 (as defined in paragraph (3) of subsection (d)), 

3 to a contribution to a medical savings account 

4 of the individual in the amount specified in 

5 such subsection. 

6 ‘‘(2) ALTERNATIVE PREMIUM OBLIGATIONS.— 

7 An individual described in subsection (a)(1)— 

8 ‘‘(A) is not responsible for payment of any 

9 premium otherwise applicable under part B or 

10 D; but 

11 ‘‘(B) is responsible for payment of the pre12 mium for qualified health insurance coverage 

13 referred to in paragraph (1) and may apply the 

14 income-related payment under subsection (c) to15 ward such premium. 

16 ‘‘(3) QUALIFIED HEALTH INSURANCE COV17 ERAGE.— 

18 ‘‘(A) PUBLICATION OF LIST.—The Sec19 retary of Health and Human Services shall 

20 publish an annual list of health insurance plans 

21 that meet the definition of qualified health in22 surance coverage, as described in subparagraph 

23 (B) below, at least one of such plans must ad24 dress the special needs of Medicare’s highest25 cost seniors, as determined by the Secretary. 


rfrederick on DSKD9S0YB1PROD with BILLS
258 

•HR 4529 IH

1 ‘‘(B) QUALIFIED HEALTH INSURANCE COV2 ERAGE DEFINED.—In this subsection, the term 

3 ‘qualified health insurance coverage’ means 

4 health benefits coverage, whether under a group 

5 health plan, health insurance coverage or other6 wise, but does not include coverage under a 

7 health plan if substantially all of its coverage is 

8 coverage described in section 223(c)(1)(B) of 

9 the Internal Revenue Code of 1986. 

10 ‘‘(c) INCOME-RELATED PAYMENT.— 

11 ‘‘(1) IN GENERAL.—The amount of the income12 related payment under this subsection for an indi13 vidual for a year is equal to— 

14 ‘‘(A) the annual amount specified for the 

15 year in paragraph (2); 

16 ‘‘(B) subject to reduction under paragraph 

17 (3) (relating to higher income individuals); 

18 ‘‘(C) further subject to adjustment under 

19 paragraph (4); and 

20 ‘‘(D) subject to pro-ration under para21 graph (5). 

22 ‘‘(2) ANNUAL AMOUNT.— 

23 ‘‘(A) IN GENERAL.—The annual amount 

24 specified in this paragraph— 


rfrederick on DSKD9S0YB1PROD with BILLS
259 

•HR 4529 IH

1 ‘‘(i) for 2011 is the average nominal 

2 dollar value of the Medicare benefit; and 

3 ‘‘(ii) for any subsequent year is the 

4 annual amount specified in this paragraph 

5 for the preceding year increased by the an6 nual inflation adjustment described in sub7 paragraph (B) for such subsequent year. 

8 Any amount computed under clause (ii) that is 

9 not a multiple of $12 shall be rounded to the 

10 nearest multiple of $12. 

11 ‘‘(B) ANNUAL INFLATION ADJUSTMENT.— 

12 The annual inflation adjustment under this 

13 subparagraph for a year is equal to the average 

14 of— 

15 ‘‘(i) the annual rate of increase in the 

16 consumer price index for urban consumers 

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

18 as projected by the Secretary in consulta19 tion with the Bureau of Labor Statistics 

20 before the beginning of the year; and 

21 ‘‘(ii) the annual rate of increase in the 

22 medical care component of the consumer 

23 price index for all urban consumers (U.S. 

24 city average) for the year, as projected by 

25 the Secretary in consultation with the BuVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00259 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
260 

•HR 4529 IH

1 reau of Labor Statistics before the begin2 ning of the year. 

3 ‘‘(3) REDUCTION FOR HIGHER-INCOME INDIVID4 UALS.— 

5 ‘‘(A) IN GENERAL.—In the case of an indi6 vidual whose modified adjusted gross income 

7 exceeds the threshold amount specified in para8 graph (2) of section 1839(i), as adjusted under 

9 paragraph (5) of such section, the annual 

10 amount under paragraph (2) shall be reduced 

11 by the adjustment percentage specified in sub12 paragraph (B). 

13 ‘‘(B) ADJUSTMENT PERCENTAGE.—In the 

14 case of an individual for whom the applicable 

15 percentage specified in section 1839(i)(3)(C)— 

16 ‘‘(i) is less than 80 percent, the ad17 justment percentage under this subpara18 graph shall be 50 percent; or 

19 ‘‘(ii) is equal to 80 percent, the ad20 justment percentage under this subpara21 graph shall be 70 percent. 

22 ‘‘(C) APPLICATION OF CERTAIN PROVI23 SIONS.—The provisions of paragraphs (4) 

24 through (6) of section 1839(i) shall apply under 


rfrederick on DSKD9S0YB1PROD with BILLS
261 

•HR 4529 IH

1 this paragraph in the same manner as they 

2 apply for purposes of such section. 

3 ‘‘(4) RISK, GEOGRAPHIC AREA, AND OTHER AD4 JUSTMENTS.— 

5 ‘‘(A) RISK ADJUSTMENT.—The payment 

6 amount under this subsection for an individual 

7 shall be adjusted, using a methodology specified 

8 by the Secretary, in a manner that takes into 

9 account the relative risk factors (such as those 

10 described in section 1853(a)(1)(C)(i)) associ11 ated with such individual. Such adjustment 

12 shall be made in such a manner as not to 

13 change the total amount of payments made 

14 under this subsection as a result of such adjust15 ment. 

16 ‘‘(B) PARTIAL GEOGRAPHIC AREA ADJUST17 MENT.—Such payment amount for an indi18 vidual also shall be adjusted, using a method19 ology specified by the Secretary, in a manner 

20 that takes into account the relative differences 

21 in area health care costs for the area in which 

22 the individual resides compared to other areas. 

23 Such adjustment shall be made in such a man24 ner as not to change the total amount of pay25 ments made under this subsection as a result of 


rfrederick on DSKD9S0YB1PROD with BILLS
262 

•HR 4529 IH

1 such adjustment. The Secretary shall provide 

2 for a decrease over time in the adjustment 

3 made under this subparagraph. 

4 ‘‘(C) CERTAIN PART A BUY-IN INDIVID5 UALS.—Such payment amount for an individual 

6 who is not eligible for benefits under part A 

7 pursuant to section 226 or 226A shall be ad8 justed by such proportion or amount as the 

9 Secretary determines appropriate to take into 

10 account premiums that would otherwise be pay11 able under section 1818 or 1818A for benefits 

12 under part A. 

13 ‘‘(5) PRO-RATIO FOR PARTIAL YEAR OF ELIGI14 BILITY.—In the case of an individual whose entitle15 ment under this section is for less than an entire 

16 year, the payment amount under this subsection 

17 shall be pro-rated to reflect the portion of the year 

18 included in such entitlement. 

19 ‘‘(6) PAYMENT ON PERIODIC BASIS.—The Sec20 retary shall provide for the payment under this sub21 section on an appropriate monthly or other periodic 

22 basis. 

23 ‘‘(d) CONTRIBUTION TO A MEDICAL SAVINGS AC24 COUNT (MSA) FOR LOW-INCOME INDIVIDUALS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
263 

•HR 4529 IH

1 ‘‘(1) IN GENERAL.—The amount of the con2 tribution under subsection (b)(1)(B) to a medical 

3 savings account of a low-income individual is 

4 equal— 

5 ‘‘(A) in the case of an individual described 

6 in clause (i) or (ii) of paragraph (4)(A), to the 

7 full MSA contribution amount (as defined in 

8 paragraph (2)); or 

9 ‘‘(B) in the case of any other individual, to 

10 75 percent of the full MSA contribution 

11 amount. 

12 ‘‘(2) FULL MSA CONTRIBUTION AMOUNT.—For 

13 purposes of this subsection, the term ‘full MSA con14 tribution amount’ means, for a year for an indi15 vidual, an amount to be equivalent to the full 

16 amount of the average deductible of a high-deduct17 ible health plan (as defined in section 223(c)(2) of 

18 the Internal Revenue Code of 1986) as determined 

19 by the Secretary. 

20 ‘‘(3) NO MEDICAID COVERAGE FOR MEDICARE21 COVERED SERVICES.— 

22 ‘‘(A) IN GENERAL.—In the case of an indi23 vidual who is eligible to be provided a contribu24 tion to a medical savings account under this 

25 subsection, the individual is not entitled to any 


rfrederick on DSKD9S0YB1PROD with BILLS
264 

•HR 4529 IH

1 payment under a State plan under title XIX 

2 with respect to any benefits relating to items 

3 and services for which coverage is provided 

4 under this title. 

5 ‘‘(B) CONSTRUCTION.—Subparagraph (A) 

6 shall not affect the continued provision of med7 ical assistance under title XIX for items and 

8 services, such as dental, vision, or long-term 

9 care facility services, for which benefits are not 

10 provided under this title regardless of medical 

11 necessity. 

12 ‘‘(4) PERIODIC PAYMENT.—The Secretary shall 

13 provide for the contribution into medical savings ac14 counts of amounts under this subsection on an ap15 propriate monthly or other periodic basis. 

16 ‘‘(5) LOW-INCOME INDIVIDUAL DEFINED.— 

17 ‘‘(A) IN GENERAL.—For purposes of this 

18 section, the term ‘low-income individual’ means 

19 an individual described in subsection (a)(1)— 

20 ‘‘(i) who meets the requirement of 

21 section 1936(c)(6)(A)(ii) (relating to a full22 benefit dual eligible individual); 

23 ‘‘(ii) whose income (as determined 

24 under section 1612 for purposes of the 

25 supplemental security income program, exVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00264 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
265 

•HR 4529 IH

1 cept as provided in subparagraph (B)) 

2 does not exceed 100 percent of the official 

3 income poverty line (referred to in section 

4 1905(p)(1)) applicable to a family of the 

5 size involved; or 

6 ‘‘(iii) whose income (as so determined) 

7 exceeds 100 percent, but does not exceed 

8 150 percent, of such official income pov9 erty line applicable to a family of the size 

10 involved. 

11 ‘‘(B) APPLICATION OF SPECIAL RULE RE12 GARDING APPLICATION OF SOCIAL SECURITY IN13 CREASES.—The provisions of subparagraph (D) 

14 of section 1905(p)(2) shall apply to determina15 tions of income under subparagraph (A) in the 

16 same manner they apply under such section. 

17 ‘‘(C) DETERMINATION PROCESS.—The 

18 Secretary shall specify a process for the deter19 mination of whether individuals are low-income 

20 individuals.’’. 

21 SEC. 302. INCREASE IN MEDICARE ELIGIBILITY AGE. 

22 Section 226 of the Social Security Act (42 U.S.C. 

23 426) is amended by adding at the end the following new 

24 subsection: 

25 ‘‘(k) INCREASING MEDICARE QUALIFYING AGE.— 


rfrederick on DSKD9S0YB1PROD with BILLS
266 

•HR 4529 IH

1 ‘‘(1) IN GENERAL.—Notwithstanding any other 

2 provision of law, any reference in this section or title 

3 XVIII (or title XIX insofar as it refers to title 

4 XVIII) to ‘age 65’ shall be deemed a reference to 

5 the medicare qualifying age specified in paragraph 

6 (2). 

7 ‘‘(2) MEDICARE QUALIFYING AGE SPECIFIED.— 

8 The medicare qualifying age specified in this para9 graph is determined as follows: 

10 ‘‘(A) In the case of an individual who at11 tains 65 years of age before January 1, 2021, 

12 the medicare qualifying age is 65 years of age. 

13 ‘‘(B) In the case of an individual who at14 tains 65 years of age in a year after 2018 and 

15 before 2027, the medicare qualifying age is the 

16 medicare qualifying age specified in this para17 graph for the previous year increased by 2 

18 months. 

19 ‘‘(C) In the case of an individual who at20 tains 65 years of age— 

21 ‘‘(i) in the 2-year period beginning on 

22 January 1, 2027, the medicare qualifying 

23 age is 67 years and 1 month; or 

24 ‘‘(ii) in a subsequent 2-year period be25 ginning before 2087, the medicare qualiVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00266 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
267 

•HR 4529 IH

1 fying age is the medicare qualifying age 

2 specified in this paragraph for the previous 

3 2-year period (or, in the case of the first 

4 2-year period, specified for 2026) increased 

5 by 1 month. 

6 ‘‘(D) In the case of an individual who at7 tains 65 years of age on or after January 1, 

8 2086, the medicare qualifying age is the medi9 care qualifying age specified in this paragraph 

10 is 69 years and 6 months.’’. 

11 SEC. 303. UNIFIED MEDICARE TRUST FUND. 

12 (a) IN GENERAL.—The Federal Hospital Insurance 

13 Trust Fund (established under section 1817 of the Social 

14 Security Act) and the Federal Supplementary Medical In15 surance Trust Fund (established under section 1841 of 

16 such Act) are hereby consolidated into a unified Medicare 

17 trust fund. Such trust fund shall have separate accounts 

18 for parts A, B, and D of such title and shall be adminis19 tered by the same board of trustees that administers the 

20 current Trust Funds. 

21 (b) CONSTRUCTION.—Nothing in this section shall be 

22 construed as affecting the actual transfer of funds or com23 putations of amounts of premiums under any part of the 

24 Medicare program. 


rfrederick on DSKD9S0YB1PROD with BILLS
268 

•HR 4529 IH

1 (c) SOLVENCY.—The Medicare trustee shall establish 

2 a measure of program solvency for the Medicare program 

3 of total outlays as a measure of gross domestic product. 

4 Subtitle B—Changes in Current 

5 Medicare Program 

6 SEC. 311. INCOME-RELATED REDUCTION IN PART D PRE7 MIUM SUBSIDY. 

8 (a) INCOME-RELATED REDUCTION IN PART D PRE9 MIUM SUBSIDY.— 

10 (1) IN GENERAL.—Section 1860D–13(a) of the 

11 Social Security Act (42 U.S.C. 1395w–113(a)) is 

12 amended by adding at the end the following new 

13 paragraph: 

14 ‘‘(7) REDUCTION IN PREMIUM SUBSIDY BASED

15 ON INCOME.— 

16 ‘‘(A) IN GENERAL.—In the case of an indi17 vidual whose modified adjusted gross income 

18 exceeds the threshold amount applicable under 

19 paragraph (2) of section 1839(i) (including ap20 plication of paragraph (5) of such section) for 

21 the calendar year, the monthly amount of the 

22 premium subsidy applicable to the premium 

23 under this section for a month after December 

24 2010 shall be reduced (and the monthly bene25 ficiary premium shall be increased) by the 


rfrederick on DSKD9S0YB1PROD with BILLS
269 

•HR 4529 IH

1 monthly adjustment amount specified in sub2 paragraph (B). 

3 ‘‘(B) MONTHLY ADJUSTMENT AMOUNT.— 

4 The monthly adjustment amount specified in 

5 this subparagraph for an individual for a month 

6 in a year is equal to the product of— 

7 ‘‘(i) the quotient obtained by divid8 ing— 

9 ‘‘(I) the applicable percentage de10 termined under paragraph (3)(C) of 

11 section 1839(i) (including application 

12 of paragraph (5) of such section) for 

13 the individual for the calendar year 

14 reduced by 25.5 percent; by 

15 ‘‘(II) 25.5 percent; and 

16 ‘‘(ii) the base beneficiary premium (as 

17 computed under paragraph (2)). 

18 ‘‘(C) MODIFIED ADJUSTED GROSS IN19 COME.—For purposes of this paragraph, the 

20 term ‘modified adjusted gross income’ has the 

21 meaning given such term in subparagraph (A) 

22 of section 1839(i)(4), determined for the tax23 able year applicable under subparagraphs (B) 

24 and (C) of such section. 


rfrederick on DSKD9S0YB1PROD with BILLS
270 

•HR 4529 IH

1 ‘‘(D) DETERMINATION BY COMMISSIONER

2 OF SOCIAL SECURITY.—The Commissioner of 

3 Social Security shall make any determination 

4 necessary to carry out the income-related reduc5 tion in premium subsidy under this paragraph. 

6 ‘‘(E) PROCEDURES TO ASSURE CORRECT

7 INCOME-RELATED REDUCTION IN PREMIUM

8 SUBSIDY.— 

9 ‘‘(i) DISCLOSURE OF BASE BENE10 FICIARY PREMIUM.—Not later than Sep11 tember 15 of each year beginning with 

12 2011, the Secretary shall disclose to the 

13 Commissioner of Social Security the 

14 amount of the base beneficiary premium 

15 (as computed under paragraph (2)) for the 

16 purpose of carrying out the income-related 

17 reduction in premium subsidy under this 

18 paragraph with respect to the following 

19 year. 

20 ‘‘(ii) ADDITIONAL DISCLOSURE.—Not 

21 later than October 15 of each year begin22 ning with 2010, the Secretary shall dis23 close to the Commissioner of Social Secu24 rity the following information for the pur25 pose of carrying out the income-related reVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00270 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
271 

•HR 4529 IH

1 duction in premium subsidy under this 

2 paragraph with respect to the following 

3 year: 

4 ‘‘(I) The modified adjusted gross 

5 income threshold applicable under 

6 paragraph (2) of section 1839(i) (in7 cluding application of paragraph (5) 

8 of such section). 

9 ‘‘(II) The applicable percentage 

10 determined under paragraph (3)(C) of 

11 section 1839(i) (including application 

12 of paragraph (5) of such section). 

13 ‘‘(III) The monthly adjustment 

14 amount specified in subparagraph 

15 (B). 

16 ‘‘(IV) Any other information the 

17 Commissioner of Social Security de18 termines necessary to carry out the 

19 income-related reduction in premium 

20 subsidy under this paragraph. 

21 ‘‘(F) RULE OF CONSTRUCTION.—The for22 mula used to determine the monthly adjustment 

23 amount specified under subparagraph (B) shall 

24 only be used for the purpose of determining 


rfrederick on DSKD9S0YB1PROD with BILLS
272 

•HR 4529 IH

1 such monthly adjustment amount under such 

2 subparagraph.’’. 

3 (2) COLLECTION OF MONTHLY ADJUSTMENT

4 AMOUNT.—Section 1860D–13(c) of the Social Secu5 rity Act (42 U.S.C. 1395w–113(c)) is amended— 

6 (A) in paragraph (1), by striking ‘‘(2) and 

7 (3)’’ and inserting ‘‘(2), (3), and (4)’’; and 

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

9 paragraph: 

10 ‘‘(4) COLLECTION OF MONTHLY ADJUSTMENT

11 AMOUNT.— 

12 ‘‘(A) IN GENERAL.—Notwithstanding any 

13 other provision of this subsection or section 

14 1854(d)(2), subject to subparagraph (B), the 

15 amount of the income-related reduction in pre16 mium subsidy for an individual for a month (as 

17 determined under subsection (a)(7)) shall be 

18 paid through withholding from benefit pay19 ments in the manner provided under section 

20 1840. 

21 ‘‘(B) AGREEMENTS.—In the case where 

22 the monthly benefit payments of an individual 

23 that are withheld under subparagraph (A) are 

24 insufficient to pay the amount described in such 

25 subparagraph, the Commissioner of Social SeVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00272 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
273 

•HR 4529 IH

1 curity shall enter into agreements with the Sec2 retary, the Director of the Office of Personnel 

3 Management, and the Railroad Retirement 

4 Board as necessary in order to allow other 

5 agencies to collect the amount described in sub6 paragraph (A) that was not withheld under 

7 such subparagraph.’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) MEDICARE.—Part D of title XVIII of the 

10 Social Security Act (42 U.S.C. 1395w–101 et seq.) 

11 is amended— 

12 (A) in section 1860D–13(a)(1)— 

13 (i) by redesignating subparagraph (F) 

14 as subparagraph (G); 

15 (ii) in subparagraph (G), as redesig16 nated by clause (i), by striking ‘‘(D) and 

17 (E)’’ and inserting ‘‘(D), (E), and (F)’’; 

18 and 

19 (iii) by inserting after subparagraph 

20 (E) the following new subparagraph: 

21 ‘‘(F) INCREASE BASED ON INCOME.—The 

22 monthly beneficiary premium shall be increased 

23 pursuant to paragraph (7).’’; and 


rfrederick on DSKD9S0YB1PROD with BILLS
274 

•HR 4529 IH

1 (B) in section 1860D–15(a)(1)(B), by 

2 striking ‘‘paragraph (1)(B)’’ and inserting 

3 ‘‘paragraphs (1)(B) and (1)(F)’’. 

4 (2) INTERNAL REVENUE CODE.—Section 

5 6103(l)(20) of the Internal Revenue Code of 1986 

6 (relating to disclosure of return information to carry 

7 out Medicare part B premium subsidy adjustment) 

8 is amended— 

9 (A) in the heading, by striking ‘‘PART B

10 PREMIUM SUBSIDY ADJUSTMENT’’ and inserting 

11 ‘‘PARTS B AND D PREMIUM SUBSIDY ADJUST12 MENTS’’; 

13 (B) in subparagraph (A)— 

14 (i) in the matter preceding clause (i), 

15 by inserting ‘‘or 1860D–13(a)(7)’’ after 

16 ‘‘1839(i)’’; and 

17 (ii) in clause (vii), by inserting after 

18 ‘‘subsection (i) of such section’’ the fol19 lowing: ‘‘or under section 1860D–13(a)(7) 

20 of such Act’’; and 

21 (C) in subparagraph (B)— 

22 (i) by inserting ‘‘or such section 

23 1860D–13(a)(7)’’ before the period at the 

24 end; 


rfrederick on DSKD9S0YB1PROD with BILLS
275 

•HR 4529 IH

1 (ii) as amended by clause (i), by in2 serting ‘‘or for the purpose of resolving tax 

3 payer appeals with respect to any such pre4 mium adjustment’’ before the period at the 

5 end; and 

6 (iii) by adding at the end the fol7 lowing new sentence: ‘‘Officers, employees, 

8 and contractors of the Social Security Ad9 ministration may disclose such return in10 formation to officers, employees, and con11 tractors of the Department of Health and 

12 Human Services, the Office of Personnel 

13 Management, the Railroad Retirement 

14 Board, the Department of Justice, and the 

15 courts of the United States to the extent 

16 necessary to carry out the purposes de17 scribed in the preceding sentence.’’; and 

18 (D) by adding at the end the following new 

19 subparagraph: 

20 ‘‘(C) TIMING OF DISCLOSURE.—Return in21 formation shall be disclosed to officers, employ22 ees, and contractors of the Social Security Ad23 ministration under subparagraph (A) not later 

24 than the date that is 90 days prior to the date 

25 on which the taxpayer first becomes entitled to 


rfrederick on DSKD9S0YB1PROD with BILLS
276 

•HR 4529 IH

1 benefits under part A of title XVIII of the So2 cial Security Act or eligible to enroll for benefits 

3 under part B of such title.’’. 

4 SEC. 312. REDUCTION IN HOSPITAL MARKETBASKET IN5 CREASES. 

6 Notwithstanding any other provision of law: 

7 (1) OUTPATIENT HOSPITAL SERVICES.—For 

8 2010 and each succeeding year, the OPD fee sched9 ule increase factor otherwise computed under section 

10 1833(t)(3)(C)(iv) of the Social Security Act (42 

11 U.S.C. 1395l(t)(3)(C)(iv)) shall be reduced by .4 

12 percentage points. 

13 (2) INPATIENT HOSPITAL SERVICES.—For fis14 cal year 2010 and each succeeding fiscal year, the 

15 applicable percentage increase otherwise computed 

16 under clauses (i) and (ii) of section 1886(b)(3)(B) of 

17 such Act (42 U.S.C. 1395ww(b)(3)(B)) shall be re18 duced by .4 percentage points. 

19 SEC. 313. ELIMINATION OF INDEXING OF INCOME THRESH20 OLDS FOR PART B INCOME-RELATED PRE21 MIUMS. 

22 (a) IN GENERAL.—Section 1839(i) of the Social Se23 curity Act (42 U.S.C. 1395r(i)) is amended by striking 

24 paragraph (5). 


rfrederick on DSKD9S0YB1PROD with BILLS
277 

•HR 4529 IH

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

2 subsection (a) shall apply to premiums for years beginning 

3 with 2010. 

4 SEC. 314. REINSTATEMENT OF THE MEDICARE TRIGGER. 

5 (a) REINSTATEMENT OF THE MEDICARE TRIGGER.— 

6 (1) DETERMINATIONS OF EXCESS GENERAL

7 REVENUE MEDICARE FUNDING.— 

8 (A) IN GENERAL.—The Board of Trustees 

9 of each medicare trust fund shall include in the 

10 annual reports submitted under subsection 

11 (b)(2) of sections 1817 and 1841 of the Social 

12 Security Act (42 U.S.C. 1395i and 1395t)— 

13 (i) the information described in para14 graph (2); and 

15 (ii) a determination as to whether 

16 there is projected to be excess general rev17 enue medicare funding (as defined in para18 graph (3)) for the fiscal year in which the 

19 report is submitted or for the previous fis20 cal year. 

21 (B) MEDICARE FUNDING WARNING.—For 

22 purposes of section 1105(h) of title 31, United 

23 States Code, and this subsection, an affirmative 

24 determination under subparagraph (A)(i) in 2 

25 consecutive annual reports shall be treated as a 


rfrederick on DSKD9S0YB1PROD with BILLS
278 

•HR 4529 IH

1 medicare funding warning in the year in which 

2 the second such report is made. 

3 (2) INFORMATION.—The information described 

4 in this subsection for an annual report in a year is 

5 as follows: 

6 (A) PROJECTIONS OF GROWTH OF GEN7 ERAL REVENUE SPENDING.—A statement of the 

8 general revenue medicare funding as a percent9 age of the total medicare outlays for each of the 

10 following: 

11 (i) The previous fiscal year. 

12 (ii) Previous fiscal years and as of 10, 

13 50, and 75 years after such year. 

14 (B) COMPARISON WITH OTHER GROWTH

15 TRENDS.—A comparison of the trend of such 

16 percentages with the annual growth rate in the 

17 following: 

18 (i) The gross domestic product. 

19 (ii) Private health costs. 

20 (iii) National health expenditures. 

21 (iv) Other appropriate measures. 

22 (C) PART D SPENDING.—Expenditures, in23 cluding trends in expenditures, under part D of 

24 title XVIII of the Social Security Act, as added 

25 by section 101 of the Medicare Prescription 


rfrederick on DSKD9S0YB1PROD with BILLS
279 

•HR 4529 IH

1 Drug, Improvement, and Modernization Act of 

2 2003 (Public Law 108–173). 

3 (D) COMBINED MEDICARE TRUST FUND

4 ANALYSIS.—A financial analysis of the com5 bined medicare trust funds if general revenue 

6 medicare funding were limited to the percentage 

7 specified in paragraph (3)(A)(ii) of total medi8 care outlays. 

9 (3) DEFINITIONS.—For purposes of this sec10 tion: 

11 (A) EXCESS GENERAL REVENUE MEDI12 CARE FUNDING.—The term ‘‘excess general rev13 enue medicare funding’’ means, with respect to 

14 a fiscal year, that— 

15 (i) general revenue medicare funding 

16 (as defined in subparagraph (B)), ex17 pressed as a percentage of total medicare 

18 outlays (as defined in subparagraph (D)) 

19 for the fiscal year; exceeds 

20 (ii) 45 percent. 

21 (B) GENERAL REVENUE MEDICARE FUND22 ING.—The term ‘‘general revenue medicare 

23 funding’’ means for a year— 


rfrederick on DSKD9S0YB1PROD with BILLS
280 

•HR 4529 IH

1 (i) the total medicare outlays (as de2 fined in subparagraph (D)) for the year; 

3 minus 

4 (ii) the dedicated medicare financing 

5 sources (as defined in subparagraph (C)) 

6 for the year. 

7 (C) DEDICATED MEDICARE FINANCING

8 SOURCES.—The term ‘‘dedicated medicare fi9 nancing sources’’ means the following: 

10 (i) HOSPITAL INSURANCE TAX.— 

11 Amounts appropriated to the Hospital In12 surance Trust Fund under the third sen13 tence of section 1817(a) of the Social Se14 curity Act (42 U.S.C. 1395i(a)) and 

15 amounts transferred to such Trust Fund 

16 under section 7(c)(2) of the Railroad Re17 tirement Act of 1974 (45 U.S.C. 

18 231f(c)(2)). 

19 (ii) TAXATION OF CERTAIN OASDI

20 BENEFITS.—Amounts appropriated to the 

21 Hospital Insurance Trust Fund under sec22 tion 121(e)(1)(B) of the Social Security 

23 Amendments of 1983 (Public Law 98–21), 

24 as inserted by section 13215(c) of the OmVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00280 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
281 

•HR 4529 IH

1 nibus Budget Reconciliation Act of 1993 

2 (Public Law 103–66). 

3 (iii) STATE TRANSFERS.—The State 

4 share of amounts paid to the Federal Gov5 ernment by a State under section 1843 of 

6 the Social Security Act (42 U.S.C. 1395v) 

7 or pursuant to section 1935(c) of such Act. 

8 (iv) PREMIUMS.—The following pre9 miums: 

10 (I) PART A.—Premiums paid by 

11 non-Federal sources under sections 

12 1818 and section 1818A (42 U.S.C. 

13 1395i–2 and 1395i–2a) of such Act. 

14 (II) PART B.—Premiums paid by 

15 non-Federal sources under section 

16 1839 of such Act (42 U.S.C. 1395r), 

17 including any adjustments in pre18 miums under such section. 

19 (III) PART D.—Monthly bene20 ficiary premiums paid under part D of 

21 title XVIII of such Act, as added by 

22 section 101 of the Medicare Prescrip23 tion Drug, Improvement, and Mod24 ernization Act of 2003 (Public Law 

25 108–173), and MA monthly prescripVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00281 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
282 

•HR 4529 IH

1 tion drug beneficiary premiums paid 

2 under part C of such title insofar as 

3 they are attributable to basic prescrip4 tion drug coverage. 

5 (IV) DESCRIPTION.—Premiums 

6 under subclauses (II) and (III) shall 

7 be determined without regard to any 

8 reduction in such premiums attrib9 utable to a beneficiary rebate under 

10 section 1854(b)(1)(C) of such title, as 

11 amended by section 222(b)(1) of the 

12 Medicare Prescription Drug, Improve13 ment, and Modernization Act of 2003 

14 (Public Law 108–173), and premiums 

15 under clause (iii) are deemed to in16 clude any amounts paid under section 

17 1860D–13(b) of such title, as added 

18 by section 101 of the Medicare Pre19 scription Drug, Improvement, and 

20 Modernization Act of 2003 (Public 

21 Law 108–173). 

22 (v) GIFTS.—Amounts received by the 

23 medicare trust funds under section 201(i) 

24 of the Social Security Act (42 U.S.C. 

25 401(i)). 


rfrederick on DSKD9S0YB1PROD with BILLS
283 

•HR 4529 IH

1 (D) TOTAL MEDICARE OUTLAYS.—The 

2 term ‘‘total medicare outlays’’ means total out3 lays from the medicare trust funds and shall— 

4 (i) include payments made to plans 

5 under part C of title XVIII of the Social 

6 Security Act that are attributable to any 

7 rebates under section 1854(b)(1)(C) of 

8 such Act (42 U.S.C. 1395w–24(b)(1)(C)), 

9 as amended by section 222(b)(1) of the 

10 Medicare Prescription Drug, Improvement, 

11 and Modernization Act of 2003 (Public 

12 Law 108–173); 

13 (ii) include administrative expendi14 tures made in carrying out title XVIII of 

15 the Social Security Act and Federal out16 lays under section 1935(b) of such Act, as 

17 added by section 103(a)(2) of the Medicare 

18 Prescription Drug, Improvement, and 

19 Modernization Act of 2003 (Public Law 

20 108–173); and 

21 (iii) offset outlays by the amount of 

22 fraud and abuse collections insofar as they 

23 are applied or deposited into a medicare 

24 trust fund. 


rfrederick on DSKD9S0YB1PROD with BILLS
284 

•HR 4529 IH

1 (E) MEDICARE TRUST FUND.—The term 

2 ‘‘medicare trust fund’’ means— 

3 (i) the Federal Hospital Insurance 

4 Trust Fund established under section 1817 

5 of the Social Security Act (42 U.S.C. 

6 1395i); and 

7 (ii) the Federal Supplementary Med8 ical Insurance Trust Fund established 

9 under section 1841 of such Act (42 U.S.C. 

10 1395t), including the Medicare Prescrip11 tion Drug Account under such Trust 

12 Fund. 

13 (4) CONFORMING AMENDMENTS.— 

14 (A) FEDERAL HOSPITAL INSURANCE

15 TRUST FUND.—The last sentence of section 

16 1817(b)(2) (42 U.S.C. 1395i(b)(2)) is amended 

17 to read as follows: ‘‘Each report provided under 

18 paragraph (2) beginning with the report in 

19 2010 shall include the information specified in 

20 section 314 of the Roadmap for America’s Fu21 ture Act of 2010.’’. 

22 (B) FEDERAL SUPPLEMENTARY MEDICAL

23 INSURANCE TRUST FUND.—The last sentence of 

24 section 1841(b)(2) (42 U.S.C. 1395t(b)(2)) is 

25 amended to read as follows: ‘‘Each report proVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00284 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
285 

•HR 4529 IH

1 vided under paragraph (2) beginning with the 

2 report in 2010 shall include the information 

3 specified in section 314 of the Roadmap for 

4 America’s Future Act of 2010.’’. 

5 (5) NOTICE OF MEDICARE FUNDING WARN6 ING.—Whenever any report described in subsection 

7 (a) contains a determination that for the previous 

8 fiscal year reporting period there will be excess gen9 eral revenue medicare funding, Congress and the 

10 President should address the matter under existing 

11 rules and procedures. 

12 (b) PRESIDENTIAL SUBMISSION OF LEGISLATION.— 

13 (1) IN GENERAL.—Section 1105(h) of title 31, 

14 United States Code, is amended to read as follows: 

15 ‘‘(h)(1) If there is a medicare funding warning under 

16 section 314 of the Roadmap for America’s Future Act of 

17 2010 made in a year, the President shall submit to Con18 gress, within the 15-day period beginning on the date of 

19 the budget submission to Congress under subsection (a) 

20 for the succeeding year, proposed legislation to respond 

21 to such warning. 

22 ‘‘(2) Paragraph (1) does not apply if, during the year 

23 in which the warning is made, legislation is enacted which 

24 eliminates excess general revenue medicare funding (as de25 fined in section 314 of the Roadmap for America’s Future 


rfrederick on DSKD9S0YB1PROD with BILLS
286 

•HR 4529 IH

1 Act of 2010) for the previous fiscal year, as certified by 

2 the Board of Trustees of each medicare trust fund (as de3 fined in section 314 of such Act) not later than 30 days 

4 after the date of the enactment of such legislation.’’. 

5 (2) SENSE OF CONGRESS.—It is the sense of 

6 Congress that legislation submitted pursuant to sec7 tion 1105(h) of title 31, United States Code, in a 

8 year should be designed to reduce payments by 1 

9 percent for services furnished in Medicare’s fee-for10 service sector for the fiscal year that begins in such 

11 year. 

12 (c) PROCEDURES IN THE HOUSE OF REPRESENTA13 TIVES.— 

14 (1) INTRODUCTION AND REFERRAL OF PRESI15 DENT’S LEGISLATIVE PROPOSAL.— 

16 (A) INTRODUCTION.—In the case of a leg17 islative proposal submitted by the President 

18 pursuant to section 1105(h) of title 31, United 

19 States Code, within the 15-day period specified 

20 in paragraph (1) of such section, the majority 

21 leader of the House of Representatives (or his 

22 designee) and the minority leader of the House 

23 of Representatives (or his designee) shall intro24 duce such proposal (by request), the title of 

25 which is as follows: ‘‘A bill to respond to a 


rfrederick on DSKD9S0YB1PROD with BILLS
287 

•HR 4529 IH

1 medicare funding warning.’’. Such bill shall be 

2 introduced within 3 legislative days after Con3 gress receives such proposal. 

4 (B) REFERRAL.—Any legislation intro5 duced pursuant to paragraph (1) shall be re6 ferred to the appropriate committees of the 

7 House of Representatives. 

8 (2) DIRECTION TO THE APPROPRIATE HOUSE

9 COMMITTEES.— 

10 (A) IN GENERAL.—In the House, in any 

11 year during which the President is required to 

12 submit proposed legislation to Congress under 

13 section 1105(h) of title 31, United States Code, 

14 the appropriate committees shall report medi15 care funding legislation by not later than June 

16 30 of such year. 

17 (B) MEDICARE FUNDING LEGISLATION.— 

18 For purposes of this section, the term ‘‘medi19 care funding legislation’’ means— 

20 (i) legislation introduced pursuant to 

21 subsection (c)(1), but only if the legislative 

22 proposal upon which the legislation is 

23 based was submitted within the 15-day pe24 riod referred to in such subsection; or 


rfrederick on DSKD9S0YB1PROD with BILLS
288 

•HR 4529 IH

1 (ii) any bill the title of which is as fol2 lows: ‘‘A bill to respond to a medicare 

3 funding warning.’’. 

4 (C) CERTIFICATION.—With respect to any 

5 medicare funding legislation or any amendment 

6 to such legislation to respond to a medicare 

7 funding warning, the chairman of the Com8 mittee on the Budget of the House shall cer9 tify— 

10 (i) whether or not such legislation 

11 eliminates excess general revenue medicare 

12 funding (as defined in subsection (a)(3)) 

13 for the previous fiscal year; and 

14 (ii) with respect to such an amend15 ment, whether the legislation, as amended, 

16 would reduce payments by 1 percent for 

17 services furnished in Medicare’s fee-for18 service sector for the fiscal year that be19 gins in such year. 

20 (3) FALLBACK PROCEDURE FOR FLOOR CON21 SIDERATION IF THE HOUSE FAILS TO VOTE ON

22 FINAL PASSAGE BY JULY 30.— 

23 (A) After July 30 of any year during 

24 which the President is required to submit pro25 posed legislation to Congress under section 


rfrederick on DSKD9S0YB1PROD with BILLS
289 

•HR 4529 IH

1 1105(h) of title 31, United States Code, unless 

2 the House of Representatives has voted on final 

3 passage of any medicare funding legislation for 

4 which there is an affirmative certification under 

5 paragraph (2)(C)(i), then, after the expiration 

6 of not less than 30 calendar days (and concur7 rently 5 legislative days), it is in order to move 

8 to discharge any committee to which medicare 

9 funding legislation which has such a certifi10 cation and which has been referred to such 

11 committee for 30 calendar days from further 

12 consideration of the legislation. 

13 (B) A motion to discharge may be made 

14 only by an individual favoring the legislation, 

15 may be made only if supported by one-fifth of 

16 the total membership of the House (a quorum 

17 being present), and is highly privileged in the 

18 House. Debate thereon shall be limited to not 

19 more than one hour, the time to be divided in 

20 the House equally between those favoring and 

21 those opposing the motion. An amendment to 

22 the motion is not in order, and it is not in order 

23 to move to reconsider the vote by which the mo24 tion is agreed to or disagreed to. 


rfrederick on DSKD9S0YB1PROD with BILLS
290 

•HR 4529 IH

1 (C) Only one motion to discharge a par2 ticular committee may be adopted under this 

3 subsection in any session of a Congress. 

4 (D) Notwithstanding subparagraph (A), it 

5 shall not be in order to move to discharge a 

6 committee from further consideration of medi7 care funding legislation pursuant to this sub8 section during a session of a Congress if, dur9 ing the previous session of the Congress, the 

10 House passed medicare funding legislation for 

11 which there is an affirmative certification under 

12 paragraph (2)(C)(i). 

13 (4) FLOOR CONSIDERATION IN THE HOUSE OF

14 DISCHARGED LEGISLATION.— 

15 (A) In the House, not later than 3 legisla16 tive days after any committee has been dis17 charged from further consideration of legisla18 tion under paragraph (3), the Speaker shall re19 solve the House into the Committee of the 

20 Whole for consideration of the legislation. 

21 (B) The first reading of the legislation 

22 shall be dispensed with. All points of order 

23 against consideration of the legislation are 

24 waived. General debate shall be confined to the 

25 legislation and shall not exceed five hours, 


rfrederick on DSKD9S0YB1PROD with BILLS
291 

•HR 4529 IH

1 which shall be divided equally between those fa2 voring and those opposing the legislation. After 

3 general debate the legislation shall be consid4 ered for amendment under the five-minute rule. 

5 During consideration of the legislation, no 

6 amendments shall be in order in the House or 

7 in the Committee of the Whole except those for 

8 which there has been an affirmative certifi9 cation under paragraph (2)(C)(ii). All points of 

10 order against consideration of any such amend11 ment in the Committee of the Whole are 

12 waived. The legislation, together with any 

13 amendments which shall be in order, shall be 

14 considered as read. During the consideration of 

15 the bill for amendment, the Chairman of the 

16 Committee of the Whole may accord priority in 

17 recognition on the basis of whether the Member 

18 offering an amendment has caused it to be 

19 printed in the portion of the Congressional 

20 Record designated for that purpose in clause 8 

21 of Rule XVIII of the Rules of the House of 

22 Representatives. Debate on any amendment 

23 shall not exceed one hour, which shall be di24 vided equally between those favoring and those 

25 opposing the amendment, and no pro forma 


rfrederick on DSKD9S0YB1PROD with BILLS
292 

•HR 4529 IH

1 amendments shall be offered during the debate. 

2 The total time for debate on all amendments 

3 shall not exceed 10 hours. At the conclusion of 

4 consideration of the legislation for amendment, 

5 the Committee shall rise and report the legisla6 tion to the House with such amendments as 

7 may have been adopted. The previous question 

8 shall be considered as ordered on the legislation 

9 and amendments thereto to final passage with10 out intervening motion except one motion to re11 commit with or without instructions. If the 

12 Committee of the Whole rises and reports that 

13 it has come to no resolution on the bill, then on 

14 the next legislative day the House shall, imme15 diately after the third daily order of business 

16 under clause 1 of Rule XIV of the Rules of the 

17 House of Representatives, resolve into the Com18 mittee of the Whole for further consideration of 

19 the bill. 

20 (C) All appeals from the decisions of the 

21 Chair relating to the application of the Rules of 

22 the House of Representatives to the procedure 

23 relating to any such legislation shall be decided 

24 without debate. 


rfrederick on DSKD9S0YB1PROD with BILLS
293 

•HR 4529 IH

1 (D) Except to the extent specifically pro2 vided in the preceding provisions of this sub3 section, consideration of any such legislation 

4 and amendments thereto (or any conference re5 port thereon) shall be governed by the Rules of 

6 the House of Representatives applicable to 

7 other bills and resolutions, amendments, and 

8 conference reports in similar circumstances. 

9 (5) LEGISLATIVE DAY DEFINED.—As used in 

10 this section, the term ‘‘legislative day’’ means a day 

11 on which the House of Representatives is in session. 

12 (6) RESTRICTION ON WAIVER.—In the House, 

13 the provisions of this section may be waived only by 

14 a rule or order proposing only to waive such provi15 sions. 

16 (7) RULEMAKING POWER.—The provisions of 

17 this section are enacted by the Congress— 

18 (A) as an exercise of the rulemaking power 

19 of the House of Representatives and, as such, 

20 shall be considered as part of the rules of that 

21 House and shall supersede other rules only to 

22 the extent that they are inconsistent therewith; 

23 and 

24 (B) with full recognition of the constitu25 tional right of that House to change the rules 


rfrederick on DSKD9S0YB1PROD with BILLS
294 

•HR 4529 IH

1 (so far as they relate to the procedures of that 

2 House) at any time, in the same manner, and 

3 to the same extent as in the case of any other 

4 rule of that House. 

5 (d) PROCEDURES IN THE SENATE.— 

6 (1) INTRODUCTION AND REFERRAL OF PRESI7 DENT’S LEGISLATIVE PROPOSAL.— 

8 (A) INTRODUCTION.—In the case of a leg9 islative proposal submitted by the President 

10 pursuant to section 1105(h) of title 31, United 

11 States Code, within the 15-day period specified 

12 in paragraph (1) of such section, the majority 

13 leader and minority leader of the Senate (or 

14 their designees) shall introduce such proposal 

15 (by request), the title of which is as follows: ‘‘A 

16 bill to respond to a medicare funding warn17 ing.’’. Such bill shall be introduced within 3 

18 days of session after Congress receives such 

19 proposal. 

20 (B) REFERRAL.—Any legislation intro21 duced pursuant to paragraph (1) shall be re22 ferred to the Committee on Finance. 

23 (2) MEDICARE FUNDING LEGISLATION.—For 

24 purposes of this section, the term ‘‘medicare funding 

25 legislation’’ means— 


rfrederick on DSKD9S0YB1PROD with BILLS
295 

•HR 4529 IH

1 (A) legislation introduced pursuant to sub2 section (d)(1), but only if the legislative pro3 posal upon which the legislation is based was 

4 submitted within the 15-day period referred to 

5 in such subsection; or 

6 (B) any bill the title of which is as follows: 

7 ‘‘A bill to respond to a medicare funding warn8 ing.’’. 

9 (3) QUALIFICATION FOR SPECIAL PROCE10 DURES.— 

11 (A) IN GENERAL.—The special procedures 

12 set forth in paragraphs (4) and (5) shall apply 

13 to medicare funding legislation, as described in 

14 paragraph (2), only if the legislation— 

15 (i) is medicare funding legislation that 

16 is passed by the House of Representatives; 

17 or 

18 (ii) contains matter within the juris19 diction of the Committee on Finance in the 

20 Senate. 

21 (B) FAILURE TO QUALIFY FOR SPECIAL

22 PROCEDURES.—If the medicare funding legisla23 tion does not satisfy subparagraph (A), then 

24 the legislation shall be considered under the orVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00295 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
296 

•HR 4529 IH

1 dinary procedures of the Standing Rules of the 

2 Senate. 

3 (4) DISCHARGE.— 

4 (A) IN GENERAL.—If the Committee on 

5 Finance has not reported medicare funding leg6 islation described in subparagraph (3)(A) by 

7 June 30 of a year in which the President is re8 quired to submit medicare funding legislation to 

9 Congress under section 1105(h) of title 31, 

10 United States Code, then any Senator may 

11 move to discharge the Committee of any single 

12 medicare funding legislation measure. Only one 

13 such motion shall be in order in any session of 

14 Congress. 

15 (B) DEBATE LIMITS.—Debate in the Sen16 ate on any such motion to discharge, and all 

17 appeals in connection therewith, shall be limited 

18 to not more than 2 hours. The time shall be 

19 equally divided between, and controlled by, the 

20 maker of the motion and the majority leader, or 

21 their designees, except that in the event the ma22 jority leader is in favor of such motion, the time 

23 in opposition thereto shall be controlled by the 

24 minority leader or the minority leader’s des25 ignee. A point of order under this subsection 


rfrederick on DSKD9S0YB1PROD with BILLS
297 

•HR 4529 IH

1 may be made at any time. It is not in order to 

2 move to proceed to another measure or matter 

3 while such motion (or the motion to reconsider 

4 such motion) is pending. 

5 (C) AMENDMENTS.—No amendment to the 

6 motion to discharge shall be in order. 

7 (D) EXCEPTION IF CERTIFIED LEGISLA8 TION ENACTED.—Notwithstanding subpara9 graph (A), it shall not be in order to discharge 

10 the Committee from further consideration of 

11 medicare funding legislation pursuant to this 

12 subsection during a session of a Congress if the 

13 chairman of the Committee on the Budget of 

14 the Senate certifies that medicare funding legis15 lation has been enacted that reduce payments 

16 by 1 percent for services furnished in Medi17 care’s fee-for-service sector for the next fiscal 

18 year. 

19 (5) CONSIDERATION.—After the date on which 

20 the Committee on Finance has reported medicare 

21 funding legislation described in paragraph (3)(A), or 

22 has been discharged (under paragraph (4)) from fur23 ther consideration of, such legislation, it is in order 

24 (even though a previous motion to the same effect 

25 has been disagreed to) for any Member of the SenVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00297 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
298 

•HR 4529 IH

1 ate to move to proceed to the consideration of such 

2 legislation. 

3 (6) RULES OF THE SENATE.—This section is 

4 enacted by the Senate— 

5 (A) as an exercise of the rulemaking power 

6 of the Senate and as such it is deemed a part 

7 of the rules of the Senate, but applicable only 

8 with respect to the procedure to be followed in 

9 the Senate in the case of a bill described in this 

10 paragraph, and it supersedes other rules only to 

11 the extent that it is inconsistent with such 

12 rules; and 

13 (B) with full recognition of the constitu14 tional right of the Senate to change the rules 

15 (so far as relating to the procedure of the Sen16 ate) at any time, in the same manner, and to 

17 the same extent as in the case of any other rule 

18 of the Senate. 

19 SEC. 315. ELIMINATING INEFFICIENCIES AND INCREASING 

20 CHOICE IN MEDICARE ADVANTAGE. 

21 (a) REIMBURSEMENT BENCHMARKS.—In imple22 menting section 1853 of the Social Security Act (42 

23 U.S.C. 1395w–23)— 


rfrederick on DSKD9S0YB1PROD with BILLS
299 

•HR 4529 IH

1 (1) in calculating the benchmark amounts 

2 under subsection (k), the Secretary shall use the av3 erage amount of local plan bids; and 

4 (2) in addition to the amounts under subsection 

5 (k), the Secretary may provide bonus payments to 

6 local plans that implement care coordination pro7 grams, as defined by the Secretary. 

8 Subtitle C—Medical Liability 

9 Reform 

10 PART 1—ENACTING REAL MEDICAL LIABILITY 

11 REFORM 

12 SEC. 321. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

13 (a) TIMING OF LAWSUIT.—The time for the com14 mencement of a health care lawsuit shall be 3 years after 

15 the date of manifestation of injury or 1 year after the 

16 claimant discovers, or through the use of reasonable dili17 gence should have discovered, the injury, whichever occurs 

18 first. In no event shall the time for commencement of a 

19 health care lawsuit exceed 3 years after the date of mani20 festation of injury unless tolled for any of the following: 

21 (1) Upon proof of fraud. 

22 (2) Intentional concealment. 

23 (3) The presence of a foreign body, which has 

24 no therapeutic or diagnostic purpose or effect, in the 

25 person of the injured person. 


rfrederick on DSKD9S0YB1PROD with BILLS
300 

•HR 4529 IH

1 (b) ACTIONS BY MINORS.—Actions by a minor shall 

2 be commenced within 3 years from the date of the alleged 

3 manifestation of injury except that actions by a minor 

4 under the full age of 6 years shall be commenced within 

5 3 years of manifestation of injury or prior to the minor’s 

6 8th birthday, whichever provides a longer period. Such 

7 time limitation shall be tolled for minors for any period 

8 during which a parent or guardian and a health care pro9 vider or health care organization have committed fraud or 

10 collusion in the failure to bring an action on behalf of the 

11 injured minor. 

12 SEC. 322. COMPENSATING PATIENT INJURY. 

13 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

14 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

15 health care lawsuit, nothing in this part shall limit a 

16 claimant’s recovery of the full amount of the available eco17 nomic damages, notwithstanding the limitation in sub18 section (b). 

19 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

20 health care lawsuit, the amount of noneconomic damages, 

21 if available, may be as much as $250,000, regardless of 

22 the number of parties against whom the action is brought 

23 or the number of separate claims or actions brought with 

24 respect to the same injury. 


rfrederick on DSKD9S0YB1PROD with BILLS
301 

•HR 4529 IH

1 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

2 DAMAGES.—For purposes of applying the limitation in 

3 subsection (b), future noneconomic damages shall not be 

4 discounted to present value. The jury shall not be in5 formed about the maximum award for noneconomic dam6 ages. An award for noneconomic damages in excess of 

7 $250,000 shall be reduced either before the entry of judg8 ment, or by amendment of the judgment after entry of 

9 judgment, and such reduction shall be made before ac10 counting for any other reduction in damages required by 

11 law. If separate awards are rendered for past and future 

12 noneconomic damages and the combined awards exceed 

13 $250,000, the future noneconomic damages shall be re14 duced first. 

15 (d) FAIR SHARE RULE.—In any health care lawsuit, 

16 each party shall be liable for that party’s several share 

17 of any damages only and not for the share of any other 

18 person. Each party shall be liable only for the amount of 

19 damages allocated to such party in direct proportion to 

20 such party’s percentage of responsibility. Whenever a 

21 judgment of liability is rendered as to any party, a sepa22 rate judgment shall be rendered against each such party 

23 for the amount allocated to such party. For purposes of 

24 this section, the trier of fact shall determine the proporVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00301 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
302 

•HR 4529 IH

1 tion of responsibility of each party for the claimant’s 

2 harm. 

3 SEC. 323. MAXIMIZING PATIENT RECOVERY. 

4 (a) COURT SUPERVISION OF SHARE OF DAMAGES

5 ACTUALLY PAID TO CLAIMANTS.—In any health care law6 suit, the court shall supervise the arrangements for pay7 ment of damages to protect against conflicts of interest 

8 that may have the effect of reducing the amount of dam9 ages awarded that are actually paid to claimants. In par10 ticular, in any health care lawsuit in which the attorney 

11 for a party claims a financial stake in the outcome by vir12 tue of a contingent fee, the court shall have the power 

13 to restrict the payment of a claimant’s damage recovery 

14 to such attorney, and to redirect such damages to the 

15 claimant based upon the interests of justice and principles 

16 of equity. In no event shall the total of all contingent fees 

17 for representing all claimants in a health care lawsuit ex18 ceed the following limits: 

19 (1) 40 percent of the first $50,000 recovered by 

20 the claimant(s). 

(2) 331 21 ⁄3 percent of the next $50,000 recovered 

22 by the claimant(s). 

23 (3) 25 percent of the next $500,000 recovered 

24 by the claimant(s). 


rfrederick on DSKD9S0YB1PROD with BILLS
303 

•HR 4529 IH

1 (4) 15 percent of any amount by which the re2 covery by the claimant(s) is in excess of $600,000. 

3 (b) APPLICABILITY.—The limitations in this section 

4 shall apply whether the recovery is by judgment, settle5 ment, mediation, arbitration, or any other form of alter6 native dispute resolution. In a health care lawsuit involv7 ing a minor or incompetent person, a court retains the 

8 authority to authorize or approve a fee that is less than 

9 the maximum permitted under this section. The require10 ment for court supervision in the first two sentences of 

11 subsection (a) applies only in civil actions. 

12 SEC. 324. ADDITIONAL HEALTH BENEFITS. 

13 In any health care lawsuit involving injury or wrong14 ful death, any party may introduce evidence of collateral 

15 source benefits. If a party elects to introduce such evi16 dence, any opposing party may introduce evidence of any 

17 amount paid or contributed or reasonably likely to be paid 

18 or contributed in the future by or on behalf of the oppos19 ing party to secure the right to such collateral source bene20 fits. No provider of collateral source benefits shall recover 

21 any amount against the claimant or receive any lien or 

22 credit against the claimant’s recovery or be equitably or 

23 legally subrogated to the right of the claimant in a health 

24 care lawsuit involving injury or wrongful death. This sec25 tion shall apply to any health care lawsuit that is settled 


rfrederick on DSKD9S0YB1PROD with BILLS
304 

•HR 4529 IH

1 as well as a health care lawsuit that is resolved by a fact 

2 finder. This section shall not apply to section 1862(b) (42 

3 U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 

4 1396a(a)(25)) of the Social Security Act. 

5 SEC. 325. PUNITIVE DAMAGES. 

6 (a) IN GENERAL.—Punitive damages may, if other7 wise permitted by applicable State or Federal law, be 

8 awarded against any person in a health care lawsuit only 

9 if it is proven by clear and convincing evidence that such 

10 person acted with malicious intent to injure the claimant, 

11 or that such person deliberately failed to avoid unneces12 sary injury that such person knew the claimant was sub13 stantially certain to suffer. In any health care lawsuit 

14 where no judgment for compensatory damages is rendered 

15 against such person, no punitive damages may be awarded 

16 with respect to the claim in such lawsuit. No demand for 

17 punitive damages shall be included in a health care lawsuit 

18 as initially filed. A court may allow a claimant to file an 

19 amended pleading for punitive damages only upon a mo20 tion by the claimant and after a finding by the court, upon 

21 review of supporting and opposing affidavits or after a 

22 hearing, after weighing the evidence, that the claimant has 

23 established by a substantial probability that the claimant 

24 will prevail on the claim for punitive damages. At the reVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00304 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
305 

•HR 4529 IH

1 quest of any party in a health care lawsuit, the trier of 

2 fact shall consider in a separate proceeding— 

3 (1) whether punitive damages are to be award4 ed and the amount of such award; and 

5 (2) the amount of punitive damages following a 

6 determination of punitive liability. 

7 (b) SEPARATE PROCEEDING.—If a separate pro8 ceeding is requested, evidence relevant only to the claim 

9 for punitive damages, as determined by applicable State 

10 law, shall be inadmissible in any proceeding to determine 

11 whether compensatory damages are to be awarded. 

12 (c) DETERMINING AMOUNT OF PUNITIVE DAM13 AGES.— 

14 (1) FACTORS CONSIDERED.—In determining 

15 the amount of punitive damages, if awarded, in a 

16 health care lawsuit, the trier of fact shall consider 

17 only the following— 

18 (A) the severity of the harm caused by the 

19 conduct of such party; 

20 (B) the duration of the conduct or any 

21 concealment of it by such party; 

22 (C) the profitability of the conduct to such 

23 party; 

24 (D) the number of products sold or med25 ical procedures rendered for compensation, as 


rfrederick on DSKD9S0YB1PROD with BILLS
306 

•HR 4529 IH

1 the case may be, by such party, of the kind 

2 causing the harm complained of by the claim3 ant; 

4 (E) any criminal penalties imposed on such 

5 party, as a result of the conduct complained of 

6 by the claimant; and 

7 (F) the amount of any civil fines assessed 

8 against such party as a result of the conduct 

9 complained of by the claimant. 

10 (2) MAXIMUM AWARD.—The amount of punitive 

11 damages, if awarded, in a health care lawsuit may 

12 be as much as $250,000 or as much as two times 

13 the amount of economic damages awarded, which14 ever is greater. The jury shall not be informed of 

15 this limitation. 

16 SEC. 326. AUTHORIZATION OF PAYMENT OF FUTURE DAM17 AGES TO CLAIMANTS IN HEALTH CARE LAW18 SUITS. 

19 (a) IN GENERAL.—In any health care lawsuit, if an 

20 award of future damages, without reduction to present 

21 value, equaling or exceeding $50,000 is made against a 

22 party with sufficient insurance or other assets to fund a 

23 periodic payment of such a judgment, the court shall, at 

24 the request of any party, enter a judgment ordering that 

25 the future damages be paid by periodic payments. In any 


rfrederick on DSKD9S0YB1PROD with BILLS
307 

•HR 4529 IH

1 health care lawsuit, the court may be guided by the Uni2 form Periodic Payment of Judgments Act promulgated by 

3 the National Conference of Commissioners on Uniform 

4 State Laws. 

5 (b) APPLICABILITY.—This section applies to all ac6 tions which have not been first set for trial or retrial be7 fore the effective date of this part. 

8 SEC. 327. DEFINITIONS. 

9 In this part: 

10 (1) ALTERNATIVE DISPUTE RESOLUTION; 

11 ADR.—The term ‘‘alternative dispute resolution sys12 tem’’ or ‘‘ADR’’ means a system that provides for 

13 the resolution of health care lawsuits in a manner 

14 other than through a civil action brought in a State 

15 or Federal court. 

16 (2) CLAIMANT.—The term ‘‘claimant’’ means 

17 any person who brings a health care lawsuit, includ18 ing a person who asserts or claims a right to legal 

19 or equitable contribution, indemnity, or subrogation, 

20 arising out of a health care liability claim or action, 

21 and any person on whose behalf such a claim is as22 serted or such an action is brought, whether de23 ceased, incompetent, or a minor. 

24 (3) COLLATERAL SOURCE BENEFITS.—The 

25 term ‘‘collateral source benefits’’ means any amount 


rfrederick on DSKD9S0YB1PROD with BILLS
308 

•HR 4529 IH

1 paid or reasonably likely to be paid in the future to 

2 or on behalf of the claimant, or any service, product, 

3 or other benefit provided or reasonably likely to be 

4 provided in the future to or on behalf of the claim5 ant, as a result of the injury or wrongful death, pur6 suant to— 

7 (A) any State or Federal health, sickness, 

8 income-disability, accident, or workers’ com9 pensation law; 

10 (B) any health, sickness, income-disability, 

11 or accident insurance that provides health bene12 fits or income-disability coverage; 

13 (C) any contract or agreement of any 

14 group, organization, partnership, or corporation 

15 to provide, pay for, or reimburse the cost of 

16 medical, hospital, dental, or income-disability 

17 benefits; and 

18 (D) any other publicly or privately funded 

19 program. 

20 (4) COMPENSATORY DAMAGES.—The term 

21 ‘‘compensatory damages’’ means objectively 

22 verifiable monetary losses incurred as a result of the 

23 provision of, use of, or payment for (or failure to 

24 provide, use, or pay for) health care services or med25 ical products, such as past and future medical exVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00308 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
309 

•HR 4529 IH

1 penses, loss of past and future earnings, cost of ob2 taining domestic services, loss of employment, and 

3 loss of business or employment opportunities, dam4 ages for physical and emotional pain, suffering, in5 convenience, physical impairment, mental anguish, 

6 disfigurement, loss of enjoyment of life, loss of soci7 ety and companionship, loss of consortium (other 

8 than loss of domestic service), hedonic damages, in9 jury to reputation, and all other nonpecuniary losses 

10 of any kind or nature. The term ‘‘compensatory 

11 damages’’ includes economic damages and non12 economic damages, as such terms are defined in this 

13 section. 

14 (5) CONTINGENT FEE.—The term ‘‘contingent 

15 fee’’ includes all compensation to any person or per16 sons which is payable only if a recovery is effected 

17 on behalf of one or more claimants. 

18 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

19 damages’’ means objectively verifiable monetary 

20 losses incurred as a result of the provision of, use 

21 of, or payment for (or failure to provide, use, or pay 

22 for) health care services or medical products, such as 

23 past and future medical expenses, loss of past and 

24 future earnings, cost of obtaining domestic services, 


rfrederick on DSKD9S0YB1PROD with BILLS
310 

•HR 4529 IH

1 loss of employment, and loss of business or employ2 ment opportunities. 

3 (7) HEALTH CARE LAWSUIT.—The term 

4 ‘‘health care lawsuit’’ means any health care liability 

5 claim concerning the provision of health care goods 

6 or services or any medical product affecting inter7 state commerce, or any health care liability action 

8 concerning the provision of health care goods or 

9 services or any medical product affecting interstate 

10 commerce, brought in a State or Federal court or 

11 pursuant to an alternative dispute resolution system, 

12 against a health care provider, a health care organi13 zation, or the manufacturer, distributor, supplier, 

14 marketer, promoter, or seller of a medical product, 

15 regardless of the theory of liability on which the 

16 claim is based, or the number of claimants, plain17 tiffs, defendants, or other parties, or the number of 

18 claims or causes of action, in which the claimant al19 leges a health care liability claim. Such term does 

20 not include a claim or action which is based on 

21 criminal liability; which seeks civil fines or penalties 

22 paid to Federal, State, or local government; or which 

23 is grounded in antitrust. 

24 (8) HEALTH CARE LIABILITY ACTION.—The 

25 term ‘‘health care liability action’’ means a civil acVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00310 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
311 

•HR 4529 IH

1 tion brought in a State or Federal court or pursuant 

2 to an alternative dispute resolution system, against 

3 a health care provider, a health care organization, or 

4 the manufacturer, distributor, supplier, marketer, 

5 promoter, or seller of a medical product, regardless 

6 of the theory of liability on which the claim is based, 

7 or the number of plaintiffs, defendants, or other par8 ties, or the number of causes of action, in which the 

9 claimant alleges a health care liability claim. 

10 (9) HEALTH CARE LIABILITY CLAIM.—The 

11 term ‘‘health care liability claim’’ means a demand 

12 by any person, whether or not pursuant to ADR, 

13 against a health care provider, health care organiza14 tion, or the manufacturer, distributor, supplier, mar15 keter, promoter, or seller of a medical product, in16 cluding, but not limited to, third-party claims, cross17 claims, counter-claims, or contribution claims, which 

18 are based upon the provision of, use of, or payment 

19 for (or the failure to provide, use, or pay for) health 

20 care services or medical products, regardless of the 

21 theory of liability on which the claim is based, or the 

22 number of plaintiffs, defendants, or other parties, or 

23 the number of causes of action. 

24 (10) HEALTH CARE ORGANIZATION.—The term 

25 ‘‘health care organization’’ means any person or enVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00311 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
312 

•HR 4529 IH

1 tity which is obligated to provide or pay for health 

2 benefits under any health plan, including any person 

3 or entity acting under a contract or arrangement 

4 with a health care organization to provide or admin5 ister any health benefit. 

6 (11) HEALTH CARE PROVIDER.—The term 

7 ‘‘health care provider’’ means any person or entity 

8 required by State or Federal laws or regulations to 

9 be licensed, registered, or certified to provide health 

10 care services, and being either so licensed, reg11 istered, or certified, or exempted from such require12 ment by other statute or regulation. 

13 (12) HEALTH CARE GOODS OR SERVICES.—The 

14 term ‘‘health care goods or services’’ means any 

15 goods or services provided by a health care organiza16 tion, provider, or by any individual working under 

17 the supervision of a health care provider, that relates 

18 to the diagnosis, prevention, or treatment of any 

19 human disease or impairment, or the assessment or 

20 care of the health of human beings. 

21 (13) MALICIOUS INTENT TO INJURE.—The 

22 term ‘‘malicious intent to injure’’ means inten23 tionally causing or attempting to cause physical in24 jury other than providing health care goods or serv25 ices. 


rfrederick on DSKD9S0YB1PROD with BILLS
313 

•HR 4529 IH

1 (14) MEDICAL PRODUCT.—The term ‘‘medical 

2 product’’ means a drug, device, or biological product 

3 intended for humans, and the terms ‘‘drug’’, ‘‘de4 vice’’, and ‘‘biological product’’ have the meanings 

5 given such terms in sections 201(g)(1) and 201(h) 

6 of the Federal Food, Drug and Cosmetic Act (21 

7 U.S.C. 321(g)(1) and (h)) and section 351(a) of the 

8 Public Health Service Act (42 U.S.C. 262(a)), re9 spectively, including any component or raw material 

10 used therein, but excluding health care services. 

11 (15) NONECONOMIC DAMAGES.—The term 

12 ‘‘noneconomic damages’’ means damages for phys13 ical and emotional pain, suffering, inconvenience, 

14 physical impairment, mental anguish, disfigurement, 

15 loss of enjoyment of life, loss of society and compan16 ionship, loss of consortium (other than loss of do17 mestic service), hedonic damages, injury to reputa18 tion, and all other nonpecuniary losses of any kind 

19 or nature. 

20 (16) PUNITIVE DAMAGES.—The term ‘‘punitive 

21 damages’’ means damages awarded, for the purpose 

22 of punishment or deterrence, and not solely for com23 pensatory purposes, against a health care provider, 

24 health care organization, or a manufacturer, dis25 tributor, or supplier of a medical product. Punitive 


rfrederick on DSKD9S0YB1PROD with BILLS
314 

•HR 4529 IH

1 damages are neither economic nor noneconomic 

2 damages. 

3 (17) RECOVERY.—The term ‘‘recovery’’ means 

4 the net sum recovered after deducting any disburse5 ments or costs incurred in connection with prosecu6 tion or settlement of the claim, including all costs 

7 paid or advanced by any person. Costs of health care 

8 incurred by the plaintiff and the attorneys’ office 

9 overhead costs or charges for legal services are not 

10 deductible disbursements or costs for such purpose. 

11 (18) STATE.—The term ‘‘State’’ means each of 

12 the several States, the District of Columbia, the 

13 Commonwealth of Puerto Rico, the Virgin Islands, 

14 Guam, American Samoa, the Northern Mariana Is15 lands, the Trust Territory of the Pacific Islands, and 

16 any other territory or possession of the United 

17 States, or any political subdivision thereof. 

18 SEC. 328. EFFECT ON OTHER LAWS. 

19 (a) VACCINE INJURY.— 

20 (1) IN GENERAL.—To the extent that title XXI 

21 of the Public Health Service Act establishes a Fed22 eral rule of law applicable to a civil action brought 

23 for a vaccine-related injury or death— 

24 (A) this part does not affect the applica25 tion of the rule of law to such an action; and 


rfrederick on DSKD9S0YB1PROD with BILLS
315 

•HR 4529 IH

1 (B) any rule of law prescribed by this part 

2 in conflict with a rule of law of such title XXI 

3 shall not apply to such action. 

4 (2) APPLICATION.—If there is an aspect of a 

5 civil action brought for a vaccine-related injury or 

6 death to which a Federal rule of law under title XXI 

7 of the Public Health Service Act does not apply, 

8 then this part or otherwise applicable law (as deter9 mined under this part) will apply to such aspect of 

10 such action. 

11 (b) OTHER FEDERAL LAW.—Except as provided in 

12 this section, nothing in this part shall be deemed to affect 

13 any defense available to a defendant in a health care law14 suit or action under any other provision of Federal law. 

15 SEC. 329. STATE FLEXIBILITY AND PROTECTION OF 

16 STATES’ RIGHTS. 

17 (a) HEALTH CARE LAWSUITS.—The provisions gov18 erning health care lawsuits set forth in this part preempt, 

19 subject to subsections (b) and (c), State law to the extent 

20 that State law prevents the application of any provisions 

21 of law established by or under this part. The provisions 

22 governing health care lawsuits set forth in this part super23 sede chapter 171 of title 28, United States Code, to the 

24 extent that such chapter— 


rfrederick on DSKD9S0YB1PROD with BILLS
316 

•HR 4529 IH

1 (1) provides for a greater amount of damages 

2 or contingent fees, a longer period in which a health 

3 care lawsuit may be commenced, or a reduced appli4 cability or scope of periodic payment of future dam5 ages, than provided in this part; or 

6 (2) prohibits the introduction of evidence re7 garding collateral source benefits, or mandates or 

8 permits subrogation or a lien on collateral source 

9 benefits. 

10 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

11 LAWS.— 

12 (1) IN GENERAL.—Any issue that is not gov13 erned by any provision of law established by or 

14 under this part (including State standards of neg15 ligence) shall be governed by otherwise applicable 

16 State or Federal law. 

17 (2) PREEMPTION.—This part shall not preempt 

18 or supersede any State or Federal law that imposes 

19 greater procedural or substantive protections for 

20 health care providers and health care organizations 

21 from liability, loss, or damages than those provided 

22 by this part or create a cause of action. 

23 (c) STATE FLEXIBILITY.—No provision of this part 

24 shall be construed to preempt— 


rfrederick on DSKD9S0YB1PROD with BILLS
317 

•HR 4529 IH

1 (1) any State law (whether effective before, on, 

2 or after the date of the enactment of this Act) that 

3 specifies a particular monetary amount of compen4 satory or punitive damages (or the total amount of 

5 damages) that may be awarded in a health care law6 suit, regardless of whether such monetary amount is 

7 greater or lesser than is provided for under this 

8 part, notwithstanding section 323(a); or 

9 (2) any defense available to a party in a health 

10 care lawsuit under any other provision of State or 

11 Federal law. 

12 SEC. 330. APPLICABILITY; EFFECTIVE DATE. 

13 This part shall apply to any health care lawsuit 

14 brought in a Federal or State court, or subject to an alter15 native dispute resolution system, that is initiated on or 

16 after the date of the enactment of this Act, except that 

17 any health care lawsuit arising from an injury occurring 

18 prior to the date of the enactment of this Act shall be 

19 governed by the applicable statute of limitations provisions 

20 in effect at the time the injury occurred. 


rfrederick on DSKD9S0YB1PROD with BILLS
318 

•HR 4529 IH

1 PART 2—ENDING LAWSUIT ABUSE 

2 SEC. 331. STATE GRANTS TO CREATE HEALTH COURT SOLU3 TIONS. 

4 Part P of title III of the Public Health Service Act 

5 (42 U.S.C. 280g et seq.) is amended by adding at the end 

6 the following: 

7 ‘‘SEC. 399R. STATE GRANTS TO CREATE HEALTH COURT SO8 LUTIONS. 

9 ‘‘(a) IN GENERAL.—The Secretary may award grants 

10 to States for the development, implementation, and eval11 uation of alternatives to current tort litigation that comply 

12 with this section, for the resolution of disputes concerning 

13 injuries allegedly caused by health care providers or health 

14 care organizations. 

15 ‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 

16 ‘‘(1) APPLICATION.—To be eligible to receive a 

17 grant under this section, a State shall submit to the 

18 Secretary an application at such time, in such man19 ner, and containing such information as may be re20 quired by the Secretary. A grant shall be awarded 

21 under this section on such terms and conditions as 

22 the Secretary determines appropriate. 

23 ‘‘(2) STATE REQUIREMENTS.—To be eligible to 

24 receive a grant under this section, a State shall— 

25 ‘‘(A) develop and implement an alternative 

26 to current tort litigation for resolving disputes 


rfrederick on DSKD9S0YB1PROD with BILLS
319 

•HR 4529 IH

1 over injuries allegedly caused by health care 

2 providers or health care organizations based on 

3 one or more of the models described in sub4 section (d); and 

5 ‘‘(B) implement policies that provide for a 

6 reduction in health care errors through the col7 lection and analysis by organizations that en8 gage in voluntary efforts to improve patient 

9 safety and the quality of health care delivery, of 

10 patient safety data related to disputes resolved 

11 under the alternatives under subparagraph (A). 

12 ‘‘(3) DEMONSTRATION OF EFFECTIVENESS.— 

13 To be eligible to receive a grant under subsection 

14 (a), a State shall demonstrate how the proposed al15 ternative to be implemented under paragraph (2)(A) 

16 will— 

17 ‘‘(A) make the medical liability system of 

18 the State more reliable through the prompt and 

19 fair resolution of disputes; 

20 ‘‘(B) encourage the early disclosure of 

21 health care errors; 

22 ‘‘(C) enhance patient safety; and 

23 ‘‘(D) maintain access to medical liability 

24 insurance. 


rfrederick on DSKD9S0YB1PROD with BILLS
320 

•HR 4529 IH

1 ‘‘(4) SOURCES OF COMPENSATION.—To be eligi2 ble to receive a grant under subsection (a), a State 

3 shall identify the sources from, and methods by 

4 which, compensation would be paid for medical li5 ability claims resolved under the proposed alter6 native to current tort litigation implemented under 

7 paragraph (2)(A). Funding methods shall, to the ex8 tent practicable, provide financial incentives for ac9 tivities that improve patient safety. 

10 ‘‘(5) SCOPE.— 

11 ‘‘(A) IN GENERAL.—To be eligible to re12 ceive a grant under subsection (a), a State shall 

13 utilize the proposed alternative identified under 

14 paragraph (2)(A) for the resolution of all types 

15 of disputes concerning injuries allegedly caused 

16 by health care providers or health care organi17 zations. 

18 ‘‘(B) CURRENT STATE EFFORTS TO ESTAB19 LISH ALTERNATIVE TO TORT LITIGATION.— 

20 ‘‘(i) IN GENERAL.—Nothing in this 

21 section shall be construed to limit the ef22 forts that any State has made prior to the 

23 date of enactment of this section to estab24 lish any alternative to tort litigation. 


rfrederick on DSKD9S0YB1PROD with BILLS
321 

•HR 4529 IH

1 ‘‘(ii) ALTERNATIVE FOR PRACTICE

2 AREAS OR INJURIES.—In the case of a 

3 State that has established an alternative to 

4 tort litigation for a certain area of health 

5 care practice or a category of injuries, the 

6 alternative selected as provided for in this 

7 section shall supplement not replace or in8 validate such established alternative unless 

9 the State intends otherwise. 

10 ‘‘(6) NOTIFICATION OF PATIENTS.—To be eligi11 ble to receive a grant under subsection (a), the State 

12 shall demonstrate how patients will be notified when 

13 they are receiving health care services that fall with14 in the scope of the alternative selected under this 

15 section by the State to current tort litigation. 

16 ‘‘(c) REPRESENTATION BY COUNSEL.—A State that 

17 receives a grant under this section may not preclude any 

18 party to a dispute that falls within the jurisdiction of the 

19 alternative to current tort litigation that is implemented 

20 under the grant from obtaining legal representation at any 

21 point during the consideration of the claim under such al22 ternative. 

23 ‘‘(d) MODELS.— 

24 ‘‘(1) IN GENERAL.—The models in this section 

25 are the following: 


rfrederick on DSKD9S0YB1PROD with BILLS
322 

•HR 4529 IH

1 ‘‘(2) EXPERT PANEL REVIEW AND EARLY

2 OFFER GUIDELINES.— 

3 ‘‘(A) IN GENERAL.—A State may use 

4 amounts received under a grant under this sec5 tion to develop and implement an expert panel 

6 and early offer review system that meets the re7 quirements of this paragraph. 

8 ‘‘(B) ESTABLISHMENT OF PANEL.—Under 

9 the system under this paragraph, the State 

10 shall establish an expert panel to review any 

11 disputes concerning injuries allegedly caused by 

12 health care providers or health care organiza13 tions according to the guidelines described in 

14 this paragraph. 

15 ‘‘(C) COMPOSITION.— 

16 ‘‘(i) IN GENERAL.—An expert panel 

17 under this paragraph shall be composed of 

18 3 medical experts (either physicians or 

19 health care professionals) and 3 attorneys 

20 to be appointed by the head of the State 

21 agency responsible for health. 

22 ‘‘(ii) LICENSURE AND EXPERTISE.— 

23 Each physician or health care professional 

24 appointed to an expert panel under clause 

25 (i) shall— 


rfrederick on DSKD9S0YB1PROD with BILLS
323 

•HR 4529 IH

1 ‘‘(I) be appropriately credentialed 

2 or licensed in the State in which the 

3 dispute takes place to deliver health 

4 care services; and 

5 ‘‘(II) typically treat the condi6 tion, make the diagnosis, or provide 

7 the type of treatment that is under re8 view. 

9 ‘‘(iii) INDEPENDENCE.— 

10 ‘‘(I) IN GENERAL.—Subject to 

11 subclause (II), each individual ap12 pointed to an expert panel under this 

13 paragraph shall— 

14 ‘‘(aa) not have a material 

15 familial, financial, or professional 

16 relationship with a party involved 

17 in the dispute reviewed by the 

18 panel; and 

19 ‘‘(bb) not otherwise have a 

20 conflict of interest with such a 

21 party. 

22 ‘‘(II) EXCEPTION.—Nothing in 

23 subclause (I) shall be construed to 

24 prohibit an individual who has staff 

25 privileges at an institution where the 


rfrederick on DSKD9S0YB1PROD with BILLS
324 

•HR 4529 IH

1 treatment involved in the dispute was 

2 provided from serving as a member of 

3 an expert panel merely on the basis of 

4 such affiliation, if the affiliation is 

5 disclosed to the parties and neither 

6 party objects. 

7 ‘‘(iv) PRACTICING HEALTH CARE PRO8 FESSIONAL IN SAME FIELD.— 

9 ‘‘(I) IN GENERAL.—In a dispute 

10 before an expert panel that involves 

11 treatment, or the provision of items or 

12 services— 

13 ‘‘(aa) by a physician, the 

14 medical experts on the expert 

15 panel shall be practicing physi16 cians (allopathic or osteopathic) 

17 of the same or similar specialty 

18 as a physician who typically 

19 treats the condition, makes the 

20 diagnosis, or provides the type of 

21 treatment under review; or 

22 ‘‘(bb) by a health care pro23 fessional other than a physician, 

24 at least two medical experts on 

25 the expert panel shall be pracVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00324 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
325 

•HR 4529 IH

1 ticing physicians (allopathic or 

2 osteopathic) of the same or simi3 lar specialty as the health care 

4 professional who typically treats 

5 the condition, makes the diag6 nosis, or provides the type of 

7 treatment under review, and, if 

8 determined appropriate by the 

9 State agency, the third medical 

10 expert shall be a practicing 

11 health care professional (other 

12 than such a physician) of such a 

13 same or similar specialty. 

14 ‘‘(II) PRACTICING DEFINED.—In 

15 this paragraph, the term ‘practicing’ 

16 means, with respect to an individual 

17 who is a physician or other health 

18 care professional, that the individual 

19 provides health care services to indi20 vidual patients on average at least 2 

21 days a week. 

22 ‘‘(v) PEDIATRIC EXPERTISE.—In the 

23 case of dispute relating to a child, at least 

24 1 medical expert on the expert panel shall 


rfrederick on DSKD9S0YB1PROD with BILLS
326 

•HR 4529 IH

1 have expertise described in clause (iv)(I) in 

2 pediatrics. 

3 ‘‘(D) DETERMINATION.—After a review, 

4 an expert panel shall make a determination as 

5 to the liability of the parties involved and com6 pensation based on a schedule of compensation 

7 that is developed by the panel. Such a schedule 

8 shall at least include— 

9 ‘‘(i) payment for the net economic loss 

10 incurred by the patient, on a periodic 

11 basis, reduced by any payments received by 

12 the patient under— 

13 ‘‘(I) any health or accident insur14 ance; 

15 ‘‘(II) any wage or salary continu16 ation plan; or 

17 ‘‘(III) any disability income in18 surance; 

19 ‘‘(ii) payment for the non-economic 

20 damages incurred by the patient, if appro21 priate for the injury, based on a defined 

22 payment schedule developed by the State, 

23 in consultation with relevant experts and 

24 with the Secretary; 

25 ‘‘(iii) reasonable attorney’s fees; and 


rfrederick on DSKD9S0YB1PROD with BILLS
327 

•HR 4529 IH

1 ‘‘(iv) regular updates of the schedule 

2 under clause (ii) as necessary. 

3 ‘‘(E) ACCEPTANCE.—If the parties to a 

4 dispute who come before an expert panel under 

5 this paragraph accept the determination of the 

6 expert panel concerning liability and compensa7 tion, such compensation shall be paid to the 

8 claimant and the claimant shall agree to forgo 

9 any further action against the health care pro10 viders or health care organizations involved. 

11 ‘‘(F) FAILURE TO ACCEPT.—If any party 

12 decides not to accept the expert panel’s deter13 mination under this paragraph, the State may 

14 choose whether to allow the panel to review the 

15 determination de novo, with deference, or to 

16 provide an opportunity for parties to reject the 

17 determination of the panel. 

18 ‘‘(G) REVIEW BY STATE COURT AFTER EX19 HAUSTION OF ADMINISTRATIVE REMEDIES.— 

20 ‘‘(i) RIGHT TO FILE.—If the State 

21 elects not to permit the expert panel under 

22 this paragraph to conduct its own reviews 

23 of determinations, or if the State elects to 

24 permit such reviews but a party is not sat25 isfied with the final decision of the panel 


rfrederick on DSKD9S0YB1PROD with BILLS
328 

•HR 4529 IH

1 after such a review, the party shall have 

2 the right to file a claim relating to the in3 jury involved in a State court of competent 

4 jurisdiction. 

5 ‘‘(ii) FORFEIT OF AWARDS.—Any 

6 party filing an action in a State court 

7 under clause (i) shall forfeit any compensa8 tion award made under subparagraph (C). 

9 ‘‘(iii) ADMISSIBILITY.—The deter10 minations of the expert panel pursuant to 

11 a review under subparagraph (C) shall be 

12 admissible into evidence in any State court 

13 proceeding under this subparagraph. 

14 ‘‘(3) ADMINISTRATIVE HEALTH CARE TRIBU15 NALS.— 

16 ‘‘(A) IN GENERAL.—A State may use 

17 amounts received under a grant under this sec18 tion to develop and implement an administra19 tive health care tribunal system under which 

20 the parties involved shall have the right to re21 quest a hearing to review any dispute con22 cerning injuries allegedly caused by health care 

23 providers or health care organizations before an 

24 administrative health care tribunal established 

25 by the State involved. 


rfrederick on DSKD9S0YB1PROD with BILLS
329 

•HR 4529 IH

1 ‘‘(B) REQUIREMENTS.—In establishing an 

2 administrative health care tribunal under this 

3 paragraph, a State shall— 

4 ‘‘(i) ensure that such tribunals are 

5 presided over by special judges with health 

6 care expertise who meet applicable State 

7 standards for judges and who agree to pre8 side over such court voluntarily; 

9 ‘‘(ii) provide authority to such judges 

10 to make binding rulings, rendered in writ11 ten decisions, on standards of care, causa12 tion, compensation, and related issues with 

13 reliance on independent expert witnesses 

14 commissioned by the tribunal; 

15 ‘‘(iii) establish a legal standard for 

16 the tribunal that shall be the same as the 

17 standard that would apply in the State 

18 court of competent jurisdiction which 

19 would otherwise handle the claim; and 

20 ‘‘(iv) provide for an appeals process to 

21 allow for review of decisions by State 

22 courts. 

23 ‘‘(C) DETERMINATION.—After a tribunal 

24 conducts a review under this paragraph, the tri25 bunal shall make a determination as to the liVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00329 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
330 

•HR 4529 IH

1 ability of the parties involved and the amount 

2 of compensation that should be paid based on 

3 a schedule of compensation developed by the 

4 tribunal. Such a schedule shall at a minimum 

5 include— 

6 ‘‘(i) payment for the net economic loss 

7 incurred by the patient, on a periodic 

8 basis, reduced by any payments received by 

9 the patient under— 

10 ‘‘(I) any health or accident insur11 ance; 

12 ‘‘(II) any wage or salary continu13 ation plan; or 

14 ‘‘(III) any disability income in15 surance; 

16 ‘‘(ii) payment for the non-economic 

17 damages incurred by the patient, if appro18 priate for the injury, based on a defined 

19 payment schedule developed by the State 

20 in consultation with relevant experts and 

21 with the Secretary; 

22 ‘‘(iii) reasonable attorney’s fees; and 

23 ‘‘(iv) regular updates of the schedule 

24 under clause (ii) as necessary. 


rfrederick on DSKD9S0YB1PROD with BILLS
331 

•HR 4529 IH

1 ‘‘(D) REVIEW BY STATE COURT AFTER EX2 HAUSTION OF ADMINISTRATIVE REMEDIES.— 

3 ‘‘(i) RIGHT TO FILE.—Nothing in this 

4 paragraph shall be construed to prohibit 

5 any individual who is not satisfied with the 

6 determinations of a tribunal under this 

7 paragraph, from filing a claim for the in8 jury involved in a State court of competent 

9 jurisdiction. 

10 ‘‘(ii) FORFEIT OF AWARD.—Any party 

11 filing an action in a State court under 

12 clause (i) shall forfeit any compensation 

13 award made under subparagraph (C). 

14 ‘‘(iii) ADMISSIBILITY.—The deter15 minations of the tribunal under subpara16 graph (C) shall be admissible into evidence 

17 in any State court proceeding under this 

18 subparagraph. 

19 ‘‘(4) EXPERT PANEL REVIEW AND ADMINISTRA20 TIVE HEALTH CARE TRIBUNAL COMBINATION

21 MODEL.— 

22 ‘‘(A) IN GENERAL.—A State may use 

23 amounts received under a grant under this sec24 tion to develop and implement an expert panel 

25 review and administrative health care tribunal 


rfrederick on DSKD9S0YB1PROD with BILLS
332 

•HR 4529 IH

1 combination system to review any dispute con2 cerning injuries allegedly caused by health care 

3 providers or health care organizations. Under 

4 such system, a dispute concerning injuries al5 legedly caused by health care providers or 

6 health care organizations shall proceed through 

7 the procedures described in this subparagraph 

8 prior to the submission of such dispute to a 

9 State court. 

10 ‘‘(B) GENERAL PROCEDURE.— 

11 ‘‘(i) ESTABLISHMENT OF EXPERT

12 PANEL.—Prior to submitting any dispute 

13 described in subparagraph (A) to an ad14 ministrative health care tribunal under the 

15 system established under this paragraph, 

16 the State shall establish an expert panel 

17 (in accordance with subparagraph (C)) to 

18 review the allegations involved in such dis19 pute. 

20 ‘‘(ii) REFERRAL TO TRIBUNAL.—If ei21 ther party to a dispute described in clause 

22 (i) fails to accept the determination of the 

23 expert panel, the dispute shall then be re24 ferred to an administrative health care triVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00332 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
333 

•HR 4529 IH

1 bunal (in accordance with subparagraph 

2 (D). 

3 ‘‘(C) EXPERT REVIEW PANEL.— 

4 ‘‘(i) IN GENERAL.—The provisions of 

5 paragraph (2) shall apply with respect to 

6 the establishment and operation of an ex7 pert review panel under this subparagraph, 

8 except that the subparagraphs (F) and (G) 

9 of such paragraph shall not apply. 

10 ‘‘(ii) FAILURE TO ACCEPT DETER11 MINATION OF PANEL.—If any party to a 

12 dispute before an expert panel under this 

13 subparagraph refuses to accept the panel’s 

14 determination, the dispute shall be referred 

15 to an administrative health care tribunal 

16 under subparagraph (D). 

17 ‘‘(D) ADMINISTRATIVE HEALTH CARE TRI18 BUNALS.— 

19 ‘‘(i) IN GENERAL.—Upon the failure 

20 of any party to accept the determination of 

21 an expert panel under subparagraph (C), 

22 the parties shall request a hearing con23 cerning the liability or compensation in24 volved by an administrative health care triVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00333 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
334 

•HR 4529 IH

1 bunal established by the State involved 

2 under this subparagraph. 

3 ‘‘(ii) REQUIREMENTS.—The provisions 

4 of paragraph (3) shall apply with respect 

5 to the establishment and operation of an 

6 administrative health care tribunal under 

7 this subparagraph. 

8 ‘‘(iii) FORFEIT OF AWARDS.—Any 

9 party proceeding to the second step-admin10 istrative health care tribunal-under this 

11 model shall forfeit any compensation 

12 awarded by the expert panel. 

13 ‘‘(iv) ADMISSIBILITY.—The deter14 minations of the expert panel under sub15 paragraph (C) shall be admissible into evi16 dence in any administrative health care tri17 bunal proceeding under this subparagraph. 

18 ‘‘(E) RIGHT TO FILE.—Nothing in this 

19 paragraph shall be construed to prohibit any in20 dividual who is not satisfied with the deter21 mination of the tribunal (after having proceeded 

22 through both the expert panel under subpara23 graph (C) and the tribunal under subparagraph 

24 (D)) from filing a claim for the injury involved 

25 in a State court of competent jurisdiction. 


rfrederick on DSKD9S0YB1PROD with BILLS
335 

•HR 4529 IH

1 ‘‘(F) ADMISSIBILITY.—The determinations 

2 of both the expert panel and the tribunal under 

3 this paragraph shall be admissible into evidence 

4 in any State court proceeding under this para5 graph. 

6 ‘‘(G) FORFEIT OF AWARDS.—Any party fil7 ing an action in State court under subpara8 graph (E) shall forfeit any compensation award 

9 made by both the expert panel and the adminis10 trative health care tribunal under this para11 graph. 

12 ‘‘(e) DEFINITIONS.—In this section: 

13 ‘‘(1) CURRENT TORT LITIGATION.—The term 

14 ‘current tort litigation’ means the tort litigation sys15 tem existing in the State on the date on which the 

16 State submits an application under subsection 

17 (b)(1), for the resolution of disputes concerning inju18 ries allegedly caused by health care providers or 

19 health care organizations. 

20 ‘‘(2) HEALTH CARE ORGANIZATION.—The term 

21 ‘health care organization’ means any individual or 

22 entity that is obligated to provide, pay for, or admin23 ister health benefits under any health plan. 

24 ‘‘(3) NET ECONOMIC LOSS.—The term ‘net eco25 nomic loss’ means— 


rfrederick on DSKD9S0YB1PROD with BILLS
336 

•HR 4529 IH

1 ‘‘(A) reasonable expenses incurred for 

2 products, services and accommodations needed 

3 for health care, training and other remedial 

4 treatment and care of an injured individual; 

5 ‘‘(B) reasonable and appropriate expenses 

6 for rehabilitation treatment and occupational 

7 training; 

8 ‘‘(C) 100 percent of the loss of income 

9 from work that an injured individual would 

10 have performed if not injured, reduced by any 

11 income from substitute work actually per12 formed; and 

13 ‘‘(D) reasonable expenses incurred in ob14 taining ordinary and necessary services to re15 place services an injured individual would have 

16 performed for the benefit of the individual or 

17 the family of such individual if the individual 

18 had not been injured. 

19 ‘‘(4) NON-ECONOMIC DAMAGES.—The term 

20 ‘non-economic damages’ means losses for physical 

21 and emotional pain, suffering, inconvenience, phys22 ical impairment, mental anguish, disfigurement, loss 

23 of enjoyment of life, loss of society and companion24 ship, loss of consortium (other than loss of domestic 

25 service), injury to reputation, and all other non-peVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00336 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
337 

•HR 4529 IH

1 cuniary losses of any kind or nature, to the extent 

2 permitted under State law. 

3 ‘‘(f) FUNDING.— 

4 ‘‘(1) ONE-TIME INCREASE IN MEDICAID PAY5 MENT.—In the case of a State awarded a grant to 

6 carry out this section, the total amount of the Fed7 eral payment determined for the State under section 

8 1913 of the Social Security Act (as amended by sec9 tion 401) for fiscal year 2011 (in addition to the any 

10 increase applicable for that fiscal year under section 

11 203(b) but determined without regard to any such 

12 increase) shall be increased by an amount equal to 

13 1 percent of the total amount of payments made to 

14 the State for fiscal year 2010 under section 1903(a) 

15 of the Social Security Act (42 U.S.C. 1396b(a)) for 

16 purposes of carrying out a grant awarded under this 

17 section. Amounts paid to a State pursuant to this 

18 subsection shall remain available until expended. 

19 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

20 There are authorized to be appropriated for any fis21 cal year such sums as may be necessary for purposes 

22 of making payments to States pursuant to para23 graph (1).’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
338 

•HR 4529 IH

1 TITLE IV—SOCIAL SECURITY 

2 REFORM 

3 SEC. 401. SHORT TITLE. 

4 This title may be cited as the ‘‘Social Security Per5 sonal Savings Guarantee and Prosperity Act of 2010’’. 

6 SEC. 402. ESTABLISHMENT OF PERSONAL SOCIAL SECU7 RITY SAVINGS PROGRAM. 

8 (a) IN GENERAL.—Title II of the Social Security Act 

9 is amended— 

10 (1) by inserting before section 201 the fol11 lowing: 

12 ‘‘PART A—INSURANCE BENEFITS’’; 

13 and 

14 (2) by adding at the end the following new part: 

15 ‘‘PART B—PERSONAL SOCIAL SECURITY SAVINGS 

16 PROGRAM 

17 ‘‘SEC. 251. DEFINITIONS. 

18 ‘‘For purposes of this part— 

19 ‘‘(1) PARTICIPATING INDIVIDUAL.—The term 

20 ‘participating individual’ has the meaning provided 

21 in section 253(a). 

22 ‘‘(2) BOARD.—The term ‘Board’ means the 

23 Personal Social Security Savings Board established 

24 under section 260. 


rfrederick on DSKD9S0YB1PROD with BILLS
339 

•HR 4529 IH

1 ‘‘(3) EXECUTIVE DIRECTOR.—The term ‘Execu2 tive Director’ means the Executive Director ap3 pointed under section 261. 

4 ‘‘(4) PERSONAL SOCIAL SECURITY SAVINGS AC5 COUNT.—The term ‘personal social security savings 

6 account’ means an account established under section 

7 254(a). 

8 ‘‘(5) PERSONAL SOCIAL SECURITY SAVINGS AN9 NUITY.—The term ‘personal social security savings 

10 annuity’ means an annuity approved by the Board 

11 under section 258(b)(3). 

12 ‘‘(6) SAVINGS FUND.—The term ‘Savings Fund’ 

13 means the Social Security Personal Savings Fund 

14 established under section 252. 

15 ‘‘(7) TIER I INVESTMENT FUND.—The term 

16 ‘Tier I Investment Fund’ means the trust fund cre17 ated under section 255. 

18 ‘‘(8) TIER II INVESTMENT FUND.—The term 

19 ‘Tier II Investment Fund’ means the trust fund cre20 ated under section 256. 

21 ‘‘(9) TIER III INVESTMENT OPTION.—The term 

22 ‘Tier III Investment Option’ means an investment 

23 option which is— 

24 ‘‘(A) offered by an eligible entity certified 

25 by the Board under section 257(b); and 


rfrederick on DSKD9S0YB1PROD with BILLS
340 

•HR 4529 IH

1 ‘‘(B) approved by the Board under section 

2 257(c). 

3 ‘‘SEC. 252. SOCIAL SECURITY PERSONAL SAVINGS FUND. 

4 ‘‘(a) ESTABLISHMENT OF SAVINGS FUND.— 

5 ‘‘(1) ESTABLISHMENT.—There is established in 

6 the Treasury of the United States a trust fund to 

7 be known as the ‘Social Security Personal Savings 

8 Fund’. 

9 ‘‘(2) AMOUNTS IN FUND.—The Savings Fund 

10 shall consist of— 

11 ‘‘(A) all amounts transferred to or depos12 ited into the Savings Fund under subsection 

13 (b), increased by the total net earnings from in14 vestments of sums in the Savings Fund attrib15 utable to such transferred or deposited 

16 amounts, and reduced by the total net losses 

17 from investments of such sums, and 

18 ‘‘(B) the reserves held in the Annuity Re19 serves Account established under section 

20 258(b)(3), increased by the total net earnings 

21 from investments of such reserves, and reduced 

22 by the total net losses from investments of such 

23 reserves. 

24 ‘‘(3) TRUSTEES.—The Board shall serve as 

25 trustees of the Savings Fund. 


rfrederick on DSKD9S0YB1PROD with BILLS
341 

•HR 4529 IH

1 ‘‘(4) BUDGET AUTHORITY; APPROPRIATION.— 

2 This part constitutes budget authority in advance of 

3 appropriations Acts and represents the obligation of 

4 the Board to provide for the payment of amounts 

5 provided under this part. The amounts held in the 

6 Savings Fund are appropriated and shall remain 

7 available without fiscal year limitation. 

8 ‘‘(b) DEPOSITS INTO FUND.— 

9 ‘‘(1) IN GENERAL.—During each calendar year, 

10 the Secretary of the Treasury shall deposit into the 

11 Savings Fund, from amounts held in the Federal 

12 Old-Age and Survivors Insurance Trust Fund, a 

13 total amount equal, in the aggregate, to 100 percent 

14 of the redirected Social Security contribution for 

15 such calendar year of each individual who is a par16 ticipating individual for such calendar year. 

17 ‘‘(2) TRANSFERS BASED ON ESTIMATES.— 

18 ‘‘(A) IN GENERAL.—The amounts depos19 ited pursuant to paragraph (1) shall be trans20 ferred in at least weekly payments from the 

21 Federal Old-Age and Survivors Insurance Trust 

22 Fund to the Savings Fund. 

23 ‘‘(B) DETERMINATION OF AMOUNTS.—The 

24 amounts transferred under subparagraph (A) 

25 shall be determined on the basis of estimates, 


rfrederick on DSKD9S0YB1PROD with BILLS
342 

•HR 4529 IH

1 made by the Commissioner of Social Security 

2 and certified to the Secretary of the Treasury, 

3 of the wages paid to, and self-employment in4 come derived by, participating individuals. 

5 Proper adjustments shall be made in amounts 

6 subsequently transferred to the extent prior es7 timates were in excess of or were less than ac8 tual amounts transferred. 

9 ‘‘(3) REDIRECTED SOCIAL SECURITY CONTRIBU10 TIONS.—For purposes of paragraph (1)— 

11 ‘‘(A) IN GENERAL.—The term ‘redirected 

12 social security contributions’ means, with re13 spect to an individual for a calendar year, the 

14 sum of— 

15 ‘‘(i) the product derived by multi16 plying— 

17 ‘‘(I) the sum of the total wages 

18 paid to, and self-employment income 

19 derived by, such individual during 

20 such calendar year, to the extent such 

21 total wages and self-employment in22 come do not exceed the base amount 

23 for such calendar year; by 

24 ‘‘(II) the applicable base percent25 age for the calendar year; and 


rfrederick on DSKD9S0YB1PROD with BILLS
343 

•HR 4529 IH

1 ‘‘(ii) the product derived by multi2 plying— 

3 ‘‘(I) the sum of the total wages 

4 paid to, and self-employment income 

5 derived by, such individual during 

6 such calendar year, to the extent such 

7 total wages and self-employment in8 come exceed the base amount (taking 

9 into account the limits imposed by the 

10 contribution and benefit base under 

11 section 230); by 

12 ‘‘(II) the applicable supplemental 

13 percentage for the calendar year. 

14 ‘‘(B) BASE AMOUNT.—For purposes of 

15 subparagraph (A)— 

16 ‘‘(i) INITIAL BASE AMOUNT.—The 

17 base amount for calendar year 2012 is 

18 $10,000. 

19 ‘‘(ii) ADJUSTMENTS TO BASE

20 AMOUNT.—The base amount for any cal21 endar year after 2011 is the product de22 rived by multiplying $10,000 by a frac23 tion— 

24 ‘‘(I) the numerator of which is 

25 the national average wage index (as 


rfrederick on DSKD9S0YB1PROD with BILLS
344 

•HR 4529 IH

1 defined in section 209(k)) for the first 

2 of the 2 preceding calendar years; and 

3 ‘‘(II) the denominator of which is 

4 the national average wage index (as so 

5 defined) for 2010. 

6 ‘‘(C) APPLICABLE BASE PERCENTAGE.— 

7 For purposes of subparagraph (A), the applica8 ble base percentage for a calendar year is— 

9 ‘‘(i) for calendar years after 2011 and 

10 before 2022, 2 percent; 

11 ‘‘(ii) for calendar years after 2021 

12 and before 2032, 4 percent; 

13 ‘‘(iii) for calendar years after 2031 

14 and before 2042, 6 percent; and 

15 ‘‘(iv) for calendar years after 2041, 8 

16 percent. 

17 ‘‘(D) APPLICABLE SUPPLEMENTAL PER18 CENTAGE.—For purposes of subparagraph (A), 

19 the applicable supplemental percentage for a 

20 calendar year is— 

21 ‘‘(i) for calendar years after 2011 and 

22 before 2022, 1 percent; 

23 ‘‘(ii) for calendar years after 2021 

24 and before 2032, 2 percent; 


rfrederick on DSKD9S0YB1PROD with BILLS
345 

•HR 4529 IH

1 ‘‘(iii) for calendar years after 2031 

2 and before 2042, 3 percent; and 

3 ‘‘(iv) for calendar years after 2041, 4 

4 percent. 

5 ‘‘(c) AVAILABILITY.—The sums in the Savings Fund 

6 are appropriated and shall remain available without fiscal 

7 year limitation— 

8 ‘‘(1) to invest funds in the Tier I Investment 

9 Fund of the Savings Fund and the Tier II Invest10 ment Fund of the Savings Fund under sections 255 

11 and 256, respectively; 

12 ‘‘(2) to transfer into Tier III Investment Op13 tions under section 257; 

14 ‘‘(3) to make distributions in accordance with 

15 section 258; and 

16 ‘‘(4) to pay the administrative expenses of the 

17 Board in accordance with subsection (e). 

18 ‘‘(d) LIMITATIONS ON USE OF FUNDS.— 

19 ‘‘(1) IN GENERAL.—Sums in the Savings Fund 

20 credited to a participating individual’s personal so21 cial security savings account may not be used for, or 

22 diverted to, purposes other than for the exclusive 

23 benefit of the participating individual or the partici24 pating individual’s beneficiaries under this part. 


rfrederick on DSKD9S0YB1PROD with BILLS
346 

•HR 4529 IH

1 ‘‘(2) ASSIGNMENTS.—Sums in the Savings 

2 Fund may not be assigned or alienated and are not 

3 subject to execution, levy, attachment, garnishment, 

4 or other legal process. 

5 ‘‘(e) PAYMENT OF ADMINISTRATIVE EXPENSES.— 

6 Administrative expenses incurred to carry out this part 

7 shall be paid out of net earnings in the Savings Fund in 

8 conjunction with the allocation of investment earnings and 

9 losses under section 254(c). 

10 ‘‘(f) LIMITATION.—The sums in the Savings Fund 

11 shall not be appropriated for any purpose other than the 

12 purposes specified in this part and may not be used for 

13 any other purpose. 

14 ‘‘SEC. 253. PARTICIPATION IN PROGRAM. 

15 ‘‘(a) PARTICIPATING INDIVIDUAL.—For purposes of 

16 this part, the term ‘participating individual’ means any 

17 individual— 

18 ‘‘(1)(A) who receives wages in any calendar 

19 year after December 31, 2011, on which there is im20 posed a tax under section 3101(a) of the Internal 

21 Revenue Code of 1986, or 

22 ‘‘(B) who derives self-employment income for a 

23 taxable year beginning after December 31, 2011, on 

24 which there is imposed a tax under section 1401(a) 

25 of the Internal Revenue Code of 1986, 


rfrederick on DSKD9S0YB1PROD with BILLS
347 

•HR 4529 IH

1 ‘‘(2) who is born on or after January 1, 1956, 

2 and 

3 ‘‘(3) who has filed an election to be treated as 

4 a participating individual under subsection (b) and 

5 has not subsequently filed an election to renounce 

6 such individual’s status as a participating individual 

7 under subsection (c). 

8 ‘‘(b) ELECTION OF PARTICIPATION.— 

9 ‘‘(1) IN GENERAL.—An individual who has not 

10 become entitled to old-age insurance benefits under 

11 section 202(a) may elect, subject to paragraph (2) 

12 and in such form and manner as shall be prescribed 

13 in regulations of the Board, to be treated as a ‘par14 ticipating individual’ for purposes of this part. Such 

15 regulations shall provide for regular, periodic oppor16 tunities for the filing of such an election. The Board 

17 shall provide for immediate notification to the Com18 missioner of Social Security, the Secretary of the 

19 Treasury, and the Executive Director of such elec20 tion. 

21 ‘‘(2) DEADLINE FOR ELECTION.—An election 

22 under paragraph (1) may be made by an individual 

23 not later than the later of— 

24 ‘‘(A) the date on which such individual at25 tains age 25, or 


rfrederick on DSKD9S0YB1PROD with BILLS
348 

•HR 4529 IH

1 ‘‘(B) December 31, 2012. 

2 ‘‘(3) EFFECTIVENESS OF ELECTION.—An elec3 tion under this subsection shall be effective with re4 spect to wages earned, and self-employment income 

5 derived, on the earliest date on which the Board de6 termines is practicable to make such election effec7 tive following the date of the filing of the election. 

8 ‘‘(c) REVOCATION OF ELECTION.— 

9 ‘‘(1) IN GENERAL.—An individual may, in such 

10 form and manner as shall be prescribed in regula11 tions of the Board, revoke an election made by such 

12 individual under subsection (b) within 1 year after 

13 the date of a qualifying event described in paragraph 

14 (2). Upon completion of the procedures provided for 

15 under paragraph (3), any such individual who has 

16 made such an election shall not be treated as a par17 ticipating individual under this part, effective as if 

18 such individual had never been a participating indi19 vidual. The Board shall provide for immediate notifi20 cation of such election to the Commissioner of Social 

21 Security, the Secretary of the Treasury, and the Ex22 ecutive Director. 

23 ‘‘(2) QUALIFYING EVENTS.—For purposes of 

24 paragraph (1), the term ‘qualifying event’ means, in 


rfrederick on DSKD9S0YB1PROD with BILLS
349 

•HR 4529 IH

1 connection with an individual, any of the following 

2 events: 

3 ‘‘(A) The death of the individual’s spouse. 

4 ‘‘(B) The entry into marriage by the indi5 vidual. 

6 ‘‘(C) The divorce or legal separation of the 

7 individual from the individual’s spouse. 

8 ‘‘(D) A dependent child of the individual 

9 ceasing to be a dependent child of the indi10 vidual under section 202(d)(3). 

11 ‘‘(3) PROCEDURE.—The Board shall prescribe 

12 by regulation procedures governing the termination 

13 of an individual’s status as ‘participating individual’ 

14 pursuant to a revocation under this subsection. Such 

15 procedures shall include— 

16 ‘‘(A) prompt closing of the individual’s per17 sonal social security savings account established 

18 under section 254, and 

19 ‘‘(B) prompt transfer to the Federal Old20 Age and Survivors Insurance Trust Fund as 

21 general receipts of any amount held in the Tier 

22 II Investment Fund of the Savings Fund or 

23 under a Tier III Investment Option pursuant to 

24 section 256 or 257 and credited to such individ25 ual’s personal social security savings account. 


rfrederick on DSKD9S0YB1PROD with BILLS
350 

•HR 4529 IH

1 ‘‘SEC. 254. PERSONAL SOCIAL SECURITY SAVINGS AC2 COUNTS. 

3 ‘‘(a) ESTABLISHMENT OF PUBLICLY ADMINISTERED

4 SYSTEM OF PERSONAL SECURITY SAVINGS ACCOUNTS.— 

5 As soon as practicable after the later of January 1, 2011, 

6 or the date on which an individual becomes a participating 

7 individual under this part, the Executive Director shall es8 tablish a personal social security savings account for such 

9 individual. Such account shall be the means by which 

10 amounts held in the Tier I Investment Fund and the Tier 

11 II Investment Fund of the Savings Fund under sections 

12 255 and 256 and amounts held under Tier III Investment 

13 Options under section 257 are credited to such individual, 

14 under procedures which shall be established by the Board 

15 by regulation. Each account of a participating individual 

16 shall be identified to such participating individual by 

17 means of the participating individual’s Social Security ac18 count number. 

19 ‘‘(b) ACCOUNT BALANCE.—The balance in a partici20 pating individual’s account at any time is the sum of— 

21 ‘‘(1) the balance in the Tier I Investment Fund 

22 of the Savings Fund credited to such participating 

23 individual prior to transfer of the credited amount to 

24 the Tier II Investment Fund of the Savings Fund; 

25 plus 

26 ‘‘(2) the excess of— 


rfrederick on DSKD9S0YB1PROD with BILLS
351 

•HR 4529 IH

1 ‘‘(A) all deposits in the Tier II Investment 

2 Fund of the Savings Fund credited to such par3 ticipating individual’s personal social security 

4 savings account, subject to such increases and 

5 reductions as may result from allocations made 

6 to and reductions made in the account pursuant 

7 to subsection (c)(1); over 

8 ‘‘(B) amounts paid out of the Tier II In9 vestment Fund in connection with amounts 

10 credited to such participating individual’s per11 sonal social security savings account; plus 

12 ‘‘(3) the excess of— 

13 ‘‘(A) the deposits in the Tier III Invest14 ment Options credited to such participating in15 dividual’s personal social security savings ac16 count, subject to such increases and reductions 

17 as may result from amounts credited to, and re18 ductions made in, the account pursuant to sub19 section (c)(2); over 

20 ‘‘(B) amounts paid out of the Tier III In21 vestment Options of such participating indi22 vidual. 

23 The calculation made under paragraph (3) shall be made 

24 separately for each Tier III Investment Option of the par25 ticipating individual. The Board shall also hold for the 


rfrederick on DSKD9S0YB1PROD with BILLS
352 

•HR 4529 IH

1 participating individual any benefit credit certificate as2 signed to the participating individual’s personal social se3 curity savings account under section 255. 

4 ‘‘(c) ALLOCATION OF EARNINGS AND LOSSES.—Pur5 suant to regulations which shall be prescribed by the 

6 Board, the Executive Director shall allocate to each per7 sonal social security savings account an amount equal to 

8 the net earnings and net losses from each investment of 

9 sums— 

10 ‘‘(1) in the Tier I Investment Fund and the 

11 Tier II Investment Fund which are attributable to 

12 sums credited to such account reduced by an appro13 priate share of the administrative expenses paid out 

14 of the net earnings, as determined by the Executive 

15 Director; and 

16 ‘‘(2) in the Tier III Investment Options which 

17 are attributable to sums credited to such account re18 duced by the administrative expenses paid out of the 

19 net earnings. 

20 ‘‘SEC. 255. TIER I INVESTMENT FUND. 

21 ‘‘(a) ESTABLISHMENT OF TIER I INVESTMENT

22 FUND.— 

23 ‘‘(1) IN GENERAL.—The Savings Fund shall in24 clude a separate fund to be known as the ‘Tier I In25 vestment Fund’. 


rfrederick on DSKD9S0YB1PROD with BILLS
353 

•HR 4529 IH

1 ‘‘(2) AMOUNTS IN FUND.—The Tier I Invest2 ment Fund consists of all amounts derived from 

3 payments into the Fund under section 252(b) and 

4 remaining after investment of such amounts under 

5 subsection (b), including additional amounts derived 

6 as income from such investments. 

7 ‘‘(3) USE OF FUNDS.—The amounts held in the 

8 Fund are appropriated and shall remain available 

9 without fiscal year limitation— 

10 ‘‘(A) to be held for investment on behalf of 

11 participating individuals under subsection (b), 

12 ‘‘(B) to pay the administrative expenses re13 lated to the Fund, and 

14 ‘‘(C) to make transfers from the Fund 

15 under subsection (c)(2). 

16 ‘‘(b) INVESTMENT OF FUND BALANCE.—For pur17 poses of investment of the Tier I Investment Fund, the 

18 Board shall contract with appropriate professional asset 

19 managers, recordkeepers, and custodians selected for in20 vestment of amounts held in the Fund, so as to provide 

21 for investment of the balance of the Fund, in a manner 

22 providing broad diversification in accordance with regula23 tions of the Board, in— 

24 ‘‘(1) insurance contracts, 

25 ‘‘(2) certificates of deposit, or 


rfrederick on DSKD9S0YB1PROD with BILLS
354 

•HR 4529 IH

1 ‘‘(3) other instruments or obligations selected 

2 by such asset managers, 

3 which return the amount invested and pay interest, at a 

4 specified rate or rates, on that amount during a specified 

5 period of time. 

6 ‘‘(c) SEPARATE CREDITING TO PERSONAL SOCIAL

7 SECURITY SAVINGS ACCOUNTS AND TRANSFERS TO THE

8 TIER II INVESTMENT FUND OR TO TIER III INVESTMENT

9 OPTIONS.— 

10 ‘‘(1) CREDITING TO ACCOUNTS.— 

11 ‘‘(A) IN GENERAL.—Subject to this para12 graph, the Board shall provide for prompt, sep13 arate crediting, as soon as practicable, of the 

14 amounts deposited in the Tier I Investment 

15 Fund to the personal social security savings ac16 count of each participating individual with re17 spect to the redirected social security contribu18 tions (as defined in section 252(b)(3)) of such 

19 participating individual. The Board shall in20 clude in such crediting, with respect to each 

21 such individual, any increases or decreases in 

22 such amounts so as to reflect the net returns 

23 and losses from investment of the balance of 

24 the Fund prior to such crediting. For purposes 

25 of determining such increases and decreases for 


rfrederick on DSKD9S0YB1PROD with BILLS
355 

•HR 4529 IH

1 each calendar year, the amounts deposited into 

2 the Fund in connection with such individual 

3 during such calendar year shall be deemed to 

4 have been deposited on June 30 of such year. 

5 ‘‘(B) TREATMENT OF MARRIED PARTICI6 PATING INDIVIDUALS.—If the participating in7 dividual is married as of the end of the calendar 

8 year in which the amounts to be credited were 

9 deposited in the Tier I Investment Fund and 

10 the spouse is also a participating individual, the 

11 personal social security savings account of the 

12 participating individual and the personal social 

13 security savings account of his or her spouse 

14 shall each be credited with 50 percent of such 

15 amounts. 

16 ‘‘(2) TRANSFERS FROM THE TIER I INVEST17 MENT FUND.—In accordance with elections filed 

18 with the Board by a participating individual, any 

19 amount credited to the personal social security sav20 ings account of such participating individual under 

21 paragraph (1) shall be promptly transferred to the 

22 Tier II Investment Fund of the Savings Fund for 

23 investment in accordance with section 256 and, to 

24 the extent available under section 257, to Tier III 

25 Investment Options in accordance with section 257. 


rfrederick on DSKD9S0YB1PROD with BILLS
356 

•HR 4529 IH

1 ‘‘(d) TREATMENT OF AMOUNTS HELD IN TIER I IN2 VESTMENT FUND.—Subject to this part— 

3 ‘‘(1) until amounts deposited into the Tier I In4 vestment Fund during any calendar year are cred5 ited to personal social security savings accounts, 

6 such amounts shall be treated as the unallocated 

7 property of all participating individuals with respect 

8 to whom amounts were deposited in the Fund dur9 ing such year, jointly held in trust for such partici10 pating individuals in the Savings Fund, and 

11 ‘‘(2) amounts deposited into the Fund which 

12 are credited to the personal social security savings 

13 account of a participating individual shall be treated 

14 as property of the participating individual, held in 

15 trust for such participating individual in the Savings 

16 Fund. 

17 ‘‘SEC. 256. TIER II INVESTMENT FUND. 

18 ‘‘(a) ESTABLISHMENT OF TIER II INVESTMENT

19 FUND.— 

20 ‘‘(1) IN GENERAL.—The Savings Fund shall in21 clude a separate fund to be known as the ‘Tier II 

22 Investment Fund’. 

23 ‘‘(2) AMOUNTS IN FUND.—The Tier II Invest24 ment Fund consists of all amounts derived from 

25 payments into the Fund under section 255(c)(2) and 


rfrederick on DSKD9S0YB1PROD with BILLS
357 

•HR 4529 IH

1 remaining after investment of such amounts under 

2 subsection (b), including additional amounts derived 

3 as income from such investments. 

4 ‘‘(3) USE OF FUNDS.—The amounts held in the 

5 Fund are appropriated and shall remain available 

6 without fiscal year limitation— 

7 ‘‘(A) to be held for investment under sub8 section (b), 

9 ‘‘(B) to pay the administrative expenses re10 lated to the Fund, and 

11 ‘‘(C) to make transfers to Tier III Invest12 ment Options under section 257 or to make 

13 payments under section 258. 

14 ‘‘(b) PAYMENTS INTO TIER II INVESTMENT FUND.— 

15 ‘‘(1) IN GENERAL.—Upon the crediting under 

16 section 252 to the personal social security savings 

17 account of a participating individual of any amount 

18 held in the Tier I Investment Fund for any calendar 

19 year, the Board shall transfer from the Tier I In20 vestment Fund into the Tier II Investment Fund 

21 any amount so credited to such participating individ22 ual’s account which is not transferred to a Tier III 

23 Investment Option pursuant to an election under 

24 section 257(a). 


rfrederick on DSKD9S0YB1PROD with BILLS
358 

•HR 4529 IH

1 ‘‘(2) ONGOING SEPARATE CREDITING.—Subject 

2 to this paragraph, the Board shall provide for ongo3 ing separate crediting to each participating individ4 ual’s personal social security savings account of the 

5 amounts deposited in the Tier II Investment Fund 

6 with respect to such participating individual, to7 gether with any increases or decreases therein so as 

8 to reflect the net returns and losses from investment 

9 thereof while held in the Fund. 

10 ‘‘(c) INVESTMENT ACCOUNTS.— 

11 ‘‘(1) IN GENERAL.—For purposes of investment 

12 of the Tier II Investment Fund, the Board shall di13 vide the Fund into 6 investment accounts. The 

14 Board shall contract with appropriate investment 

15 managers, recordkeepers, and custodians selected for 

16 investment of amounts held in each investment ac17 count. Such accounts shall consist of— 

18 ‘‘(A) a Lifecycle Investment Account, 

19 ‘‘(B) a Government Securities Investment 

20 Account, 

21 ‘‘(C) a Fixed Income Investment Account, 

22 ‘‘(D) a Common Stock Index Investment 

23 Account, 

24 ‘‘(E) a Small Capitalization Stock Index 

25 Investment Account, and 


rfrederick on DSKD9S0YB1PROD with BILLS
359 

•HR 4529 IH

1 ‘‘(F) an International Stock Index Invest2 ment Account. 

3 ‘‘(2) ELECTION OF INVESTMENT OPTIONS.— 

4 ‘‘(A) DEFAULT INVESTMENT ACCOUNT.— 

5 Except as provided in an election in effect 

6 under subparagraph (B), amounts held in the 

7 Tier II Investment Fund shall be credited to 

8 the Lifecycle Investment Account. 

9 ‘‘(B) ELECTION OF TRANSFERS BETWEEN

10 INVESTMENT ACCOUNTS.—In any case in which 

11 a participating individual who has an amount in 

12 such individual’s personal social security sav13 ings account credited to any of the investment 

14 accounts in the Tier II Investment Fund files 

15 with the Secretary of the Treasury a written 

16 election under this subparagraph, not more fre17 quently than annually and in accordance with 

18 regulations of the Board, the Secretary of the 

19 Treasury shall transfer the full amount so cred20 ited in such investment account from such in21 vestment account to any one of the other invest22 ment accounts in the Tier II Investment Fund 

23 (whichever is designated in such election). 

24 ‘‘(d) LIFECYLE INVESTMENT ACCOUNT.— 


rfrederick on DSKD9S0YB1PROD with BILLS
360 

•HR 4529 IH

1 ‘‘(1) IN GENERAL.—The investment manager, 

2 recordkeeper, and custodian selected for investment 

3 of amounts held in the Lifecyle Investment Account 

4 shall invest such amounts under regulations which 

5 shall be prescribed by the Board in a mix of equities 

6 and fixed income instruments so as to ensure, to the 

7 maximum extent practicable, that, of the total bal8 ance in the Fund credited to such account and avail9 able for investment (after allowing for administrative 

10 expenses), the percentage invested in fixed income 

11 instruments by individuals in designated cohorts, 

12 ranging in age up to those of at least retirement 

13 age, will increase in a linear progression from 0 per14 cent to 100 percent as the cohort approaches retire15 ment age. 

16 ‘‘(2) INVESTMENT IN EQUITIES.—In accordance 

17 with regulations which shall be prescribed by the 

18 Board, the Board shall establish standards which 

19 must be met by equities selected for investment in 

20 the Lifecycle Investment Account. In conformity 

21 with such standards, the Board shall select, for pur22 poses of such investment, indices which are com23 prised of equities the aggregate market value of 

24 which is, in each case, a reasonably broad represen25 tation of companies whose shares are traded on the 


rfrederick on DSKD9S0YB1PROD with BILLS
361 

•HR 4529 IH

1 equity markets. Amounts invested in equities under 

2 an investment option shall be held in a portfolio de3 signed to replicate the performance of one or more 

4 of such indices. 

5 ‘‘(3) INVESTMENT IN FIXED INCOME INSTRU6 MENTS.—In accordance with regulations which shall 

7 be prescribed by the Board, the Board shall estab8 lish standards which must be met by fixed income 

9 instruments selected for investment in the Lifecycle 

10 Investment Account. Such standards shall take into 

11 account the competing considerations of risk and re12 turn. Amounts invested in fixed income instruments 

13 in an investment option shall be held in a portfolio 

14 which shall consist of a diverse range of fixed income 

15 instruments, taking into full account the opposing 

16 considerations of risk and maximization of return. 

17 ‘‘(e) GOVERNMENT SECURITIES INVESTMENT AC18 COUNT.— 

19 ‘‘(1) IN GENERAL.—Amounts in the Govern20 ment Securities Investment Account shall be in21 vested in securities of the United States Government 

22 as provided in this subsection 

23 ‘‘(2) ISSUANCE OF SPECIAL OBLIGATIONS.— 

24 The Secretary of the Treasury is authorized to issue 

25 special interest-bearing obligations of the United 


rfrederick on DSKD9S0YB1PROD with BILLS
362 

•HR 4529 IH

1 States for purchase by the Tier II Investment Fund 

2 for purposes of investment of amounts in the Gov3 ernment Securities Investment Account. Such obliga4 tions shall have maturities fixed with due regard to 

5 the needs of the Fund as determined by the Board, 

6 and shall bear interest at a rate equal to the average 

7 market yield (computed by the Secretary of the 

8 treasury on the basis of market quotations as of the 

9 end of the calendar month next preceding the date 

10 of issue of such obligations) on all marketable inter11 est-bearing obligations of the United States then 

12 forming a part of the public debt which are not due 

13 or callable earlier than 4 years after the end of such 

14 calendar month. Any average market yield computed 

15 under this paragraph which is not a multiple of one16 eighth of 1 percent shall be rounded to the nearest 

17 multiple of one-eighth of 1 percent. 

18 ‘‘(f) FIXED INCOME INVESTMENT ACCOUNT.— 

19 Amounts in the Fixed Income Investment Account shall 

20 be invested in instruments or obligations which return the 

21 amount invested and pay interest, at a specified rate or 

22 rates, on that amount during a specified period of time, 

23 consisting of instruments or obligations in one or more 

24 of the following categories: 

25 ‘‘(1) insurance contracts; 


rfrederick on DSKD9S0YB1PROD with BILLS
363 

•HR 4529 IH

1 ‘‘(2) certificates of deposit; or 

2 ‘‘(3) other instruments or obligations selected 

3 by qualified professional asset managers. 

4 ‘‘(g) COMMON STOCK INDEX INVESTMENT AC5 COUNT.— 

6 ‘‘(1) PORTFOLIO DESIGN.—Amounts held in the 

7 Common Stock Investment Account shall be invested 

8 in a portfolio of common stock designed to replicate 

9 the performance of the index selected under para10 graph (2). The portfolio shall be designed such that, 

11 to the extent practicable, the percentage of the bal12 ance in the Common Stock Index Investment Ac13 count that is invested in each stock is the same as 

14 the percentage determined by dividing the aggregate 

15 market value of all shares of that stock by the ag16 gregate market value of all shares of all stocks in17 cluded in such index. 

18 ‘‘(2) SELECTION OF INDEX.—The Board shall 

19 select, for purposes of investment of amounts held in 

20 the Common Stock Investment Account, an index 

21 which is a commonly recognized index comprised of 

22 common stock the aggregate market value of which 

23 is a reasonably complete representation of the 

24 United States equity markets. 


rfrederick on DSKD9S0YB1PROD with BILLS
364 

•HR 4529 IH

1 ‘‘(h) SMALL CAPITALIZATION STOCK INDEX INVEST2 MENT ACCOUNT.— 

3 ‘‘(1) PORTFOLIO DESIGN.—Amounts held in the 

4 Small Capitalization Stock Index Investment Ac5 count shall be invested in a portfolio of common 

6 stock designed to replicate the performance of the 

7 index selected under paragraph (2). The portfolio 

8 shall be designed such that, to the extent prac9 ticable, the percentage of the balance in the Small 

10 Capitalization Stock Index Investment Account that 

11 is invested in each stock is the same as the percent12 age determined by dividing the aggregate market 

13 value of all shares of that stock by the aggregate 

14 market value of all shares of all stocks included in 

15 such index. 

16 ‘‘(2) SELECTION OF INDEX.—The Board shall 

17 select, for purposes of investment of amounts held in 

18 the Small Capitalization Stock Index Investment Ac19 count, an index which is a commonly recognized 

20 index comprised of common stock the aggregate 

21 market value of which represents the United States 

22 equity markets excluding the common stocks in23 cluded in the Common Stock Index Investment Ac24 count. 


rfrederick on DSKD9S0YB1PROD with BILLS
365 

•HR 4529 IH

1 ‘‘(i) INTERNATIONAL STOCK INDEX INVESTMENT

2 ACCOUNT.— 

3 ‘‘(1) PORTFOLIO DESIGN.—Amounts held in the 

4 International Stock Index Investment Account shall 

5 be invested in a portfolio of stock designed to rep6 licate the performance of the index selected under 

7 paragraph (2). The portfolio shall be designed such 

8 that, to the extent practicable, the percentage of the 

9 balance in the International Stock Index Investment 

10 Account that is invested in each stock is the same 

11 as the percentage determined by dividing the aggre12 gate market value of all shares of that stock by the 

13 aggregate market value of all shares of all stocks in14 cluded in such index. 

15 ‘‘(2) SELECTION OF INDEX.—The Board shall 

16 select, for purposes of investment of amounts held in 

17 the International Stock Index Investment Account, 

18 an index which is a commonly recognized index com19 prised of common stock the aggregate market value 

20 of which is a reasonably complete representation of 

21 the international equity markets excluding the 

22 United States equity markets. 

23 ‘‘(j) ADDITIONAL INVESTMENT OPTIONS.—The 

24 Board may from time to time, as determined by regulation 


rfrederick on DSKD9S0YB1PROD with BILLS
366 

•HR 4529 IH

1 as appropriate to further the purposes of this section, 

2 shall— 

3 ‘‘(1) establish investment accounts in the Tier 

4 II Investment Fund meeting the requirements of 

5 this section in addition to those established by this 

6 section, and 

7 ‘‘(2) terminate investment accounts in the Tier 

8 II Investment Fund established pursuant to para9 graph (1). 

10 ‘‘(k) DISCLOSURE OF ADMINISTRATIVE COSTS.—The 

11 Board shall provide to each participating individual an an12 nual disclosure of the rate of administrative costs charge13 able with respect to investment in each investment account 

14 in the Tier II Investment Fund. Such disclosure shall be 

15 written in a manner calculated to be understood by the 

16 average participating individual. 

17 ‘‘(l) TREATMENT OF AMOUNTS HELD IN TIER II IN18 VESTMENT FUND.—Subject to this part, amounts depos19 ited into, and held and accounted for in, the Tier II In20 vestment Fund with respect to any participating individual 

21 shall continue to be treated as property of such partici22 pating individual, held in trust for such participating indi23 vidual in the Fund. 


rfrederick on DSKD9S0YB1PROD with BILLS
367 

•HR 4529 IH

1 ‘‘SEC. 257. TIER III INVESTMENT OPTIONS. 

2 ‘‘(a) ELECTION OF TIER III INVESTMENT OP3 TIONS.— 

4 ‘‘(1) IN GENERAL.—A participating individual 

5 may elect to direct transfers from amounts in the 

6 Savings Fund credited to the personal social security 

7 savings account of such individual into 1 or more 

8 Tier III Investment Options in accordance with 

9 paragraph (2). 

10 ‘‘(2) COMMENCEMENT OF TIER III INVESTMENT

11 OPTIONS UPON ATTAINMENT OF ELECTION THRESH12 OLD.—In any case in which, as of the end of any 

13 calendar year, the total balance in the Savings Fund 

14 credited to a participating individual’s personal so15 cial security savings account exceeds for the first 

16 time the election threshold, the Board shall, by regu17 lation, provide for an opportunity for such partici18 pating individual to make, at any time thereafter, 

19 such individual’s first election of one or more of the 

20 Tier III Investment Options for investment of an 

21 amount in the Savings Fund credited to such ac22 count. Such election may be in lieu of or in addition 

23 to investment in the options available with respect to 

24 the Tier II Investment Fund of the Savings Fund. 

25 ‘‘(3) ALLOCATION OF FUNDS.—In the case of 

26 an election under paragraph (1), funds credited to 


rfrederick on DSKD9S0YB1PROD with BILLS
368 

•HR 4529 IH

1 the personal social security savings account of the 

2 participating individual and elected for transfer to 

3 one or more Tier III Investment Options shall be 

4 transferred to the Tier III Investment Options so 

5 elected for such calendar year, in percentages speci6 fied in the election by the participating individual for 

7 each applicable portfolio. 

8 ‘‘(4) ELECTION THRESHOLD.— 

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (B), for purposes of this subsection the 

11 term ‘election threshold’ means an amount 

12 equal to $25,000. 

13 ‘‘(B) ADJUSTMENTS.—The Board shall ad14 just annually (effective for annual reporting 

15 months occurring after December 2011) the 

16 dollar amount set forth in subparagraph (A) 

17 under procedures providing for adjustments in 

18 the same manner and to the same extent as ad19 justments are provided for under the proce20 dures used to adjust benefit amounts under sec21 tion 215(i)(2)(A), except that any amount so 

22 adjusted that is not a multiple of $1.00 shall be 

23 rounded to the nearest multiple of $1.00. 

24 ‘‘(5) SUBSEQUENT INVESTMENT OF AMOUNTS

25 HELD IN TIER III INVESTMENT OPTIONS.—Any 


rfrederick on DSKD9S0YB1PROD with BILLS
369 

•HR 4529 IH

1 amounts held in one or more Tier III Investment 

2 Options may be— 

3 ‘‘(A) transferred at any time to one or 

4 more other Tier III Investment Options, subject 

5 to applicable regulations of the Board and the 

6 terms governing the affected Tier III Invest7 ment Options, and 

8 ‘‘(B) transferred, not more frequently than 

9 annually, to the Tier II Investment Fund, for 

10 deposit in the applicable investment account 

11 then selected by the participating individual 

12 under section 256. 

13 ‘‘(b) CERTIFICATION OF ELIGIBLE ENTITIES.— 

14 ‘‘(1) IN GENERAL.—The Board shall certify eli15 gible entities to offer Tier III Investment Options 

16 under this part. 

17 ‘‘(2) APPLICATION.—Any eligible entity that de18 sires to be certified by the Board to offer a Tier III 

19 Investment Option shall submit an application to the 

20 Board at such time, in such manner, and containing 

21 such information as the Board may require. 

22 ‘‘(3) REQUIREMENTS FOR APPROVAL.—The 

23 Board shall not certify an eligible entity unless such 

24 eligible entity agrees to the following requirements: 


rfrederick on DSKD9S0YB1PROD with BILLS
370 

•HR 4529 IH

1 ‘‘(A) SEPARATE ACCOUNTING.—Each eligi2 ble entity shall, with respect to each Tier III 

3 Investment Option offered by such eligible enti4 ty to participating individuals— 

5 ‘‘(i) establish separate accounts for 

6 the contributions of each participating in7 dividual, and any earnings properly allo8 cable to the contributions, and 

9 ‘‘(ii) maintain separate recordkeeping 

10 with respect to each account. 

11 ‘‘(B) TREATMENT OF AMOUNTS HELD IN

12 FUND.—Amounts deposited into, and held and 

13 accounted for in, a Tier III Investment Option 

14 with respect to any participating individual 

15 shall be treated as property of such partici16 pating individual, held in trust for such partici17 pating individual. 

18 ‘‘(C) TRUST REQUIREMENTS.—Amounts 

19 held and accounted for with respect to a partici20 pating individual shall be held in a trust created 

21 or organized in the United States for the exclu22 sive benefit of such individual or his bene23 ficiaries. 

24 ‘‘(D) EXEMPTION FROM THIRD PARTY

25 CLAIMS.—Each Tier III Investment Option 


rfrederick on DSKD9S0YB1PROD with BILLS
371 

•HR 4529 IH

1 shall be exempt from any and all third party 

2 claims against the eligible entity. 

3 ‘‘(E) DISCLOSURE OF ADMINISTRATIVE

4 COSTS.—Each eligible entity offering a Tier III 

5 Investment Option under this section shall pro6 vide to each participating individual an annual 

7 disclosure of the rate of administrative costs 

8 chargeable with respect to investment in such 

9 Option. Such disclosure shall be written in a 

10 manner calculated to be understood by the av11 erage participating individual. The Board shall 

12 provide for coordination of disclosures with re13 spect to Tier III Investment Options under this 

14 subparagraph so as to assist participating indi15 viduals in comparing alternative Options based 

16 on administrative costs. 

17 ‘‘(F) REPORTING TO THE EXECUTIVE DI18 RECTOR AND THE BOARD.—Each eligible entity 

19 shall provide reports to the Executive Director 

20 and the Board at such time, in such manner, 

21 and containing such information as the Board 

22 may require. 

23 ‘‘(4) ELIGIBLE ENTITY DEFINED.—For pur24 poses of this section, the term ‘eligible entity’ means 

25 any investment company (as defined in section 3 of 


rfrederick on DSKD9S0YB1PROD with BILLS
372 

•HR 4529 IH

1 the Investment Company Act of 1940) or other per2 son that the Board determines appropriate to offer 

3 Tier III Investment Options under this part. 

4 ‘‘(c) APPROVAL OF TIER III INVESTMENT OP5 TIONS.— 

6 ‘‘(1) IN GENERAL.—No funds may be trans7 ferred into a Tier III Investment Option unless the 

8 Board has approved an application submitted under 

9 paragraph (2) with respect to the option. 

10 ‘‘(2) APPLICATION.—With respect to each Tier 

11 III Investment Option that an eligible entity cer12 tified under subsection (b)(1) seeks to offer, such 

13 entity shall submit an application to the Board at 

14 such time, in such manner, and containing such in15 formation as the Board may require. 

16 ‘‘(3) QUALIFICATIONS FOR APPROVAL.—The 

17 Board may not approve an application submitted 

18 under paragraph (2) in connection with a Tier III 

19 Investment Option unless the following requirements 

20 are met: 

21 ‘‘(A) OPTION MUST BE OFFERED BY CER22 TIFIED ELIGIBLE ENTITY.—The Tier III In23 vestment Option is offered by an eligible entity 

24 certified under subsection (b). 


rfrederick on DSKD9S0YB1PROD with BILLS
373 

•HR 4529 IH

1 ‘‘(B) OPTION MUST MEET QUALITY FAC2 TORS.— 

3 ‘‘(i) IN GENERAL.—The Tier III In4 vestment Option meets qualifications which 

5 shall be prescribed by the Board relating 

6 to the quality factors described in clause 

7 (ii). 

8 ‘‘(ii) QUALITY FACTORS.—The quality 

9 factors described in this clause are— 

10 ‘‘(I) the safety and soundness of 

11 the Tier III Investment Option’s pro12 posed investment policy; 

13 ‘‘(II) the experience and record 

14 of performance of the proposed invest15 ment option, if any; 

16 ‘‘(III) the experience and record 

17 of performance of the entity issuing or 

18 offering such option; and 

19 ‘‘(IV) such other factors as the 

20 Board may determine appropriate. 

21 ‘‘(d) CONSIDERATIONS FOR CERTIFICATION AND AP22 PROVAL.—In determining whether to certify an eligible en23 tity under subsection (b) or to approve a Tier III Invest24 ment Option under subsection (c), the Board shall— 


rfrederick on DSKD9S0YB1PROD with BILLS
374 

•HR 4529 IH

1 ‘‘(1) act in the best interests of the partici2 pating individuals; 

3 ‘‘(2) base its determination solely on consider4 ations of balancing safety and soundness of the Tier 

5 III Investment Option with the maximization of re6 turns of such option; and 

7 ‘‘(3) not base any determination related to the 

8 entity or option on political or other extraneous con9 siderations. 

10 ‘‘(e) SPONSORSHIP OF TIER III INVESTMENT OP11 TIONS BY MEMBERSHIP AND LABOR ORGANIZATIONS.— 

12 ‘‘(1) IN GENERAL.—A membership or labor or13 ganization (as defined by the Board) may sponsor 

14 Tier III Investment Options under contracts with el15 igible entities certified under subsection (b) who 

16 shall administer the investment option if such invest17 ment option is approved by the Board under sub18 section (c). 

19 ‘‘(2) LIMITATION TO MEMBERSHIP.—A mem20 bership or labor organization (as so defined) may 

21 limit to the members of such organization participa22 tion in a Tier III Investment Option sponsored by 

23 such organization. 

24 ‘‘(f) DISTRIBUTIONS IN CASE OF DEATH.—Upon the 

25 death of a participating individual, the amount of any asVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00374 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
375 

•HR 4529 IH

1 sets held under a Tier III Investment Option credited to 

2 the personal social security savings account of such indi3 vidual shall be distributed in accordance with section 

4 258(e). 

5 ‘‘SEC. 258. PERSONAL SOCIAL SECURITY SAVINGS ANNUITY 

6 AND OTHER DISTRIBUTIONS. 

7 ‘‘(a) DATE OF INITIAL DISTRIBUTION.—Except as 

8 provided in subsection (e), distributions may be made to 

9 a participating individual from amounts credited to the 

10 personal social security savings account of such individual 

11 only on or after the earliest of— 

12 ‘‘(1) the date the participating individual at13 tains retirement age (as defined in section 216(l)(1)) 

14 or, if elected by the individual, early retirement age 

15 (as defined in section 216(l)(2)); or 

16 ‘‘(2) the date on which the amount credited to 

17 the participating individual’s personal social security 

18 savings account is sufficient to purchase a personal 

19 social security savings annuity with a monthly ben20 efit that is at least equal to the minimum annuity 

21 payment amount (as defined in subsection 

22 (b)(4)(C)(iii)). 

23 ‘‘(b) PERSONAL SOCIAL SECURITY SAVINGS ANNU24 ITIES.— 


rfrederick on DSKD9S0YB1PROD with BILLS
376 

•HR 4529 IH

1 ‘‘(1) NOTICE OF AVAILABLE ANNUITIES.—Not 

2 later than the date determined under subsection (a), 

3 the Board shall notify each participating individual 

4 of— 

5 ‘‘(A) the most recent listing of personal so6 cial security savings annuities offered by the 

7 Annuity Issuance Authority under paragraph 

8 (2); and 

9 ‘‘(B) the entitlement of the participating 

10 individual to purchase such an annuity. 

11 ‘‘(2) ANNUITY ISSUANCE AUTHORITY.—There is 

12 established in the office of the Board an agency 

13 which shall be known as the ‘Annuity Issuance Au14 thority’. The Authority shall provide, in accordance 

15 with regulations of the Board, for the issuance of 

16 personal social security savings annuities for pur17 chase from the Authority under this section and to 

18 otherwise administer the issuance of such annuities 

19 in accordance with such regulations. 

20 ‘‘(3) ANNUITY RESERVES ACCOUNT.—There is 

21 established in the Savings Fund an Annuity Re22 serves Account. The Account shall consist of all 

23 amounts received by the Authority from the pur24 chase of personal social security savings annuities 

25 under this section (plus such amounts as may be 


rfrederick on DSKD9S0YB1PROD with BILLS
377 

•HR 4529 IH

1 transferred to the Account under paragraph (5)(B)), 

2 increased by the total net earnings from investments 

3 of such reserves under subparagraph (A) of para4 graph (5) and reduced by the total net losses from 

5 investments of such reserves under such subpara6 graph. 

7 ‘‘(4) PURCHASE OF ANNUITIES.— 

8 ‘‘(A) SELECTION OF ANNUITY.—On a date 

9 elected by the participating individual, but no 

10 earlier than the date determined under sub11 section (a), a participating individual may pur12 chase a personal social security savings annuity 

13 selected from among the annuities offered by 

14 the Authority under paragraph (2). 

15 ‘‘(B) TRANSFER OF ASSETS.—Upon the 

16 selection of an annuity by a participating indi17 vidual under subparagraph (A), the Board shall 

18 provide for the transfer of assets, credited to 

19 the personal social security savings account of 

20 the participating individual and held in the Tier 

21 II Investment Fund or under 1 or more Tier 

22 III Investment Options (or any combination 

23 thereof), in a total amount sufficient to pur24 chase the annuity selected by the participating 


rfrederick on DSKD9S0YB1PROD with BILLS
378 

•HR 4529 IH

1 individual from annuities offered by the Author2 ity. 

3 ‘‘(C) MINIMUM ANNUITY PAYMENT

4 AMOUNT.— 

5 ‘‘(i) IN GENERAL.—Subject to sub6 paragraph (D), if, at the time a personal 

7 social security savings annuity is pur8 chased under subparagraph (A), the assets 

9 credited to the personal social security sav10 ings account of the participating individual 

11 are sufficient to purchase a personal social 

12 security savings annuity offered by the Au13 thority under paragraph (2) with a month14 ly annuity payment that is at least equal 

15 to the minimum annuity payment amount, 

16 the amount of the monthly annuity pay17 ment provided by such annuity may not be 

18 less then the minimum annuity payment 

19 amount. 

20 ‘‘(ii) CONSTRUCTION.—Nothing in 

21 this subparagraph shall be construed to 

22 prohibit a participating individual from 

23 using personal social security savings ac24 count assets to purchase a personal social 

25 security savings annuity offered by the AuVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00378 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
379 

•HR 4529 IH

1 thority under paragraph (2) which provides 

2 for a monthly payment in excess of the 

3 minimum amount required under clause 

4 (i). 

5 ‘‘(iii) MINIMUM ANNUITY PAYMENT

6 AMOUNT DEFINED.—For purposes of this 

7 part, the term ‘minimum annuity payment 

8 amount’ means, as of any date, an amount 

9 equal to the monthly equivalent of 150 per10 cent of the poverty line for an individual 

11 (as in effect on such date), determined 

12 under the poverty guidelines of the Depart13 ment of Health and Human Services 

14 issued under sections 652 and 673(2) of 

15 the Omnibus Budget Reconciliation Act of 

16 1981. 

17 ‘‘(D) PURCHASE OF ANNUITIES IN THE

18 EVENT OF INSUFFICIENT ASSETS.—If a partici19 pating individual desires, or is required under 

20 subsection (f), to purchase a personal social se21 curity savings annuity under subsection (b) on 

22 or after the date determined under subsection 

23 (a)(1) and the assets of the personal social se24 curity savings account of such individual are in25 sufficient to purchase a personal social security 


rfrederick on DSKD9S0YB1PROD with BILLS
380 

•HR 4529 IH

1 savings annuity that provides for a monthly 

2 payment that is at least equal to the minimum 

3 annuity payment amount (as defined in para4 graph (4)(C)(iii)), the participating individual 

5 shall purchase a personal social security savings 

6 annuity with a monthly payment equal to the 

7 maximum amount that the participating indi8 vidual’s personal social security savings account 

9 can fund, as determined in accordance with reg10 ulations which shall be prescribed by the Au11 thority, and that otherwise meets the require12 ments of this subsection (including the cost-of13 living protection requirement of subsection 

14 (c)(1)(C)), and the Authority shall provide for 

15 appropriate certification to the Secretary of the 

16 Treasury with respect to the participating indi17 vidual’s eligibility for guarantee payments 

18 under section 259. 

19 ‘‘(5) MAINTENANCE OF RESERVES FOR PAY20 MENT OF ANNUITIES.— 

21 ‘‘(A) INVESTMENT OF RESERVES.—For 

22 purposes of investment of reserves held in the 

23 Annuity Reserves Account, the Authority shall 

24 contract with appropriate investment managers, 

25 recordkeepers, and custodians selected by the 


rfrederick on DSKD9S0YB1PROD with BILLS
381 

•HR 4529 IH

1 Authority for investment of such reserves. Such 

2 reserves shall be invested under regulations 

3 which shall be prescribed by the Authority so as 

4 to ensure, to the maximum extent practicable, 

5 that, of the total balance of the reserves (after 

6 payment of administrative expenses to such 

7 managers, recordkeepers, and custodians)— 

8 ‘‘(i) 65 percent is invested in equities 

9 in the same manner and under the same 

10 standards as are provided in section 

11 256(c)(4), and 

12 ‘‘(ii) 35 percent is invested in fixed in13 come instruments in the same manner and 

14 under the same standards as are provided 

15 in section 256(c)(5). 

16 ‘‘(B) PROVISION FOR FULL PAYMENT OF

17 ANNUITIES.—Payment of personal social secu18 rity savings annuities in accordance with the 

19 terms of such annuities shall be made, irrespec20 tive of the sufficiency of reserves in the Annuity 

21 Reserves Fund attributable to funds obtained 

22 from the purchase of such annuities. In the 

23 event of any impending insufficiency in the An24 nuity Reserves Account for the next fiscal year, 

25 the Authority shall certify to the Secretary of 


rfrederick on DSKD9S0YB1PROD with BILLS
382 

•HR 4529 IH

1 the Treasury the amount of such insufficiency, 

2 and the Secretary of the Treasury shall transfer 

3 from the Federal Old-Age and Survivors Insur4 ance Trust Fund to the Annuity Reserves Ac5 count the amount of the insufficiency, as so cer6 tified, in such installments, made prior to or 

7 during such fiscal year, as are necessary to 

8 eliminate in advance such insufficiency. 

9 ‘‘(c) PERSONAL SOCIAL SECURITY SAVINGS ANNU10 ITY.— 

11 ‘‘(1) IN GENERAL.—For purposes of this part, 

12 the term ‘personal social security savings annuity’ 

13 means an annuity that meets the following require14 ments: 

15 ‘‘(A) The annuity starting date (as defined 

16 in section 72(c)(4) of the Internal Revenue 

17 Code of 1986) commences on the first day of 

18 the month beginning after the date of the pur19 chase of the annuity. 

20 ‘‘(B) The terms of the annuity provide— 

21 ‘‘(i) for a monthly payment to the 

22 participating individual during the life of 

23 the participating individual equal to at 

24 least the minimum annuity payment 


rfrederick on DSKD9S0YB1PROD with BILLS
383 

•HR 4529 IH

1 amount (as defined in subsection 

2 (b)(4)(C)(iii)), or 

3 ‘‘(ii) in the case of an annuity pur4 chased under subparagraph (D) of sub5 section (b)(4), the maximum monthly pay6 ment determined under regulations pre7 scribed under such subparagraph. 

8 ‘‘(C) The terms of the annuity include pro9 cedures providing for adjustments in the 

10 amount of the monthly payments in the same 

11 manner and to the same extent as adjustments 

12 are provided for under the procedures used to 

13 adjust benefit amounts under section 

14 215(i)(2)(A). Nothing in this subparagraph 

15 shall be construed to preclude the terms gov16 erning such an annuity from providing for ad17 justments in the amount of monthly payments 

18 resulting in a payment for any month greater 

19 than the payment for that month that would re20 sult from adjustments required under the pre21 ceding sentence (b)(4)(D). 

22 ‘‘(D) The terms of the annuity include 

23 such other terms and conditions as the Board 

24 requires for the protection of the annuitant. 


rfrederick on DSKD9S0YB1PROD with BILLS
384 

•HR 4529 IH

1 ‘‘(2) EXEMPTION FROM THIRD PARTY

2 CLAIMS.—Each personal social security savings an3 nuity shall be exempt from any and all third party 

4 claims against the issuer. 

5 ‘‘(d) RIGHT TO USE EXCESS PERSONAL SOCIAL SE6 CURITY SAVINGS ACCOUNT ASSETS.—To the extent assets 

7 credited to a participating individual’s personal social se8 curity savings account remain after the purchase of an an9 nuity under subsection (b), the remaining assets shall be 

10 payable to the participating individual at such time, in 

11 such manner, and in such amounts as the participating 

12 individual may specify, subject to subsection (f). 

13 ‘‘(e) DISTRIBUTIONS IN CASE OF DEATH.—If the 

14 participating individual dies before all amounts which are 

15 held in the Tier I Investment Fund or the Tier II Invest16 ment Fund of the Savings Fund or held under a Tier III 

17 Investment Option and which are credited to the personal 

18 social security savings account of the individual are other19 wise distributed in accordance with this section, such 

20 amounts shall be distributed, under regulations which 

21 shall be prescribed by the Board— 

22 ‘‘(1) in any case in which one or more bene23 ficiaries have been designated in advance, to such 

24 beneficiaries in accordance with such designation as 

25 provided in such regulations, and 


rfrederick on DSKD9S0YB1PROD with BILLS
385 

•HR 4529 IH

1 ‘‘(2) in the case of any amount not distributed 

2 as described in paragraph (1), to such individual’s 

3 estate. 

4 ‘‘(f) DATE OF FINAL DISTRIBUTION.—All amounts 

5 credited to the personal social security savings account of 

6 an individual shall be distributed, by means of the pur7 chase of annuities or otherwise in a manner consistent 

8 with the requirements of this section, not later than 5 

9 years after the date the individual attains retirement age 

10 (as defined in section 216(l)). The Board shall provide by 

11 regulation for means of distribution necessary to ensure 

12 compliance with the requirements of this subsection. 

13 ‘‘SEC. 259. GUARANTEE OF ACCOUNT SAVINGS. 

14 ‘‘(a) IN GENERAL.—If, as of immediately before the 

15 month for which the first monthly payment under a par16 ticipating individual’s personal social security savings an17 nuity is paid, the amount credited to such individual’s per18 sonal social security savings account is less that the sum 

19 of all deposits made to the account under section 252(b), 

20 adjusted as provided in subsection (b), the Annuity 

21 Issuance Authority shall so certify to the Secretary of the 

22 Treasury and, upon receipt of such certification, such Sec23 retary shall transfer to such individual’s Tier I Investment 

24 Fund, from amounts in the Federal Old-Age and Sur25 vivors Insurance Trust Fund, an amount equal to the exVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00385 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
386 

•HR 4529 IH

1 cess of such sum of such deposits, as so adjusted, over 

2 such amount credited to such account. 

3 ‘‘(b) ADJUSTMENTS.— 

4 ‘‘(1) IN GENERAL.—For purposes of subsection 

5 (a), deposits described in subsection (a) which are 

6 made in any calendar year shall be deemed to be 

7 equal to the product of— 

8 ‘‘(A) the deposits made in such year (as 

9 determined without regard to this subsection); 

10 and 

11 ‘‘(B) the quotient obtained by dividing— 

12 ‘‘(i) the Consumer Price Index for the 

13 calendar quarter beginning on July 1 and 

14 ending on September 30 preceding the 

15 year in which the month referred to in sub16 section (a) occurs; by 

17 ‘‘(ii) the Consumer Price Index for 

18 the calendar quarter beginning on July 1 

19 and ending on September 30 preceding the 

20 calendar year in which such deposits were 

21 made. 

22 ‘‘(2) CONSUMER PRICE INDEX.—For purposes 

23 of paragraph (1), the Consumer Price Index for a 

24 calendar quarter shall be the arithmetical mean of 

25 the Consumer Price Index for Urban Wage Earners 


rfrederick on DSKD9S0YB1PROD with BILLS
387 

•HR 4529 IH

1 and Clerical Workers (CPI–W) for the 3 months in 

2 such quarter. 

3 ‘‘SEC. 260. PERSONAL SOCIAL SECURITY SAVINGS BOARD. 

4 ‘‘(a) ESTABLISHMENT.—There is established in the 

5 executive branch of the Government a Personal Social Se6 curity Savings Board. 

7 ‘‘(b) COMPOSITION.—The Board shall be composed 

8 of— 

9 ‘‘(1) 3 members appointed by the President, of 

10 whom 1 shall be designated by the President as 

11 Chairman; and 

12 ‘‘(2) 2 members appointed by the President, of 

13 whom— 

14 ‘‘(A) 1 shall be appointed by the President 

15 after taking into consideration the recommenda16 tion made by the Speaker of the House of Rep17 resentatives in consultation with the minority 

18 leader of the House of Representatives; and 

19 ‘‘(B) 1 shall be appointed by the President 

20 after taking into consideration the recommenda21 tion made by the majority leader of the Senate 

22 in consultation with the minority leader of the 

23 Senate. 


rfrederick on DSKD9S0YB1PROD with BILLS
388 

•HR 4529 IH

1 ‘‘(c) ADVICE AND CONSENT.—Appointments under 

2 subsection (b) shall be made by and with the advice and 

3 consent of the Senate. 

4 ‘‘(d) MEMBERSHIP REQUIREMENTS.—Members of 

5 the Board shall have substantial experience, training, and 

6 expertise in the management of financial investments and 

7 pension benefit plans. 

8 ‘‘(e) LENGTH OF APPOINTMENTS.— 

9 ‘‘(1) TERMS.—A member of the Board shall be 

10 appointed for a term of 4 years, except that of the 

11 members first appointed under subsection (b)— 

12 ‘‘(A) the Chairman shall be appointed for 

13 a term of 4 years; 

14 ‘‘(B) the members appointed under sub15 section (b)(2) shall be appointed for terms of 3 

16 years; and 

17 ‘‘(C) the remaining members shall be ap18 pointed for terms of 2 years. 

19 ‘‘(2) VACANCIES.— 

20 ‘‘(A) IN GENERAL.—A vacancy on the 

21 Board shall be filled in the manner in which the 

22 original appointment was made and shall be 

23 subject to any conditions that applied with re24 spect to the original appointment. 


rfrederick on DSKD9S0YB1PROD with BILLS
389 

•HR 4529 IH

1 ‘‘(B) COMPLETION OF TERM.—An indi2 vidual chosen to fill a vacancy shall be ap3 pointed for the unexpired term of the member 

4 replaced. 

5 ‘‘(3) EXPIRATION.—The term of any member 

6 shall not expire before the date on which the mem7 ber’s successor takes office. 

8 ‘‘(f) DUTIES.—The Board shall— 

9 ‘‘(1) administer the program established under 

10 this part; 

11 ‘‘(2) establish policies for the investment and 

12 management of the Savings Fund, including the 

13 Tier I Investment Fund and the Tier II Investment 

14 Fund, and amounts held under Tier III Investment 

15 Options, including policies applicable to the asset 

16 managers, recordkeepers, and custodians with re17 sponsibility for managing the investment of amounts 

18 credited to personal social security investment ac19 counts, and for the management and operation of 

20 personal social security savings annuities, which 

21 shall provide for— 

22 ‘‘(A) prudent investments suitable for ac23 cumulating funds for payment of retirement in24 come; 

25 ‘‘(B) sound management practices; and 


rfrederick on DSKD9S0YB1PROD with BILLS
390 

•HR 4529 IH

1 ‘‘(C) low administrative costs; 

2 ‘‘(3) review the performance of investments 

3 made for the Tier I Investment Fund and the Tier 

4 II Investment Fund; 

5 ‘‘(4) review the performance of investments 

6 made under Tier III Investment Options; 

7 ‘‘(5) review the management and operation of 

8 personal social security savings annuities; 

9 ‘‘(6) review and approve the budget of the 

10 Board; and 

11 ‘‘(7) comply with the fiduciary requirements of 

12 part 4 of subtitle B of title I of the Employee Re13 tirement Income Security Act of 1974 (relating to fi14 duciary responsibility) in connection with any exer15 cise of discretion in connection with the assets of the 

16 Savings Fund. 

17 ‘‘(g) ADMINISTRATIVE PROVISIONS.— 

18 ‘‘(1) IN GENERAL.—The Board may— 

19 ‘‘(A) adopt, alter, and use a seal; 

20 ‘‘(B) except as provided in paragraph (4), 

21 direct the Executive Director to take such ac22 tion as the Board considers appropriate to 

23 carry out the provisions of this part and the 

24 policies of the Board in accordance with delega25 tions under this part; 


rfrederick on DSKD9S0YB1PROD with BILLS
391 

•HR 4529 IH

1 ‘‘(C) upon the concurring votes of 4 mem2 bers, remove the Executive Director from office 

3 for good cause shown; 

4 ‘‘(D) provide to the Executive Director 

5 such resources as are necessary to carry out the 

6 duties of the Executive Director; and 

7 ‘‘(E) take such other actions as may be 

8 necessary to carry out the functions of the 

9 Board. 

10 ‘‘(2) MEETINGS.—The Board shall meet— 

11 ‘‘(A) not less than once during each 

12 month; and 

13 ‘‘(B) at additional times at the call of the 

14 Chairman. 

15 ‘‘(3) EXERCISE OF POWERS.— 

16 ‘‘(A) IN GENERAL.—Except as provided in 

17 paragraph (1)(C), the Board shall perform the 

18 functions and exercise the powers of the Board 

19 on a majority vote of a quorum of the Board. 

20 Three members of the Board shall constitute a 

21 quorum for the transaction of business. 

22 ‘‘(B) VACANCIES.—A vacancy on the 

23 Board shall not impair the authority of a 

24 quorum of the Board to perform the functions 

25 and exercise the powers of the Board. 


rfrederick on DSKD9S0YB1PROD with BILLS
392 

•HR 4529 IH

1 ‘‘(4) LIMITATIONS ON INVESTMENTS.—The 

2 Board may not direct any person to invest or to 

3 cause to be invested any sums in the Tier II Invest4 ment Fund or any personal social security invest5 ment account in a specific asset or to dispose of or 

6 cause to be disposed of any specific asset of such 

7 Fund or any such account. 

8 ‘‘(h) COMPENSATION.— 

9 ‘‘(1) IN GENERAL.—Each member of the Board 

10 who is not an officer or employee of the Federal 

11 Government shall be compensated at the daily rate 

12 of basic pay for level IV of the Executive Schedule 

13 for each day during which such member is engaged 

14 in performing a function of the Board. 

15 ‘‘(2) EXPENSES.—A member of the Board shall 

16 be paid travel, per diem, and other necessary ex17 penses under subchapter I of chapter 57 of title 5, 

18 United States Code, while traveling away from such 

19 member’s home or regular place of business in the 

20 performance of the duties of the Board. 

21 ‘‘(3) SOURCE OF FUNDS.—Payments authorized 

22 under this subsection shall be paid from the Tier I 

23 Investment Fund or the Tier II Investment Fund, 

24 as determined appropriate by the Board. 


rfrederick on DSKD9S0YB1PROD with BILLS
393 

•HR 4529 IH

1 ‘‘(i) DISCHARGE OF RESPONSIBILITIES.—The mem2 bers of the Board shall discharge their responsibilities 

3 solely in the interest of the participating individuals and 

4 their beneficiaries under this part. 

5 ‘‘(j) ANNUAL INDEPENDENT AUDIT.—The Board 

6 shall annually engage an independent qualified public ac7 countant to audit the activities of the Board. 

8 ‘‘(k) SUBMISSION OF BUDGET TO CONGRESS.—The 

9 Board shall prepare and submit to the President, and, at 

10 the same time, to the appropriate committees of Congress, 

11 an annual budget of the expenses and other items relating 

12 to the Board which shall be included as a separate item 

13 in the budget required to be transmitted to Congress 

14 under section 1105 of title 31, United States Code. 

15 ‘‘(l) SUBMISSION OF LEGISLATIVE RECOMMENDA16 TIONS.—The Board may submit to the President, and, at 

17 the same time, shall submit to each House of Congress, 

18 any legislative recommendations of the Board relating to 

19 any of its functions under this part or any other provision 

20 of law. 

21 ‘‘SEC. 261. EXECUTIVE DIRECTOR. 

22 ‘‘(a) APPOINTMENT OF EXECUTIVE DIRECTOR.—The 

23 Board shall appoint, without regard to the provisions of 

24 law governing appointments in the competitive service, an 


rfrederick on DSKD9S0YB1PROD with BILLS
394 

•HR 4529 IH

1 Executive Director by action agreed to by a majority of 

2 the members of the Board. 

3 ‘‘(b) DUTIES.—The Executive Director shall, as de4 termined appropriate by the Board— 

5 ‘‘(1) carry out the policies established by the 

6 Board; 

7 ‘‘(2) invest and manage the Tier I Investment 

8 Fund and the Tier II Investment Fund in accord9 ance with the investment policies and other policies 

10 established by the Board; 

11 ‘‘(3) administer the provisions of this part re12 lating to the Tier I Investment Fund and the Tier 

13 II Investment Fund; and 

14 ‘‘(4) prescribe such regulations (other than reg15 ulations relating to fiduciary responsibilities) as may 

16 be necessary for the administration of this part re17 lating to the Tier I Investment Fund and the Tier 

18 II Investment Fund. 

19 ‘‘(c) ADMINISTRATIVE AUTHORITY.—The Executive 

20 Director may, within the scope of the duties of the Execu21 tive Director as determined by the Board— 

22 ‘‘(1) appoint such personnel as may be nec23 essary to carry out the provisions of this part relat24 ing to the Tier I Investment Fund and the Tier II 

25 Investment Fund; 


rfrederick on DSKD9S0YB1PROD with BILLS
395 

•HR 4529 IH

1 ‘‘(2) subject to approval by the Board, procure 

2 the services of experts and consultants under section 

3 3109 of title 5, United States Code; 

4 ‘‘(3) secure directly from an Executive agency, 

5 the United States Postal Service, or the Postal Rate 

6 Commission any information necessary to carry out 

7 the provisions of this part and the policies of the 

8 Board relating to the Tier I Investment Fund and 

9 the Tier II Investment Fund; 

10 ‘‘(4) make such payments out of sums in the 

11 Tier I Investment Fund and the Tier II Investment 

12 Fund as the Executive Director determines, in ac13 cordance with regulations of the Board, are nec14 essary to carry out the provisions of this part and 

15 the policies of the Board; 

16 ‘‘(5) pay the compensation, per diem, and travel 

17 expenses of individuals appointed under paragraphs 

18 (1), (2), and (6) from the Tier I Investment Fund 

19 or the Tier II Investment Fund, in accordance with 

20 regulations of the Board; 

21 ‘‘(6) accept and use the services of individuals 

22 employed intermittently in the Government service 

23 and reimburse such individuals for travel expenses, 

24 authorized by section 5703 of title 5, United States 


rfrederick on DSKD9S0YB1PROD with BILLS
396 

•HR 4529 IH

1 Code, including per diem as authorized by section 

2 5702 of such title; 

3 ‘‘(7) except as otherwise expressly prohibited by 

4 law or the policies of the Board, delegate any of the 

5 Executive Director’s functions to such employees 

6 under the Board as the Executive Director may des7 ignate and authorize such successive redelegations of 

8 such functions to such employees under the Board 

9 as the Executive Director may consider to be nec10 essary or appropriate; and 

11 ‘‘(8) take such other actions as are appropriate 

12 to carry out the functions of the Executive Direc13 tor.’’. 

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

15 this section shall apply with respect to wages paid after 

16 December 31, 2011, for pay periods ending after such 

17 date and self-employment income for taxable years begin18 ning after such date. 

19 SEC. 403. MONTHLY INSURANCE BENEFITS FOR PARTICI20 PATING INDIVIDUALS. 

21 Section 202 of the Social Security Act (42 U.S.C. 

22 402) is amended by adding at the end the following new 

23 subsection: 


rfrederick on DSKD9S0YB1PROD with BILLS
397 

•HR 4529 IH

1 ‘‘Benefits for Participants Under Part B 

2 ‘‘(z)(1) Notwithstanding the preceding provisions of 

3 this section— 

4 ‘‘(A) a participating individual under the Per5 sonal Social Security Savings Program under part B 

6 shall not be entitled to old-age insurance benefits 

7 under subsection (a); and 

8 ‘‘(B) except as provided in paragraph (2), no 

9 individual shall be entitled to benefits under this sec10 tion on the basis of the wages and self-employment 

11 income of such a participating individual. 

12 ‘‘(2) In the case of any such participating individual 

13 who dies before such individual purchases a personal social 

14 security savings annuity under section 258, paragraph 

15 (1)(B) shall not apply with respect to child’s insurance 

16 benefits under subsection (d), widow’s insurance benefits 

17 under subsection (e), widower’s insurance benefits under 

18 subsection (f), mother’s and father’s insurance benefits 

19 under subsection (g), and parent’s insurance benefits 

20 under subsection (h).’’. 

21 SEC. 404. TAX TREATMENT OF ACCOUNTS. 

22 (a) IN GENERAL.— 

23 (1) IN GENERAL.—Subchapter F of chapter 1 

24 of the Internal Revenue Code of 1986 (relating to 


rfrederick on DSKD9S0YB1PROD with BILLS
398 

•HR 4529 IH

1 exempt organizations) is amended by adding at the 

2 end the following new part: 

3 ‘‘PART IX—PERSONAL SOCIAL SECURITY 

4 SAVINGS PROGRAM 

‘‘Sec. 530A. Personal social security savings program. 

5 ‘‘SEC. 530A. PERSONAL SOCIAL SECURITY SAVINGS PRO6 GRAM. 

7 ‘‘(a) GENERAL RULE.—The Social Security Personal 

8 Savings Fund and each Tier III Investment Option are 

9 exempt from taxation under this subtitle. Notwithstanding 

10 the preceding sentence, sums in a personal social security 

11 savings account which are attributable to a Tier III Op12 tion shall be subject to the taxes imposed by section 511 

13 (relating to imposition of tax on unrelated business income 

14 of charitable, etc. organizations). 

15 ‘‘(b) DISTRIBUTIONS.— 

16 ‘‘(1) IN GENERAL.—Any qualified distribution 

17 from— 

18 ‘‘(A) amounts credited to a personal social 

19 security savings account from the Social Secu20 rity Personal Savings Fund or attributable to a 

21 Tier III Investment Option, or 

22 ‘‘(B) a personal social security savings an23 nuity, 


rfrederick on DSKD9S0YB1PROD with BILLS
399 

•HR 4529 IH

1 shall not be included in the gross income of the dis2 tributee. 

3 ‘‘(2) QUALIFIED DISTRIBUTION.—For purposes 

4 of paragraph (1), the term ‘qualified distribution’ 

5 means a distribution which meets the requirements 

6 of section 258 of the Social Security Act and which 

7 is not a guaranty payment (as defined by section 

8 259 of such Act). 

9 ‘‘(c) DEFINITIONS.—For purposes of this section— 

10 ‘‘(1) PERSONAL SOCIAL SECURITY SAVINGS AC11 COUNT.—The term ‘personal social security savings 

12 account’ means an account established under section 

13 254(a) of the Social Security Act. 

14 ‘‘(2) PERSONAL SOCIAL SECURITY SAVINGS AN15 NUITY.—The term ‘personal social security savings 

16 annuity’ means an annuity approved by the Personal 

17 Social Security Savings Board under section 

18 258(b)(3) of the Social Security Act. 

19 ‘‘(3) SOCIAL SECURITY PERSONAL SAVINGS

20 FUND.—The term ‘Social Security Personal Savings 

21 Fund’ means the Savings Fund established under 

22 section 252 of the Social Security Act. 

23 ‘‘(4) TIER III INVESTMENT OPTION.—The term 

24 ‘Tier III Investment Option’ has the meaning given 


rfrederick on DSKD9S0YB1PROD with BILLS
400 

•HR 4529 IH

1 such term by section 251(9) of the Social Security 

2 Act. 

3 ‘‘(d) ESTATE TAX TREATMENT.—No amount shall be 

4 includible in the gross estate of any individual for pur5 poses of chapter 11 by reason of an interest in the Tier 

6 I Investment Fund or the Tier II Investment Fund of the 

7 Savings Fund or held under a Tier III Investment Option 

8 and which is credited to the personal social security sav9 ings account of the individual.’’. 

10 (2) CONFORMING AMENDMENT.—Section 

11 86(d)(1)(A) of such Code is amended by inserting 

12 ‘‘part A of’’ after ‘‘under’’. 

13 (3) CLERICAL AMENDMENT.—The table of 

14 parts for subchapter F of chapter 1 of such Code is 

15 amended by adding after the item relating to part 

16 VIII the following new item: 

‘‘PART IX. PERSONAL SOCIAL SECURITY SAVINGS PROGRAM.’’. 

17 (b) GUARANTY PAYMENTS.—Paragraph (1) of sec18 tion 86(d) of the Internal Revenue Act of 1986, as amend19 ed by subsection (a)(2), is amended by striking ‘‘or’’ at 

20 the end of subparagraph (A), by striking the period and 

21 inserting ‘‘, or’’ at the end of subparagraph (B), and by 

22 adding at the end the following new subparagraph: 

23 ‘‘(C) a guaranty payment under section 

24 259(a), and a payment of an additional amount 


rfrederick on DSKD9S0YB1PROD with BILLS
401 

•HR 4529 IH

1 under section 259(c), of the Social Security 

2 Act.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2011. 

6 SEC. 405. SELF-LIQUIDATING SOCIAL SECURITY TRANSI7 TION FUND. 

8 Part B of title II of the Social Security Act (as added 

9 by section 101 of this Act) is amended by adding at the 

10 end the following new section: 

11 ‘‘SEC. 262. SELF-LIQUIDATING SOCIAL SECURITY TRANSI12 TION FUND. 

13 ‘‘(a) ESTABLISHMENT.—There is hereby created on 

14 the books of the Treasury of the United States a trust 

15 fund to be known as the Self-Liquidating Social Security 

16 Transition Fund (in this section referred to as the ‘Transi17 tion Fund’). 

18 ‘‘(b) BOARD OF TRUSTEES.— 

19 ‘‘(1) ESTABLISHMENT.—With respect to the 

20 Transition Fund, there is hereby created a body to 

21 be known as the Board of Trustees of the Transition 

22 Fund (in this section referred to as the ‘Board of 

23 Trustees’) composed of the Commissioner of Social 

24 Security, the Secretary of the Treasury, and the 


rfrederick on DSKD9S0YB1PROD with BILLS
402 

•HR 4529 IH

1 members of the Personal Social Security Savings 

2 Board. 

3 ‘‘(2) DUTIES.—The Board of Trustees shall— 

4 ‘‘(A) provide for the issuance of obligations 

5 by the Transition Fund pursuant to subsection 

6 (c), 

7 ‘‘(B) provide for the receipt and manage8 ment of amounts paid into the Transition Fund 

9 pursuant to subsection (d), 

10 ‘‘(C) use all funds paid into the Transition 

11 Fund to redeem obligations issued under sub12 section (c) as soon as practicable, 

13 ‘‘(D) report to Congress not later than the 

14 first day of April of each year on the operation 

15 and status of the Transition Fund during the 

16 preceding fiscal year and on its expected oper17 ation and status during the current fiscal year 

18 and the next 2 fiscal years, and 

19 ‘‘(E) review the general policies followed in 

20 managing the Transition Fund, and recommend 

21 changes in such policies, including necessary 

22 changes in the provisions of law which govern 

23 the way in which the Transition Fund is to be 

24 managed. 


rfrederick on DSKD9S0YB1PROD with BILLS
403 

•HR 4529 IH

1 ‘‘(3) MEETINGS.—The Board of Trustees shall 

2 meet not less frequently than once each calendar 

3 year. 

4 ‘‘(c) ISSUANCE OF TRANSITION FUND BONDS.— 

5 ‘‘(1) ISSUANCE.— 

6 ‘‘(A) IN GENERAL.—The purposes for 

7 which obligations of the United States may be 

8 issued under chapter 31 of title 31, United 

9 States Code, are hereby extended to authorize 

10 the issuance at par of public-debt obligations by 

11 the Transition Fund. 

12 ‘‘(B) REQUIRED ISSUANCE.—Beginning on 

13 January 1, 2012, whenever any obligation held 

14 in the Federal Old-Age and Survivors Insurance 

15 Trust Fund or the Federal Disability Insurance 

16 Trust Fund is repaid from the general fund of 

17 the Treasury to either of such Trust Funds, the 

18 Transition Fund shall issue an obligation under 

19 this subsection in an amount equal to the 

20 amount of interest and principal so repaid. 

21 ‘‘(C) TRANSFER OF PROCEEDS TO GEN22 ERAL FUND OF THE TREASURY.—Proceeds 

23 from the issuance of any obligation issued 

24 under this section shall be transferred to the 

25 general fund of the Treasury. 


rfrederick on DSKD9S0YB1PROD with BILLS
404 

•HR 4529 IH

1 ‘‘(D) ACCOUNTING.—The debt owed on 

2 any obligation issued under this section shall be 

3 considered to be debt of the Transition Fund 

4 and shall be accounted for in such manner. 

5 ‘‘(2) MATURITIES AND INTEREST RATE.—Such 

6 obligations issued by the Transition Fund for pur7 chase by the public shall have maturities fixed with 

8 due regard for the needs of the Transition Fund and 

9 shall bear interest at a rate equal to the average 

10 market yield (computed by the Secretary of the 

11 Treasury on the basis of market quotations as of the 

12 end of the calendar month next preceding the date 

13 of such issue) on all marketable interest-bearing ob14 ligations of the United States then forming a part 

15 of the public debt which are not due or callable until 

16 after the expiration of 4 years from the end of such 

17 calendar month, except that where such average 

18 market yield is not a multiple of one-eighth of 1 per 

19 centum, the rate of interest on such obligations shall 

20 be the multiple of one-eighth of 1 per centum near21 est such market yield. 

22 ‘‘(3) REPAYMENT OF OBLIGATIONS.—Obliga23 tions issued under this subsection may be redeemed 

24 only by funds in the Transition Fund. 

25 ‘‘(d) DEPOSIT OF OASDI TRUST FUND SURPLUS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
405 

•HR 4529 IH

1 ‘‘(1) IN GENERAL.—In advance of the initial re2 payment from the general fund of the Treasury de3 scribed in subsection (c)(1)(B), the Chief Actuary of 

4 the Social Security Administration shall certify to 

5 the Secretary of the Treasury the date of such re6 payment. There are appropriated to the Transition 

7 Fund for the fiscal year during which such date oc8 curs, and for each fiscal year thereafter, out of any 

9 moneys in the Federal Old-Age and Survivors Insur10 ance Trust Fund, amounts equivalent to the OASDI 

11 trust fund surplus (as defined in paragraph (2)) for 

12 the preceding fiscal year. 

13 ‘‘(2) TRANSFERS BASED ON ESTIMATES.—The 

14 amounts appropriated by paragraph (1) shall be 

15 transferred from time to time from the Federal Old16 Age and Survivors Insurance Trust Fund to the 

17 Transition Fund, such amounts to be determined on 

18 the basis of estimates by the Commissioner of Social 

19 Security. Proper adjustments shall be made in 

20 amounts subsequently transferred to the extent prior 

21 estimates were in excess of or were less than such 

22 surplus. 

23 ‘‘(3) OASDI TRUST FUND SURPLUS DE24 FINED.—In this section, the term ‘OASDI trust 

25 fund surplus’ for a fiscal year means the dollar 


rfrederick on DSKD9S0YB1PROD with BILLS
406 

•HR 4529 IH

1 amount by which the Federal Old-Age and Survivors 

2 Insurance Trust Fund could be reduced as of the 

3 end of such fiscal year so as to result in an OASDI 

4 trust fund ratio (as defined in section 201(p)(4)) for 

5 such fiscal year equal to 125 percent. 

6 ‘‘(4) RULE OF CONSTRUCTION.—This section 

7 shall not be construed to require redemption of obli8 gations of the Trust Fund for the purpose of mak9 ing transfers to the Transition Fund under this sec10 tion or for any other purpose other than to provide 

11 for payment of benefits under part A of title II of 

12 the Social Security Act. 

13 ‘‘(e) REDEMPTION OF OBLIGATIONS UPON DEPOSIT

14 OF FUNDS.—Obligations issued under subsection (c) may 

15 be redeemed only by funds in the Transition Fund. The 

16 Board of Trustees shall provide for the redemption of such 

17 obligations as soon as possible with funds deposited into 

18 the Transition Fund pursuant to subsection (d). 

19 ‘‘(f) SUNSET.—On the first date as of which all of 

20 the obligations issued under subsection (c) have been re21 deemed, any balance remaining in the Transition Fund 

22 as of such date shall be deposited in the Federal Old-Age 

23 and Survivors Insurance Trust Fund, the terms of the 

24 Board of Trustees shall end, the Transition Fund shall 

25 cease to exist, and this section shall be repealed.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
407 

•HR 4529 IH

1 SEC. 406. BUDGETARY TREATMENT OF SOCIAL SECURITY. 

2 (a) IN GENERAL.—Section 710 of the Social Security 

3 Act (42 U.S.C. 911) is amended to read as follows: 

4 ‘‘BUDGETARY TREATMENT OF SOCIAL SECURITY

5 ‘‘SEC. 710. 

6 ‘‘Notwithstanding any other provision of law and ex7 cept as provided in subsection (b), the receipts and dis8 bursements shall be treated in the same manner as section 

9 13301 of the Budget Enforcement Act of 1990.’’. 

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

11 this section shall apply with respect to fiscal years begin12 ning on or after October 1, 2011. 

13 SEC. 407. ACCOUNTING FOR THE OLD-AGE, SURVIVORS, 

14 AND DISABILITY INSURANCE PROGRAM AND 

15 THE PERSONAL SOCIAL SECURITY SAVINGS 

16 PROGRAM. 

17 Title VII of the Social Security Act is amended by 

18 inserting after section 705 (42 U.S.C. 906) the following 

19 new section: 

20 ‘‘ACCOUNTING FOR THE OLD-AGE, SURVIVORS, AND DIS21 ABILITY INSURANCE PROGRAM AND THE PERSONAL

22 SOCIAL SECURITY SAVINGS PROGRAM

23 ‘‘Social Security Lockbox Budget 

24 ‘‘SEC. 706. (a) At the time of the transmittal to the 

25 Congress by the President of the budget of the United 

26 States Government, the President shall transmit to each 


rfrederick on DSKD9S0YB1PROD with BILLS
408 

•HR 4529 IH

1 House of the Congress a separate report (to be known as 

2 the ‘Social Security Lockbox Budget’) detailing the per3 formance during the preceding fiscal year of each of the 

4 accounts established under subsection (b). Such report 

5 shall set forth, as determined as of the end of the year— 

6 ‘‘(1) the amount of the balance of each account, 

7 ‘‘(2) the amount of the total charges and the 

8 amount of the total credits to each account for the 

9 year, and 

10 ‘‘(3) the amount of the total for the year of 

11 each category of charges and credits itemized in sub12 section (b). 

13 ‘‘Establishment of Accounts 

14 ‘‘(b) For purposes of accounting for certain receipts 

15 and disbursement of the Treasury of the United States 

16 in connection with the Old-Age, Survivors, and Disability 

17 Insurance Program under part A of title II of the Social 

18 Security Act and the Personal Security Savings Program 

19 under part B of such title, the Secretary of the Treasury 

20 shall establish and maintain a Social Security Part A Ac21 count, a Social Security Part B Account, and a Self-Liqui22 dating Social Security Transition Fund Account. 


rfrederick on DSKD9S0YB1PROD with BILLS
409 

•HR 4529 IH

1 ‘‘Credits and Charges to the Social Security Part A 

2 Account 

3 ‘‘(c)(1) For each fiscal year, the Social Security Part 

4 A Account shall be credited with the sum of— 

5 ‘‘(A) all receipts during the year by the Federal 

6 Old-Age and Survivors Insurance Trust Fund and 

7 the Federal Disability Insurance Trust Fund under 

8 section 201 (including amounts received as interest 

9 on notes and obligations purchased by the Trust 

10 Funds under section 201(d) of such Act, and exclud11 ing amounts received in redemption of such notes 

12 and obligations and amounts received by either such 

13 Trust Fund as transfers from the other such Trust 

14 Fund), and 

15 ‘‘(B) all receipts during the year by the Federal 

16 Old-Age and Survivors Insurance Trust Fund and 

17 the Federal Disability Insurance Trust Fund under 

18 section 121(e) of the Social Security Amendments of 

19 1983 (relating to appropriation of amounts equiva20 lent to taxes on social security benefits) (42 U.S.C. 

21 401 note). 

22 ‘‘(2) For each fiscal year, the Social Security Part 

23 A Account shall be charged with the sum of— 

24 ‘‘(A) all benefits paid during the year from the 

25 Federal Old-Age and Survivors Insurance Trust 


rfrederick on DSKD9S0YB1PROD with BILLS
410 

•HR 4529 IH

1 Fund and the Federal Disability Insurance Trust 

2 Fund under part A of title II of the Social Security 

3 Act, 

4 ‘‘(B) all redirected social security contributions 

5 transferred during the year to the Social Security 

6 Personal Savings Fund under section 252(b), 

7 ‘‘(C) all other expenditures during the year 

8 from the Trust Funds under part A of title II (ex9 cluding amounts expended as transfers by either 

10 such Trust Fund to the other such Trust Fund and 

11 amounts paid for the purchase of notes and obliga12 tions under section 201(d)), and 

13 ‘‘(D) all transfers from the Federal Old-Age 

14 and Survivors Insurance Trust Fund to the Self-Liq15 uidating Social Security Transition Fund under sec16 tion 262(d). 

17 ‘‘Charges and Credits to the Social Security Part B 

18 Account 

19 ‘‘(d)(1) For each fiscal year, the Social Security Part 

20 B Account shall be credited with— 

21 ‘‘(A) all redirected social security contributions 

22 transferred during the year to the Personal Social 

23 Security Savings Fund under section 252(b) of the 

24 Social Security Act, and 


rfrederick on DSKD9S0YB1PROD with BILLS
411 

•HR 4529 IH

1 ‘‘(B) any net increase in the Tier I Investment 

2 Fund attributable to investment for the fiscal year, 

3 any net increase in the Tier II Investment Fund at4 tributable to investment for the fiscal year, and the 

5 total amount of any net increases in Tier III Invest6 ment Options attributable to investment for the fis7 cal year. 

8 ‘‘(2) For each fiscal year, the Social Security Part 

9 B Account shall be charged with— 

10 ‘‘(A) all administrative costs incurred for the 

11 fiscal year with respect to the Tier I Investment 

12 Fund, the Tier II Investment Fund, and the Tier III 

13 Investment Options, 

14 ‘‘(B) any net decrease in the Tier I Investment 

15 Fund attributable to investment for the fiscal year, 

16 any net decrease in the Tier II Investment Fund at17 tributable to investment for the fiscal year, and the 

18 total amount of any net decreases in Tier III Invest19 ment Options attributable to investment for the fis20 cal year, and 

21 ‘‘(C) annuity payments made during the year 

22 under section 258 from the Annuity Reserve Ac23 count in the Savings Fund. 


rfrederick on DSKD9S0YB1PROD with BILLS
412 

•HR 4529 IH

1 ‘‘Charges and Credits to the Self-Liquidating Social 

2 Security Transition Fund Account 

3 ‘‘(e)(1) For each fiscal year, the Self-Liquidating So4 cial Security Transition Account shall be credited with— 

5 ‘‘(A) all transfers to the Transition Fund from 

6 the Federal Old-Age and Survivors Insurance Trust 

7 Fund under section 262(b), and 

8 ‘‘(B) all amounts expended during the fiscal 

9 year from the Trust Funds in the redemption under 

10 section 262(e) of obligations issued by the Transi11 tion fund under section 262(c). 

12 ‘‘(2) For each fiscal year, the Self-Liquidating Social 

13 Security Transition Fund Account shall be charged with 

14 the total amount of obligations issued during the fiscal 

15 year by the Transition Fund under section 262(c)’’. 

16 SEC. 408. PROGRESSIVE INDEXING OF BENEFITS FOR OLD17 AGE, WIFE’S, AND HUSBAND’S INSURANCE 

18 BENEFITS. 

19 (a) IN GENERAL.—Section 215(a) of the Social Secu20 rity Act (42 U.S.C. 415(a)) is amended— 

21 (1) by striking ‘‘The’’ in paragraph (1)(A) and 

22 inserting ‘‘In the case of any benefit other than an 

23 applicable benefit to which paragraph (2) applies, 

24 the’’, and 


rfrederick on DSKD9S0YB1PROD with BILLS
413 

•HR 4529 IH

1 (2) by redesignating paragraphs (2) through 

2 (7) as paragraphs (3) through (8), respectively, and 

3 by inserting after paragraph (1) the following new 

4 paragraph: 

5 ‘‘(2)(A) In the case of an applicable benefit with re6 spect to any individual who initially becomes eligible for 

7 old-age insurance benefits or who dies (before becoming 

8 eligible for such benefits) in calendar year 2018 or later, 

9 the primary insurance amount of the individual shall be 

10 equal to the sum of— 

11 ‘‘(i) 90 percent of the individual’s average in12 dexed monthly earning (determined under subsection 

13 (b)) to the extent that such earnings do not exceed 

14 the amount established for purposes of paragraph 

15 (1)(A)(i) by paragraph (1)(B); 

16 ‘‘(ii) 32 percent of the individual’s average in17 dexed monthly earnings to the extent that such 

18 earnings exceed the amount established for purposes 

19 of paragraph (1)(A)(i) by paragraph (1)(B) but do 

20 not exceed the amount established for purposes of 

21 this clause by subparagraph (B); 

22 ‘‘(iii) 32 percent (reduced as provided in sub23 paragraph (C)) of the individual’s average indexed 

24 monthly earnings to the extent that such earnings 

25 exceed the amount established for purposes of clause 


rfrederick on DSKD9S0YB1PROD with BILLS
414 

•HR 4529 IH

1 (ii) but do not exceed the amount established for 

2 purposes of paragraph (1)(A)(ii) by paragraph 

3 (1)(B); and 

4 ‘‘(iv) 15 percent (reduced as provided in sub5 paragraph (C)) of the individual’s average indexed 

6 monthly earnings to the extent that such earnings 

7 exceed the amount established for purposes of para8 graph (1)(A)(ii) by paragraph (1)(B). 

9 ‘‘(B)(i) For purposes of subparagraph (A)(ii), the 

10 amount established under this subparagraph for calendar 

11 year 2016 shall be the level of average indexed monthly 

12 earnings determined by the Chief Actuary of the Social 

13 Security Administration under clause (ii) as being at the 

14 30th percentile for the period of calendar years 2007 

15 through 2009. 

16 ‘‘(ii) For purposes of clause (i), the average indexed 

17 monthly earnings for the period of calendar years 2007 

18 through 2009 shall be determined by— 

19 ‘‘(I) determining the average indexed monthly 

20 earnings for each individual who initially became eli21 gible for old-age insurance benefits or who died (be22 fore becoming eligible for such benefits) during such 

23 period, except that in determining such average in24 dexed monthly earnings under subsection (b), sub25 section (b)(3)(A)(ii)(I) shall be applied by subVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00414 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
415 

•HR 4529 IH

1 stituting calendar year 2004 for the second calendar 

2 year described in such subsection; and 

3 ‘‘(II) multiplying the amount determined for 

4 each individual under subclause (I) by the quotient 

5 obtained by dividing the national average wage index 

6 (as defined in section 209(k)(1)) for the calendar 

7 year 2016 by such index for the calendar year 2004. 

8 ‘‘(iii) For purposes of subparagraph (A)(ii), the 

9 amount established under this subparagraph for any cal10 endar year after 2018 shall be equal to the product of 

11 the amount in effect under clause (i) with respect to cal12 endar year 2018 and the quotient obtained by dividing— 

13 ‘‘(I) the national average wage index (as de14 fined in section 209(k)(1)) for the second calendar 

15 year preceding the calendar year for which the de16 termination is being made, by 

17 ‘‘(II) the national average wage index (as so de18 fined) for 2016. 

19 ‘‘(iv) The amount established under this subpara20 graph for any calendar year shall be rounded to the near21 est $1, except that any amount so established which is 

22 a multiple of $0.50 but not of $1 shall be rounded to the 

23 next higher $1. 

24 ‘‘(C)(i) Except as provided in clause (ii), in the case 

25 of any calendar year after 2017, each of the percentages 


rfrederick on DSKD9S0YB1PROD with BILLS
416 

•HR 4529 IH

1 to which this subparagraph applies by reason of clauses 

2 (iii) or (iv) of subparagraph (A) shall be a percentage 

3 equal to such percentage multiplied by the quotient ob4 tained by dividing— 

5 ‘‘(I) the difference of the maximum CPI-in6 dexed benefit amount for such year over the amount 

7 determined under this paragraph for an individual 

8 whose average indexed monthly earnings are equal 

9 to the amount established for purposes of subpara10 graph (A)(ii) for such year, by 

11 ‘‘(II) the difference of the maximum wage-in12 dexed benefit amount for such year over the amount 

13 determined under this paragraph for an individual 

14 whose average indexed monthly earnings are equal 

15 to the amount established for purposes of subpara16 graph (A)(ii) for such year. 

17 ‘‘(ii)(I) In the case of any calendar year which is a 

18 positive balance year, clause (i) shall not apply and each 

19 of the percentages to which this subparagraph applies by 

20 reason of clause (iii) or (iv) of subparagraph (B) shall be 

21 a percentage equal to the percentage determined under 

22 this subparagraph for the preceding year (determined 

23 after the application of this subparagraph). 

24 ‘‘(II) In the case of any calendar year after a positive 

25 balance year which is not a positive balance year, this subVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00416 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
417 

•HR 4529 IH

1 paragraph shall be applied by substituting ‘the second cal2 endar year preceding the most recent positive balance 

3 year’ for ‘2015’ each place it appears in clause (iv). 

4 ‘‘(iii) For purposes of clause (i), the maximum wage5 indexed benefit amount for any calendar year shall be 

6 equal to the amount determined under this paragraph (de7 termined without regard to any reduction under this sub8 paragraph) for an individual with wages paid in and self9 employment income credited to each computation base 

10 year in an amount equal to the contribution and benefit 

11 base for each calendar year. 

12 ‘‘(iv) For purposes of clause (i), the maximum CPI13 indexed benefit amount for any calendar year shall be an 

14 amount equal to the amount determined under clause (iii) 

15 for such year multiplied by a fraction— 

16 ‘‘(I) the numerator of which is the ratio (round17 ed to the nearest one-thousandth of 1 percent) of 

18 the Consumer Price Index for the second preceding 

19 year to such index for 2015; and 

20 ‘‘(II) the denominator of which is the ratio 

21 (rounded to the nearest one-thousandth of 1 per22 cent) of the national wage index (as defined in sec23 tion 209(k)(1)) for the second year preceding such 

24 year to such index for 2015. 


rfrederick on DSKD9S0YB1PROD with BILLS
418 

•HR 4529 IH

1 ‘‘(v)(I) For purposes of this subparagraph, a positive 

2 balance year is a calendar year following any calendar year 

3 after 2082 for which the Chief Actuary of the Social Secu4 rity Administration certifies to the Secretary of the Treas5 ury and the Congress that the combined balance ratio of 

6 the Federal Old-Age and Survivors Trust Fund and the 

7 Federal Disability Insurance Trust Fund is not less than 

8 100 percent for such year. 

9 ‘‘(II) For purposes of subclause (I), the combined 

10 balance ratio of the Federal Old-Age and Survivors Trust 

11 Fund and the Federal Disability Insurance Trust Fund 

12 for any calendar year is the ratio of the combined balance 

13 of such Trust Funds as of the last day of such calendar 

14 year (reduced by any transfer made pursuant to section 

15 201(o) in such calendar year) to the amount estimated 

16 by the Commissioner of Social Security under section 

17 201(l)(3)(B)(iii)(II) to be paid from such Trust Funds 

18 during the calendar year following such calendar year for 

19 all purposes authorized by section 201 (determined as if 

20 such following calendar year were a positive balance year). 

21 ‘‘(D) For purposes of this paragraph, rules similar 

22 to the rules of subparagraphs (C) and (D) of paragraph 

23 (1) shall apply. 


rfrederick on DSKD9S0YB1PROD with BILLS
419 

•HR 4529 IH

1 ‘‘(E) For purposes of this paragraph, the term ‘appli2 cable benefit’ means any benefit under section 202 other 

3 than— 

4 ‘‘(i) a child’s insurance benefit under section 

5 202(d) with respect to a child of an individual who 

6 has died; 

7 ‘‘(ii) a widow’s insurance benefit under section 

8 202(e) with respect to a widow who has not attained 

9 age 60 and is under a disability (as defined in sec10 tion 223(d)) which began before the end of the pe11 riod specified in section 202(e)(4); 

12 ‘‘(iii) a widower’s insurance benefit under sec13 tion 202(f) with respect to a widower who has not 

14 attained age 60 and is under a disability (as defined 

15 in section 223(d)) which began before the end of the 

16 period specified in section 202(f)(4); and 

17 ‘‘(iv) a mother’s and father’s insurance benefit 

18 under section 202(g).’’. 

19 (b) TREATMENT OF DISABLED BENEFICIARIES.— 

20 Section 215(a) of such Act (as amended by subsection (a)) 

21 is amended further by adding at the end the following new 

22 paragraph: 

23 ‘‘(9)(A) Notwithstanding the preceding provisions of 

24 this subsection, in the case of an individual who has or 

25 has had a period of disability and who initially becomes 


rfrederick on DSKD9S0YB1PROD with BILLS
420 

•HR 4529 IH

1 eligible for old-age insurance benefits or who dies (before 

2 becoming eligible for such benefits) in any calendar year 

3 in or after 2018, the primary insurance amount of such 

4 individual shall be the sum of— 

5 ‘‘(i) the amount determined under subpara6 graph (B); and 

7 ‘‘(ii) the product derived by multiplying— 

8 ‘‘(I) the excess of the amount determined 

9 under subparagraph (C) over the amount deter10 mined under subparagraph (B), by 

11 ‘‘(II) the adjustment factor for such indi12 vidual determined under subparagraph (D). 

13 ‘‘(B) The amount determined under this subpara14 graph is the amount of such individual’s primary insur15 ance amount as determined under this section without re16 gard to this paragraph. 

17 ‘‘(C) The amount determined under this subpara18 graph is the amount of such individual’s primary insur19 ance amount as determined under this section as in effect 

20 with respect to individuals becoming eligible for old-age 

21 or disability insurance benefits under section 202(a) on 

22 the date of the enactment of the Social Security Personal 

23 Savings Guarantee and Prosperity Act of 2010. 


rfrederick on DSKD9S0YB1PROD with BILLS
421 

•HR 4529 IH

1 ‘‘(D) The adjustment factor determined under this 

2 subparagraph for any individual is the ratio (not greater 

3 than 1) of— 

4 ‘‘(i) the total number of months during which 

5 such individual is under a disability (as defined in 

6 section 223(d)) during the period beginning on the 

7 date the individual attains age 22 and ending on the 

8 first day of such individual’s first month of eligibility 

9 for old-age insurance benefits under section 202(a) 

10 (or, if earlier, the month of such individual’s death), 

11 to 

12 ‘‘(ii) the number of months during the period 

13 beginning on the date the individual attains age 22 

14 and ending on the first day of such individual’s first 

15 month of eligibility for old-age insurance benefits 

16 under section 202(a) (or, if earlier, the month of 

17 such individual’s death).’’. 

18 (c) CONFORMING AMENDMENTS.— 

19 (1) Subsections (e)(2)(B)(i)(I) and 

20 (f)(2)(B)(i)(I) of section 202 of the Social Security 

21 Act are each amended by inserting ‘‘or section 

22 215(a)(2)(B)(iii)’’ after ‘‘section 215(a)(1)(B)(i) and 

23 (ii)’’. 

24 (2) Section 203(a)(10) of such Act is amend25 ed— 


rfrederick on DSKD9S0YB1PROD with BILLS
422 

•HR 4529 IH

1 (A) in subparagraph (A)(i), by striking 

2 ‘‘215(a)(2)(B)(i)’’ and inserting 

3 ‘‘215(a)(3)(B)(i)’’; 

4 (B) in subparagraph (A)(ii), by striking 

5 ‘‘215(a)(2)(C)’’ and inserting ‘‘215(a)(3)(C)’’; 

6 and 

7 (C) in subparagraph (B)(ii), by striking 

8 ‘‘215(a)(2)’’ and inserting ‘‘215(a)(3)’’. 

9 (3) Section 209(k)(1) of such Act is amended 

10 by inserting ‘‘215(a)(2)(B), 215(a)(2)(C),’’ after 

11 ‘‘215(a)(1)(D),’’. 

12 (4) Section 215(a) of such Act is amended— 

13 (A) in paragraph (4)(A), as redesignated 

14 by paragraph (2), by striking ‘‘paragraph (4)’’ 

15 and inserting ‘‘paragraph (5)’’; 

16 (B) in paragraph (4)(B), as redesignated 

17 by paragraph (2), by striking ‘‘paragraph 

18 (2)(A)’’ and inserting ‘‘paragraph (3)(A)’’; 

19 (C) in paragraph (5), as redesignated by 

20 paragraph (2), by striking ‘‘paragraph (3)(A)’’ 

21 and inserting ‘‘paragraph (4)(A)’’; 

22 (D) in paragraph (6)(A), as redesignated 

23 by paragraph (2), by striking ‘‘paragraph 

24 (4)(B)’’ and inserting ‘‘paragraph (5)(B)’’; and 


rfrederick on DSKD9S0YB1PROD with BILLS
423 

•HR 4529 IH

1 (E) in paragraph (8)(B)(ii)(I), as redesig2 nated by paragraph (2), by striking ‘‘paragraph 

3 (3)(B)’’ and inserting ‘‘paragraph (4)(B)’’. 

4 (5) Section 215(d)(3) of such Act is amended— 

5 (A) by striking ‘‘paragraph (4)(B)(ii)’’ and 

6 inserting ‘‘paragraph (5)(B)(ii)’’; and 

7 (B) by striking ‘‘subsection (a)(7)(C)’’ and 

8 inserting ‘‘subsection (a)(8)(C)’’. 

9 (6) Subsection 215(f) of such Act is amended— 

10 (A) in paragraph (2)(B), by striking ‘‘sub11 section (a)(4)(B)’’ and inserting ‘‘subsection 

12 (a)(5)(B)’’; 

13 (B) in paragraph (7), by striking ‘‘sub14 section (a)(4)(B)’’ and inserting ‘‘subsection 

15 (a)(5)(B)’’, and by striking ‘‘subsection (a)(6)’’ 

16 and inserting ‘‘subsection (a)(7)’’; 

17 (C) in paragraph (9)(A)— 

18 (i) by striking ‘‘subsection (a)(7)(A)’’ 

19 and inserting ‘‘subsection (a)(8)(A)’’; and 

20 (ii) by striking ‘‘subsection (a)(7)(C)’’ 

21 and inserting ‘‘subsection (a)(8)(C)’’; and 

22 (D) in paragraph (9)(B), by striking ‘‘sub23 section (a)(7)’’ each place it appears and insert24 ing ‘‘subsection (a)(8)’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
424 

•HR 4529 IH

1 SEC. 409. ADJUSTMENTS TO SCHEDULE FOR INCREASES IN 

2 NORMAL RETIREMENT AGE. 

3 (a) COMPLETION OF PHASE-IN OF NORMAL RETIRE4 MENT AGE TO AGE 67 BY 2021.— 

5 (1) IN GENERAL.—Section 216(l) of the Social 

6 Security Act (42 U.S.C. 416(l)) is amended— 

7 (A) in paragraph (1)(C), by striking 

8 ‘‘2017’’ and inserting ‘‘2016’’; 

9 (B) in paragraph (1)(D), by striking 

10 ‘‘2016’’ and inserting ‘‘2015’’, and by striking 

11 ‘‘2022’’ and inserting ‘‘2021’’; 

12 (C) in paragraph (1)(E), by striking 

13 ‘‘2021’’ and inserting ‘‘2020’’; and 

14 (D) in paragraph (3)(B), by striking 

15 ‘‘2017’’ and inserting ‘‘2016’’, by striking 

16 ‘‘2021’’ and inserting ‘‘2020’’, and by striking 

17 ‘‘2017’’ and inserting ‘‘2016’’. 

18 (2) MAINTENANCE OF CURRENT LAW FOR INDI19 VIDUALS BORN PRIOR TO JANUARY 1, 1956.—Section 

20 216(l)(3) of such Act (as amended by paragraph 

21 (1)(D)) is amended— 

22 (A) by redesignating subparagraphs (A) 

23 and (B) as clauses (i) and (ii), respectively; 

24 (B) by inserting ‘‘(A)’’ after ‘‘(3)’’; and 

25 (C) by adding at the end the following new 

26 subparagraph: 


rfrederick on DSKD9S0YB1PROD with BILLS
425 

•HR 4529 IH

1 ‘‘(B) Notwithstanding the preceding provisions of 

2 this subsection— 

3 ‘‘(i) with respect to an individual who attains 

4 early retirement age after December 31, 2015, and 

5 before January 1, 2017, the age increase factor 

6 under subparagraph (A)(ii) shall not be applied; and 

7 ‘‘(ii) with respect to an individual who attains 

8 early retirement age after December 31, 2016, and 

9 before January 1, 2018, the age increase factor 

10 under subparagraph (A)(ii) shall be 2 months.’’. 

11 (b) ADJUSTMENTS TO NORMAL RETIREMENT AGE

12 AFTER 2021.—Section 216(l) of such Act (as amended 

13 by subsection (a)) is amended— 

14 (1) in paragraph (1)(E), by inserting ‘‘and be15 fore January 1, 2022,’’ after ‘‘2020,’’ and by strik16 ing ‘‘age.’’ and inserting ‘‘age; and’’ ; 

17 (2) in paragraph (1), by adding after subpara18 graph (E) the following new subparagraph: 

19 ‘‘(F) with respect to an individual who attains 

20 early retirement age after December 31, 2121, 67 

21 years of age plus the number of months in the age 

22 increase factor (as determined under paragraph (3)) 

23 for the calendar year in which such individual at24 tains early retirement age.’’; and 


rfrederick on DSKD9S0YB1PROD with BILLS
426 

•HR 4529 IH

1 (3) in paragraph (3), by adding at the end the 

2 following new subparagraph: 

3 ‘‘(C) The Commissioner of Social Security shall 

4 determine (using reasonable actuarial assumptions) 

5 and publish on or before November 1 of each cal6 endar year after 2020 the number of months 

7 (rounded, if not a multiple of one month, to the next 

8 lower multiple of one month) by which the life ex9 pectancy as of October 1 of such calendar year of 

10 an individual attaining early retirement age on such 

11 October 1 exceeds the life expectancy as of October 

12 1, 2020, of an individual attaining early retirement 

13 age on October 1, 2020. With respect to an indi14 vidual who attains early retirement age in the cal15 endar year following any calendar year in which a 

16 determination is made under this subparagraph, the 

17 age increase factor shall be the number of months 

18 determined under this subparagraph as of October 1 

19 of such calendar year in which such determination is 

20 made.’’. 

21 TITLE V—SIMPLIFIED INCOME 

22 TAX 

23 SEC. 501. SHORT TITLE. 

24 This title may be cited as the ‘‘Taxpayer Choice Act’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
427 

•HR 4529 IH

1 SEC. 502. REPEAL OF ALTERNATIVE MINIMUM TAX FOR 

2 NONCORPORATE TAXPAYERS. 

3 (a) IN GENERAL.—Section 55(a) of the Internal Rev4 enue Code of 1986 (relating to alternative minimum tax 

5 imposed) is amended by adding at the end the following 

6 new flush sentence: 

7 ‘‘In the case of a taxpayer other than a corporation, no 

8 tax shall be imposed by this section for any taxable year 

9 beginning after December 31, 2010, and the tentative 

10 minimum tax of any taxpayer other than a corporation 

11 for any such taxable year shall be zero for purposes of 

12 this title.’’. 

13 (b) CONFORMING AMENDMENTS.— 

14 (1) Section 26(c) of such Code is amended by 

15 striking ‘‘the term ‘tentative minimum tax’ means 

16 the amount determined under section 55(b)(1)’’ and 

17 inserting ‘‘the tentative minimum tax is zero.’’. 

18 (2) Section 911(f)(2) of such Code is amended 

19 to read as follows: 

20 ‘‘(2) the tentative minimum tax under section 

21 55 for the taxable year shall be zero.’’. 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2010. 


rfrederick on DSKD9S0YB1PROD with BILLS
428 

•HR 4529 IH

1 SEC. 503. SIMPLIFIED INCOME TAX SYSTEM. 

2 (a) IN GENERAL.—Part I of subchapter A of chapter 

3 1 of the Internal Revenue Code of 1986 (relating to tax 

4 on individuals) is amended by redesignating section 5 as 

5 section 6 and by inserting after section 4 the following 

6 new section: 

7 ‘‘SEC. 5. SIMPLIFIED INCOME TAX SYSTEM. 

8 ‘‘(a) ELECTION.— 

9 ‘‘(1) IN GENERAL.—A taxpayer other than a 

10 corporation may elect in accordance with this sub11 section to be subject to the tax imposed by this sec12 tion in lieu of the tax imposed by section 1 for a tax13 able year and all subsequent taxable years. 

14 ‘‘(2) EFFECT OF ELECTION.—For purposes of 

15 this title, if an election is in effect under paragraph 

16 (1) for any taxable year, the tax imposed by this sec17 tion shall be treated as the tax imposed by section 

18 1 for the taxable year and, except as provided by 

19 sections 31 and 36, no amount shall be allowed as 

20 a credit against such tax for the taxable year. 

21 ‘‘(3) ELECTION.— 

22 ‘‘(A) IN GENERAL.— 

23 ‘‘(i) IN GENERAL.—Except as pro24 vided in clause (ii) of this subparagraph 

25 and clauses (ii) and (iii) of subparagraph 

26 (B), the election under paragraph (1) may 


rfrederick on DSKD9S0YB1PROD with BILLS
429 

•HR 4529 IH

1 only be made with respect to any taxable 

2 year beginning before January 1, 2021, on 

3 a timely filed return for the first taxable 

4 year for which the election applies. 

5 ‘‘(ii) NEW TAXPAYERS.—In the case 

6 of an individual with no tax liability under 

7 this title before January 1, 2021, the elec8 tion under paragraph (1) may only be 

9 made for the first taxable year beginning 

10 after December 31, 2020, for which such 

11 individual has tax liability under this title. 

12 ‘‘(B) EFFECT OF ELECTION.— 

13 ‘‘(i) IN GENERAL.—Except as pro14 vided in clauses (ii) and (iii), the election 

15 under paragraph (1), once made, shall be 

16 irrevocable. 

17 ‘‘(ii) ONE-TIME REVOCATION OF

18 ELECTION.—A taxpayer may revoke an 

19 election under paragraph (1) for a taxable 

20 year and all subsequent taxable years. The 

21 preceding sentence shall not apply if the 

22 taxpayer has made a revocation under such 

23 sentence for any prior taxable year. 

24 ‘‘(iii) FILING STATUS CHANGES DUE

25 TO MAJOR LIFE EVENTS.—In the case of 


rfrederick on DSKD9S0YB1PROD with BILLS
430 

•HR 4529 IH

1 any major life event described in clause 

2 (iv), a taxpayer may make an election 

3 under paragraph (1) or revoke such an 

4 election under clause (ii). Any such election 

5 or revocation shall apply for the taxable 

6 year for which made and all subsequent 

7 taxable years until the taxpayer makes an 

8 election under the preceding sentence for 

9 any subsequent (and all succeeding) tax10 able year. 

11 ‘‘(iv) MAJOR LIFE EVENT.—For pur12 poses of clause (iii), a major life event de13 scribed in this clause is marriage, divorce, 

14 and death. 

15 ‘‘(b) TAX IMPOSED.— 

16 ‘‘(1) MARRIED INDIVIDUALS AND SURVIVING

17 SPOUSES.—In the case of a taxpayer for whom an 

18 election under subsection (a) is in effect and who is 

19 a married individual (as defined in section 7703) 

20 who makes a single return jointly with his spouse 

21 under section 6013 or a surviving spouse (as defined 

22 in section 2(a)), there is hereby imposed on the al23 ternative taxable income of such individual a tax de24 termined in accordance with the following table: 

‘‘If taxable income is: The tax is: 

Not over $100,000 ........................ 10% of alternative taxable income. 


rfrederick on DSKD9S0YB1PROD with BILLS
431 

•HR 4529 IH

‘‘If taxable income is: The tax is: 

Over $100,000 ............................... $10,000, plus 25% of the excess over 

$100,000. 

1 ‘‘(2) UNMARRIED INDIVIDUALS (OTHER THAN

2 SURVIVING SPOUSES).—In the case of a taxpayer for 

3 whom an election under subsection (a) is in effect 

4 and who is not described in paragraph (1), there is 

5 hereby imposed on the alternative taxable income of 

6 such individual a tax determined in accordance with 

7 the following table: 

‘‘If taxable income is: The tax is: 

Not over $50,000 .......................... 10% of alternative taxable income. 

Over $50,000 ................................. $5,000, plus 25% of the excess over 

$50,000. 

8 ‘‘(c) ALTERNATIVE TAXABLE INCOME.—For pur9 poses of this section— 

10 ‘‘(1) IN GENERAL.—The term ‘alternative tax11 able income’ means— 

12 ‘‘(A) gross income, 

13 ‘‘(B) the amount excluded from income 

14 under section 139C for capital gains, dividends, 

15 and interest, minus 

16 ‘‘(C) the sum of— 

17 ‘‘(i) the personal exemption, 

18 ‘‘(ii) the dependent allowance, plus 

19 ‘‘(iii) the alternative standard deduc20 tion. 


rfrederick on DSKD9S0YB1PROD with BILLS
432 

•HR 4529 IH

1 ‘‘(2) PERSONAL EXEMPTION.—The personal ex2 emption is— 

3 ‘‘(A) 200 percent of the dollar amount in 

4 effect under subparagraph (B) in the case of— 

5 ‘‘(i) a joint return, or 

6 ‘‘(ii) a surviving spouse (as defined in 

7 section 2(a)), and 

8 ‘‘(B) $3,500 in the case of an individual— 

9 ‘‘(i) who is not married and is not a 

10 surviving spouse, or 

11 ‘‘(ii) who is a married individual filing 

12 a separate return. 

13 ‘‘(3) DEPENDENT ALLOWANCE.—The depend14 ent allowance is $3,500 for each dependent (as de15 fined in section 152). 

16 ‘‘(4) ALTERNATIVE STANDARD DEDUCTION.— 

17 The alternative standard deduction means— 

18 ‘‘(A) $25,000 in the case of— 

19 ‘‘(i) a joint return, or 

20 ‘‘(ii) a surviving spouse (as defined in 

21 section 2(a)), and 

22 ‘‘(B) $12,500 in the case of an indi23 vidual— 

24 ‘‘(i) who is not married and is not a 

25 surviving spouse, or 


rfrederick on DSKD9S0YB1PROD with BILLS
433 

•HR 4529 IH

1 ‘‘(ii) who is a married individual filing 

2 a separate return. 

3 ‘‘(d) INFLATION ADJUSTMENTS.— 

4 ‘‘(1) IN GENERAL.—In the case of any taxable 

5 year beginning in a calendar year after 2011, each 

6 of the dollar amounts for the rate brackets in sub7 section (b) and each of the dollar amounts in sub8 section (d)(2)(B), (d)(3), and (d)(4) shall be in9 creased by an amount equal to— 

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

11 ‘‘(B) the cost-of-living adjustment deter12 mined under section 1(f)(3) for the calendar 

13 year in which the taxable year begins, by sub14 stituting ‘calendar year 2010’ for ‘calendar year 

15 1992’ in subparagraph (B) thereof. 

16 ‘‘(2) ROUNDING.—If any amount as adjusted 

17 under clause (i) is not a multiple of $100, such 

18 amount shall be rounded to the nearest multiple of 

19 $100.’’. 

20 (b) CONFORMING AMENDMENT.—The table of sec21 tions for part I of subchapter A of chapter 1 of such Code 

22 is amended by striking the item relating to section 5 and 

23 inserting after the item relating to section 4 the following: 

‘‘Sec. 5. Simplified income tax system. 

‘‘Sec. 6. Cross references relating to tax on individuals.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
434 

•HR 4529 IH

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2010. 

4 SEC. 504. EXCLUSION FOR CAPITAL GAINS, DIVIDENDS, 

5 AND INTEREST. 

6 (a) IN GENERAL.—Part III of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to 

8 items specifically excluded from gross income) is amended 

9 by inserting after section 139C the following new section: 

10 ‘‘SEC. 139D. CAPITAL GAINS, DIVIDENDS, AND INTEREST. 

11 ‘‘(a) EXCLUSION.—Gross income does not include 

12 amounts received by an individual as net capital gains, 

13 qualified dividends, and interest. 

14 ‘‘(b) QUALIFIED DIVIDENDS.—For purposes of this 

15 section— 

16 ‘‘(1) IN GENERAL.—The term ‘qualified divi17 dends’ means dividends received during the taxable 

18 year from— 

19 ‘‘(A) domestic corporations, and 

20 ‘‘(B) qualified foreign corporations. 

21 ‘‘(2) QUALIFIED FOREIGN CORPORATIONS.— 

22 ‘‘(A) IN GENERAL.—Except as otherwise 

23 provided in this paragraph, the term ‘qualified 

24 foreign corporation’ means any foreign corpora25 tion if— 


rfrederick on DSKD9S0YB1PROD with BILLS
435 

•HR 4529 IH

1 ‘‘(i) such corporation is incorporated 

2 in a possession of the United States, or 

3 ‘‘(ii) such corporation is eligible for 

4 benefits of a comprehensive income tax 

5 treaty with the United States which the 

6 Secretary determines is satisfactory for 

7 purposes of this paragraph and which in8 cludes an exchange of information pro9 gram. 

10 ‘‘(B) DIVIDENDS ON STOCK READILY

11 TRADABLE ON UNITED STATES SECURITIES

12 MARKET.—A foreign corporation not otherwise 

13 treated as a qualified foreign corporation under 

14 subparagraph (A) shall be so treated with re15 spect to any dividend paid by such corporation 

16 if the stock with respect to which such dividend 

17 is paid is readily tradable on an established se18 curities market in the United States. 

19 ‘‘(C) EXCLUSION OF DIVIDENDS OF CER20 TAIN FOREIGN CORPORATIONS.—Such term 

21 shall not include any foreign corporation which 

22 for the taxable year of the corporation in which 

23 the dividend was paid, or the preceding taxable 

24 year, is a passive foreign investment company 

25 (as defined in section 1297). 


rfrederick on DSKD9S0YB1PROD with BILLS
436 

•HR 4529 IH

1 ‘‘(3) SPECIAL RULE.—If a taxpayer to whom 

2 this section applies receives, with respect to any 

3 share of stock, qualified dividend income from 1 or 

4 more dividends which are extraordinary dividends 

5 (within the meaning of section 1059(c)), any loss on 

6 the sale or exchange of such share shall, to the ex7 tent of such dividends, be treated as long-term cap8 ital loss. 

9 ‘‘(c) INTEREST.—For purposes of this section, the 

10 term ‘interest’ means— 

11 ‘‘(1) interest on deposits with a bank (as de12 fined in section 581), 

13 ‘‘(2) amounts (whether or not designated as in14 terest) paid, in respect to deposits, investment cer15 tificates, or withdrawable or repurchasable shares, 

16 by— 

17 ‘‘(A) a mutual savings bank, cooperative 

18 bank, domestic building and loan association, 

19 industrial loan association or bank, or credit 

20 union, or 

21 ‘‘(B) any other savings or thrift institu22 tion, which is chartered and supervised under 

23 Federal or State law, 


rfrederick on DSKD9S0YB1PROD with BILLS
437 

•HR 4529 IH

1 the deposits or accounts in which are insured under 

2 Federal or State law or which are protected and 

3 guaranteed under State law, 

4 ‘‘(3) interest on— 

5 ‘‘(A) evidences of indebtedness (including 

6 bonds, debentures, notes, and certificates) 

7 issued by a domestic corporation in registered 

8 form, and 

9 ‘‘(B) to the extent provided in regulations 

10 prescribed by the Secretary, other evidences of 

11 indebtedness issued by a domestic corporation 

12 of a type offered by corporations to the public, 

13 ‘‘(4) interest on obligations of the United 

14 States, a State, or a political subdivision of a State 

15 (not excluded from gross income of the taxpayer 

16 under any other provision of law), and 

17 ‘‘(5) interest attributable to participation shares 

18 in a trust established and maintained by a corpora19 tion established pursuant to Federal law. 

20 ‘‘(d) CERTAIN NONRESIDENT ALIENS INELIGIBLE

21 FOR EXCLUSION.—In the case of a nonresident alien indi22 vidual, subsection (a) shall apply only— 

23 ‘‘(1) in determining the tax imposed for the 

24 taxable year pursuant to section 871(b)(1) and only 

25 in respect to dividends and interest which are effecVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00437 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
438 

•HR 4529 IH

1 tively connected with the conduct of a trade or busi2 ness within the United States, or 

3 ‘‘(2) in determining the tax imposed for the 

4 taxable year pursuant to section 877(b).’’. 

5 (b) CONFORMING AMENDMENT.—Section 1 of such 

6 Code is amended by striking subsection (h). 

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

8 for such part III is amended by inserting after the item 

9 relating to section 139C the following new item: 

‘‘Sec. 139D. Capital gains, dividends, and interest.’’. 

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2010. 

13 SEC. 505. REPEAL OF ESTATE AND GIFT TAXES. 

14 (a) IN GENERAL.—Subtitle B of the Internal Rev15 enue Code of 1986 is hereby repealed. 

16 (b) EFFECTIVE DATE.—The repeal made by sub17 section (a) shall apply to the estates of decedents dying, 

18 and gifts made, and generation-skipping transfers after 

19 December 31, 2010. 

20 TITLE VI—BUSINESS 

21 CONSUMPTION TAX 

22 SEC. 601. SHORT TITLE. 

23 This title may be cited as the ‘‘Competitive American 

24 Business Tax’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
439 

•HR 4529 IH

1 SEC. 602. REPEAL OF CORPORATE INCOME TAX; NEW TAX 

2 PAID BY CORPORATIONS AND OTHER BUSI3 NESSES. 

4 (a) IN GENERAL.—Chapter 2 of the Internal Rev5 enue Code is renumbered chapter 3 and the following new 

6 chapter is inserted after chapter 1: 

7 ‘‘CHAPTER 2—COMPETITIVE AMERICAN 

8 BUSINESS TAX 

‘‘SUBCHAPTER A. IMPOSITION OF TAX

‘‘SUBCHAPTER B. BASIC RULES FOR BUSINESS CONSUMPTION TAX

‘‘SUBCHAPTER C. CAPITAL CONTRIBUTIONS, MERGERS, ACQUISITIONS, AND

DISTRIBUTIONS

‘‘SUBCHAPTER D. ACCOUNTING METHOD RULES

‘‘SUBCHAPTER E. LAND AND RENTAL PROPERTY

‘‘SUBCHAPTER F. INSURANCE AND FINANCIAL PRODUCTS

‘‘SUBCHAPTER G. TAX-EXEMPT ORGANIZATIONS

‘‘SUBCHAPTER H. COOPERATIVES

‘‘SUBCHAPTER I. SOURCING RULES

‘‘SUBCHAPTER J. BUSINESS CONDUCTED IN A POSSESSION

‘‘SUBCHAPTER K. IMPORT TAX

‘‘SUBCHAPTER L. TRANSITION RULES

‘‘SUBCHAPTER M. RULES FOR ADMINISTRATION, CONSOLIDATED RETURNS

‘‘SUBCHAPTER N. DEFINITIONS AND RULES OF APPLICATION

9 ‘‘Subchapter A—Imposition of Tax 

‘‘Sec. 201. Tax imposed. 


rfrederick on DSKD9S0YB1PROD with BILLS
440 

•HR 4529 IH

1 ‘‘SEC. 201. TAX IMPOSED. 

2 ‘‘(a) TAXABLE BUSINESS ACTIVITY.—A business 

3 consumption tax is imposed on the sale of goods and serv4 ices in the United States by a business entity. 

5 ‘‘(b) BUSINESS CONSUMPTION TAX IMPOSED.— 

6 ‘Business consumption tax’ is 8.5 percent of the gross 

7 profits of the business entity for the taxable year. 

8 ‘‘(c) IMPORT TAX.—For rules relating to the import 

9 tax imposed by this chapter, see subchapter K (sections 

10 281 through 283). 

11 ‘‘Subchapter B—Basic Rules for Business 

12 Consumption Tax 

‘‘Sec. 202. Gross profits. 

‘‘Sec. 203. Taxable receipts. 

‘‘Sec. 204. Deductible amounts. 

‘‘Sec. 205. Cost of business purchases. 

‘‘Sec. 206. Business entity and business activity. 

‘‘Sec. 207. Loss carryover deduction. 

13 ‘‘SEC. 202. GROSS PROFITS. 

14 ‘‘ ‘Gross profits’ means for a taxable year of a busi15 ness entity the amount by which— 

16 ‘‘(1) the taxable receipts of the business entity 

17 for the taxable year exceed, 

18 ‘‘(2) the deductible amounts for the business 

19 entity for the taxable year. 


rfrederick on DSKD9S0YB1PROD with BILLS
441 

•HR 4529 IH

1 ‘‘SEC. 203. TAXABLE RECEIPTS. 

2 ‘‘(a) IN GENERAL.—‘Taxable receipts’ means all re3 ceipts from the sale of property, use of property, and per4 formance of services in the United States. 

5 ‘‘(b) GAMES OF CHANCE.—Amounts received for 

6 playing games of chance by business entities engaging in 

7 the activity of providing such games shall be treated as 

8 receipts from the sale of property or services. 

9 ‘‘(c) IN-KIND RECEIPTS.—The taxable receipts at10 tributable to the receipt of property, use of property or 

11 services in whole or partial exchange for property, use of 

12 property or services equal the fair market value of the 

13 services or property received. 

14 ‘‘(d) TAXES.—Taxable receipts do not include any ex15 cise tax, sales tax, custom duty, or other separately stated 

16 levy imposed by a Federal, State, or local government re17 ceived by a business entity in connection with the sale of 

18 property or services or the use of property. 

19 ‘‘(e) FINANCIAL RECEIPTS.— 

20 ‘‘(1) IN GENERAL.—Taxable receipts do not in21 clude financial receipts. 

22 ‘‘(2) FINANCIAL RECEIPTS.—‘Financial re23 ceipts’ include— 

24 ‘‘(A) interest, 

25 ‘‘(B) dividends and other distributions by a 

26 business entity, 


rfrederick on DSKD9S0YB1PROD with BILLS
442 

•HR 4529 IH

1 ‘‘(C) proceeds from the sale of stock, other 

2 ownership interests in business entities, or 

3 other financial instruments, 

4 ‘‘(D) proceeds from life insurance policies, 

5 ‘‘(E) proceeds from annuities, 

6 ‘‘(F) proceeds from currency hedging or 

7 exchanges, and 

8 ‘‘(G) proceeds from other financial trans9 actions. 

10 ‘‘(3) FINANCIAL INSTRUMENT.—‘Financial in11 strument’ means any— 

12 ‘‘(A) share of stock in a corporation, 

13 ‘‘(B) equity ownership in any widely held 

14 or publicly traded partnership, trust, or other 

15 business entity, 

16 ‘‘(C) note, bond, debenture, or other evi17 dence of indebtedness, 

18 ‘‘(D) interest rate, currency, or equity no19 tional principal contract, 

20 ‘‘(E) evidence or interest in, or a derivative 

21 financial instrument in, any financial instru22 ment described in subparagraph (A), (B), (C), 

23 or (D), or any currency, including any option, 

24 forward contract, short position, and any simiVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00442 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
443 

•HR 4529 IH

1 lar financial instrument in such a financial in2 strument or currency, and 

3 ‘‘(F) a position which— 

4 ‘‘(i) is not a financial instrument de5 scribed in subparagraph (A), (B), (C), (D) 

6 or (E), 

7 ‘‘(ii) is a hedge with respect to such 

8 a financial instrument, and 

9 ‘‘(iii) is clearly identified in the deal10 er’s records as being described in this sub11 paragraph before the close of the day on 

12 which it was acquired or entered into. 

13 ‘‘(f) CROSS REFERENCES.— 

14 ‘‘(1) EXPORTS, SALES IN THE UNITED

15 STATES.—See subchapter I for the exclusion from 

16 gross receipts for export sales and for rules on sales 

17 of property and services in the United States. 

18 ‘‘(2) LAND.—See subchapter E for rules relat19 ing to certain sales of land. 

20 ‘‘SEC. 204. DEDUCTIBLE AMOUNTS. 

21 ‘‘ ‘Deductible amounts’ for a business entity in a tax22 able year include— 

23 ‘‘(1) the cost of business purchases in the tax24 able year (as determined under section 205), 


rfrederick on DSKD9S0YB1PROD with BILLS
444 

•HR 4529 IH

1 ‘‘(2) the cost of employer-provided health insur2 ance for which the employee, members of his family, 

3 or persons designated by him or members of his 

4 family are the beneficiaries, 

5 ‘‘(3) such entity’s loss carryover deduction (as 

6 determined under section 207), and 

7 ‘‘(4) the transition basis deduction (as deter8 mined under section 290). 

9 ‘‘SEC. 205. COST OF BUSINESS PURCHASES. 

10 ‘‘(a) BUSINESS PURCHASES.— 

11 ‘‘(1) IN GENERAL.—‘Business purchases’ means 

12 the acquisition of— 

13 ‘‘(A) property, 

14 ‘‘(B) the use of property, or 

15 ‘‘(C) services 

16 in the United States for use in a business activity. 

17 ‘‘(2) EXAMPLES.—Business purchases include 

18 (without limitation) the— 

19 ‘‘(A) purchase or rental of real property, 

20 ‘‘(B) purchase or rental of capital equip21 ment, 

22 ‘‘(C) purchase of supplies and inventory, 

23 ‘‘(D) purchase of services from inde24 pendent contractors, and 

25 ‘‘(E) imports for use in a business activity. 


rfrederick on DSKD9S0YB1PROD with BILLS
445 

•HR 4529 IH

1 ‘‘(3) EXCLUSIONS.—Business purchases do not 

2 include— 

3 ‘‘(A) payments for use of money or capital, 

4 such as interest or dividends (except to the ex5 tent that a portion so paid is a fee for financial 

6 intermediation services), 

7 ‘‘(B) premiums for life insurance, 

8 ‘‘(C) the acquisition of savings assets or 

9 other financial instruments (as defined in sec10 tion 203(e)(3)). 

11 ‘‘(D) property acquired outside the United 

12 States (but such property shall be taken into 

13 account as an import if imported), 

14 ‘‘(E) services performed outside the United 

15 States (unless treated as imported into the 

16 United States), 

17 ‘‘(F) compensation expenses for an indi18 vidual (other than amounts paid to an indi19 vidual in his capacity as a business entity), or 

20 ‘‘(G) taxes (except as provided in sub21 section (b)(2) relating to product taxes). 

22 ‘‘(4) COMPENSATION EXPENSES.—‘Compensa23 tion expenses’ means— 

24 ‘‘(A) wages, salaries or other cash payable 

25 for services, 


rfrederick on DSKD9S0YB1PROD with BILLS
446 

•HR 4529 IH

1 ‘‘(B) any taxes imposed on the recipient 

2 that are withheld by the business entity, 

3 ‘‘(C) the cost of property purchased to pro4 vide employees with compensation (other than 

5 property incidental to the provision of fringe 

6 benefits that are excluded from income under 

7 the individual tax), 

8 ‘‘(D) the cost of fringe benefits which are 

9 includible in an employee’s, partner’s, or propri10 etor’s income under the business consumption 

11 tax (or are excluded solely because they con12 stitute employee savings), including (without 

13 limitation)— 

14 ‘‘(i) contributions to retirement and 

15 severance benefit plans, 

16 ‘‘(ii) premiums for the cost of life, ac17 cident, disability and other insurance poli18 cies for which the employee, members of 

19 his family, or persons designated by him or 

20 members of his family are the bene21 ficiaries, 

22 ‘‘(iii) rental of parking spaces or park23 ing fees (unless the parking space is used 

24 for a vehicle that is regularly used in a 

25 business activity); 


rfrederick on DSKD9S0YB1PROD with BILLS
447 

•HR 4529 IH

1 ‘‘(iv) employer paid educational bene2 fits; 

3 ‘‘(v) employer paid housing (other 

4 than housing provided for the convenience 

5 of the employer); and 

6 ‘‘(vi) employer paid meals (other than 

7 meals provided for the convenience of the 

8 employer). 

9 ‘‘(b) COST OF BUSINESS PURCHASES.— 

10 ‘‘(1) IN GENERAL.—The ‘cost of a business 

11 purchase’ is the amount paid or to be paid for the 

12 business purchase. 

13 ‘‘(2) TAXES.— 

14 ‘‘(A) IN GENERAL.—The ‘cost of business 

15 purchases’ includes any product taxes paid with 

16 respect to the property or services purchased. 

17 ‘‘(B) PRODUCT TAX.—‘Product tax’ means 

18 any excise tax, sales or use tax, custom duty, or 

19 other separately stated levy imposed by a Fed20 eral, State, or local government on the produc21 tion, severance or consumption of property or 

22 on the provision of services, whether or not sep23 arately stated, and including any such taxes 

24 that are technically imposed on the seller of 

25 property or services. 


rfrederick on DSKD9S0YB1PROD with BILLS
448 

•HR 4529 IH

1 ‘‘(C) TAXES NOT PRODUCT TAXES.—Prod2 uct taxes do not include— 

3 ‘‘(i) the import tax, 

4 ‘‘(ii) state and local property taxes, 

5 ‘‘(iii) franchise or income taxes, 

6 ‘‘(iv) payroll taxes and self-employ7 ment taxes, or 

8 ‘‘(v) the business consumption tax. 

9 ‘‘(3) IMPORTS.—In the case of an import by a 

10 business entity, the cost of the import is the import 

11 price for purposes of the import tax. The import tax 

12 is not part of the cost of the import. 

13 ‘‘(c) PROPERTY AND SERVICES ACQUIRED FOR

14 PROPERTY.—If a business entity receives property or serv15 ices from a business entity in whole or partial exchange 

16 for property or services, the property or services acquired 

17 shall be treated as if they were purchased for an amount 

18 equal to the fair market value of the services or property 

19 received. For purposes of this section, property includes 

20 stock and other equity interests in business other than 

21 stock or an equity interest in the business entity acquiring 

22 the property or services. See section 210(b) for rules on 

23 property or services received in exchange for an equity in24 terest in the recipient. 


rfrederick on DSKD9S0YB1PROD with BILLS
449 

•HR 4529 IH

1 ‘‘(d) GAMBLING PAYMENTS.—In the case of a busi2 ness involving gambling, lotteries, or other games of 

3 chance, business purchases include amounts paid to win4 ners. 

5 ‘‘(e) SAVINGS ASSETS.—‘Savings assets’ means 

6 stocks, bonds, securities, certificates of deposits, invest7 ments in partnerships and limited liability companies, 

8 shares of mutual funds, life insurance policies, annuities, 

9 and other similar savings or investment assets. 

10 ‘‘(f) CROSS REFERENCES.— 

11 ‘‘(1) LAND.—For special rules relating to the 

12 acquisition of land, see subchapter E. 

13 ‘‘(2) RENTAL REAL ESTATE.—For special rules 

14 relating to the rental of real estate previously occu15 pied by an owner of the real estate, see section 232. 

16 ‘‘(3) OUTSIDE THE UNITED STATES.—For spe17 cial rules relating to services performed outside the 

18 United States but used inside the United States and 

19 international services, see subchapter I. 

20 ‘‘SEC. 206. BUSINESS ENTITY AND BUSINESS ACTIVITY. 

21 ‘‘(a) BUSINESS ENTITY.—For purposes of the busi22 ness consumption tax, ‘business entity’ means any cor23 poration, unincorporated association, partnership, limited 

24 liability company, proprietorship, independent contractor, 

25 individual, or any other person engaging in business activVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00449 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
450 

•HR 4529 IH

1 ity in the United States. An individual shall be considered 

2 a business entity only with respect to the individual’s busi3 ness activities. 

4 ‘‘(b) BUSINESS ACTIVITY.—‘Business activity’ means 

5 the sale of property or services, the leasing of property, 

6 the development of property or services for subsequent 

7 sale or use in producing property or services for subse8 quent sale. ‘Business activity’ does not include casual or 

9 occasional sales of property used by an individual (other 

10 than in a business activity), such as the sale by an indi11 vidual of a vehicle used by the individual. 

12 ‘‘(c) EXCEPTION FOR CERTAIN EMPLOYEES.— 

13 ‘‘(1) IN GENERAL.—‘Business activity’ does not 

14 include— 

15 ‘‘(A) the performance of services by an em16 ployee for an employer that is a business entity 

17 with respect to the activity in which the em18 ployee is engaged, or 

19 ‘‘(B) the performance of regular domestic 

20 household services (including babysitting, 

21 housecleaning, and lawn cutting) by an em22 ployee of an employer that is an individual or 

23 family. 

24 ‘‘(2) EMPLOYEE DEFINED.—For purposes of 

25 this subsection, ‘employee’ includes an individual 


rfrederick on DSKD9S0YB1PROD with BILLS
451 

•HR 4529 IH

1 partner who provides services to a partnership or an 

2 individual member who provides services to a limited 

3 liability company, or a proprietor with respect to 

4 compensation for services from his proprietorship. 

5 ‘‘SEC. 207. LOSS CARRYOVER DEDUCTION. 

6 ‘‘(a) DEDUCTION.—The ‘loss carryover deduction’ for 

7 a taxable year is the lesser of— 

8 ‘‘(1) the business entity’s gross profits for the 

9 taxable year (determined without the loss carryover 

10 deduction), or 

11 ‘‘(2) the amount of the loss carryover to the 

12 taxable year. 

13 ‘‘(b) LOSS CARRYOVER.— 

14 ‘‘(1) GENERAL RULE.—A loss for any taxable 

15 year shall be a loss carryover to each of the 15 tax16 able years following the taxable year of the loss. 

17 ‘‘(2) LOSS CARRYOVERS TO A TAXABLE YEAR.— 

18 The loss carryover to a taxable year is the sum of 

19 the loss carryovers from all prior taxable years be20 ginning on or after January 1, 2011, that can be 

21 carried over to the taxable year. 

22 ‘‘(3) REDUCTION OF LOSS CARRYOVERS AS A

23 RESULT OF THE DEDUCTION.—A business entity’s 

24 loss carryovers shall be reduced each year by the 

25 amount of the loss carryover deduction for the year. 


rfrederick on DSKD9S0YB1PROD with BILLS
452 

•HR 4529 IH

1 Loss carryovers shall be reduced in the order that 

2 they arose. 

3 ‘‘(c) LOSS FOR TAXABLE YEAR.—A business entity’s 

4 loss (if any) for the taxable year equals the excess (if any) 

5 of— 

6 ‘‘(1) the sum of— 

7 ‘‘(A) the cost of business purchases for the 

8 taxable year, and 

9 ‘‘(B) the transition basis adjustment for 

10 the taxable year, over 

11 ‘‘(2) taxable receipts for the taxable year. 

12 ‘‘(d) SPECIAL RULES.— 

13 ‘‘(1) CONSOLIDATED RETURNS.—In the case of 

14 a consolidated return, the loss for a taxable year 

15 shall be determined on a consolidated group basis. 

16 In the case of a deconsolidation, the loss carryovers 

17 from the consolidated group shall be allocated in ac18 cordance with rules to be prescribed by the Sec19 retary. 

20 ‘‘(2) LOSS CARRYOVERS OF ACQUIRED BUSI21 NESS ENTITY.— 

22 ‘‘(A) IN GENERAL.—If a business entity 

23 acquires another business entity in a trans24 action that is considered the acquisition of a 

25 business entity and the two entities file a conVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00452 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
453 

•HR 4529 IH

1 solidated return or if two business entities 

2 merge, the loss carryovers will survive and can 

3 be applied against the taxable receipts attrib4 utable to the business activities carried on (or 

5 in the case of a merger formerly carried on) by 

6 either entity. 

7 ‘‘(B) ASSET ACQUISITION.—If a business 

8 entity acquires all or substantially all of the as9 sets of another entity in a transaction that is 

10 considered an asset acquisition rather than the 

11 acquisition of a business entity, the acquirer 

12 will be treated as if it acquired the loss 

13 carryovers of the selling entity. For purposes of 

14 this rule, the assets of a business entity include 

15 ownership interests in other business entities. 

16 ‘‘(C) SUBSTANTIALLY ALL.—For purposes 

17 of this paragraph ‘substantially all’ means more 

18 than 80 percent of the fair market value of a 

19 business entity’s net assets. Under rules pre20 scribed by the Secretary, the parties to a trans21 action may elect to treat acquisitions in excess 

22 of 70 percent of the fair market value of a busi23 ness entity’s net assets as acquisitions of ‘sub24 stantially all’ of a business entity’s net assets. 


rfrederick on DSKD9S0YB1PROD with BILLS
454 

•HR 4529 IH

1 ‘‘Subchapter C—Capital Contributions, 

2 Mergers, Acquisitions, and Distributions 

‘‘Sec. 210. Contributions to a business entity. 

‘‘Sec. 211. Distributions of property. 

‘‘Sec. 212. Asset acquisitions. 

‘‘Sec. 213. Mergers and stock acquisitions. 

‘‘Sec. 214. Spin-offs, split-off, etc. 

‘‘Sec. 215. Allocation of certain tax attributes. 

3 ‘‘SEC. 210. CONTRIBUTIONS TO A BUSINESS ENTITY. 

4 ‘‘(a) BY BUSINESS ENTITY.— 

5 ‘‘(1) CASH.—If a business entity contributes 

6 cash to a business entity of which it is or becomes 

7 a partial or full owner, the amount contributed is 

8 not a deductible amount to the contributor or a tax9 able receipt to the recipient. 

10 ‘‘(2) PROPERTY OR SERVICES.—If a business 

11 entity contributes property or services to a business 

12 entity of which it is or becomes a partial or full 

13 owner, the transaction will not result in taxable re14 ceipts to the contributor or a deduction for a busi15 ness purchase for the recipient and will not con16 stitute a sale resulting in taxable receipts to the con17 tributor. 

18 ‘‘(b) BY INDIVIDUAL.— 

19 ‘‘(1) CASH.—If an individual contributes cash 

20 to a business entity, the cash received is not a tax21 able receipt. 


rfrederick on DSKD9S0YB1PROD with BILLS
455 

•HR 4529 IH

1 ‘‘(2) NEW PROPERTY.—If an individual contrib2 utes to a business entity property that the individual 

3 purchased for the business entity but which was not 

4 used by any person after its purchase, the property 

5 shall be considered purchased by such business enti6 ty from the person from which the individual pur7 chased the property. 

8 ‘‘(3) PERSONAL USE PROPERTY.— 

9 ‘‘(A) IN GENERAL.—If an individual con10 tributes personal use property to a business en11 tity in which the individual has an ownership 

12 interest or for which the individual receives an 

13 ownership interest, the business entity shall not 

14 be permitted to deduct the value of the property 

15 received as a business expense. The business 

16 entity will have a tax basis in the contributed 

17 property equal to the contributor’s basis. 

18 ‘‘(B) PERSONAL USE PROPERTY.—‘Per19 sonal use property’ means any property used by 

20 an individual at any time other than in a busi21 ness activity. 

22 ‘‘(4) SERVICES.—If an individual contributes 

23 services to a business entity in which the individual 

24 has an ownership interest or receives an ownership 

25 interest, the business entity shall not be permitted to 


rfrederick on DSKD9S0YB1PROD with BILLS
456 

•HR 4529 IH

1 deduct the value of the services received (or the 

2 value of the equity interest provided to the services 

3 provider). 

4 ‘‘SEC. 211. DISTRIBUTIONS OF PROPERTY. 

5 ‘‘(a) DISTRIBUTIONS OTHER THAN TO CONTROL6 LING BUSINESS.—If a business entity distributes all or a 

7 portion of its assets to its owners (other than a controlling 

8 business entity), the business entity will be treated as if 

9 it sold the assets to its owners at fair market value. The 

10 fair market value will be determined by the distributing 

11 corporation and those determinations, unless unreason12 able, will be binding on the recipients. 

13 ‘‘(b) DISTRIBUTIONS TO A CONTROLLING BUSI14 NESS.—If a business entity distributes all or a portion of 

15 its assets to a controlling business, the controlling busi16 ness will assume the distributing entity’s tax attributes 

17 with respect to the assets and neither entity will have tax18 able receipts or a deduction as a result of the transaction. 

19 ‘‘(c) DISTRIBUTION OF PERSONAL USE PROP20 ERTY.—If personal use property is distributed to the indi21 vidual who contributed the personal use property to a busi22 ness entity, the fair market value of the property for pur23 poses of paragraph (a) shall equal the basis of the prop24 erty plus any enhancement in value of the property attrib25 utable to business purchases with respect to the property. 


rfrederick on DSKD9S0YB1PROD with BILLS
457 

•HR 4529 IH

1 ‘‘(d) CONTROLLING BUSINESS ENTITY.—A business 

2 entity is a ‘controlling business entity’ with respect to an3 other business entity if it owns directly or indirectly more 

4 than 50 percent of the profits or capital interest in the 

5 other business entity. 

6 ‘‘(e) APPLICATION OF THIS SECTION.—This section 

7 applies to both liquidating and nonliquidating distribu8 tions. Property shall be treated as distributed if the prop9 erty is used for a nonbusiness purpose or used as non rent10 al property (as defined in section 232) for more than an 

11 insubstantial period of time during a taxable year. See sec12 tion 232 for rules relating to certain rental property. 

13 ‘‘SEC. 212. ASSET ACQUISITIONS. 

14 ‘‘(a) IN GENERAL.—If a business entity transfers 

15 some or all of its assets, the consideration received for 

16 such assets shall be allocated among the assets transferred 

17 in the same manner as was required by section 1060 of 

18 the Internal Revenue Code of 1986. If the transferee and 

19 transferor agree in writing on the allocation of any consid20 eration, or as to the fair market value of any of the assets, 

21 such agreement shall be binding on both the transferor 

22 and transferee unless the Secretary determines that such 

23 allocation (or fair market value) is not appropriate. 

24 ‘‘(b) TAX CONSEQUENCES.—The tax consequences of 

25 an asset acquisition shall be determined in accordance 


rfrederick on DSKD9S0YB1PROD with BILLS
458 

•HR 4529 IH

1 with the rules of this chapter and shall be dependent upon 

2 allocations made under subsection (a). In general, consid3 eration allocable to savings assets, such as stock in an4 other business entity, would not be included in taxable re5 ceipts of the transferor and would not be a business pur6 chase of the purchaser, but consideration allocable to the 

7 sale of tangible property and intangible property (other 

8 than savings assets) will constitute taxable receipts of the 

9 seller and a business purchase of the purchaser. 

10 ‘‘(c) ELECTION TO TREAT ASSET ACQUISITION AS A

11 STOCK ACQUISITION.—In the case of the sale of substan12 tially all of the assets of a business entity or substantially 

13 all of the assets of a line of business or a separately stand14 ing business of a business entity, the transferee and trans15 feror can jointly elect to treat the acquisition as if it were 

16 an acquisition of the stock of a business entity holding 

17 the assets so transferred. In such case, the rules of section 

18 213 shall apply. 

19 ‘‘(d) AUTHORITY TO REQUIRE ALLOCATION AGREE20 MENT AND NOTICE TO THE SECRETARY.—If the Sec21 retary determines that certain types of asset acquisitions 

22 have significant possibilities of tax avoidance, the Sec23 retary may require— 

24 ‘‘(1) parties to such types of acquisitions to 

25 enter into agreements allocating consideration, 


rfrederick on DSKD9S0YB1PROD with BILLS
459 

•HR 4529 IH

1 ‘‘(2) parties to acquisitions involving certain 

2 kinds of assets to enter into agreements allocating 

3 part of the consideration to those assets, or 

4 ‘‘(3) parties to certain acquisitions to report in5 formation to the Secretary. 

6 ‘‘(e) ASSET ACQUISITION RULES DO NOT APPLY IF

7 CONSIDERATION INCLUDES EQUITY IN PURCHASER.— 

8 ‘‘(1) IN GENERAL.—If a business entity issues 

9 its own equity or equity in a subsidiary or other con10 trolled entity as part of the consideration for the 

11 transfer of assets to it, the transaction shall be 

12 treated as a business purchase and not as an asset 

13 acquisition, and the taxpayer shall not be entitled to 

14 a loss carryover for any unused deduction attrib15 utable to the equity portion of such transfer. 

16 ‘‘(2) EQUITY.—For purposes of this subsection, 

17 equity means— 

18 ‘‘(A) stock, in the case of a corporation, 

19 ‘‘(B) partnership or similar interest, in the 

20 case of a partnership or limited liability com21 pany, and 

22 ‘‘(C) an ownership interest or interest in 

23 profits in the case of any other business entity. 


rfrederick on DSKD9S0YB1PROD with BILLS
460 

•HR 4529 IH

1 ‘‘SEC. 213. MERGERS AND STOCK ACQUISITIONS. 

2 ‘‘(a) MERGERS.—A merger of one business entity 

3 into another or two businesses entities into a third busi4 ness entity or any other similar transaction shall have no 

5 direct consequences under the business consumption tax. 

6 The surviving entity shall assume the tax attributes of the 

7 merged corporations, including any loss carryovers and 

8 credit carryovers. 

9 ‘‘(b) STOCK ACQUISITION.—The acquisition of all or 

10 substantially all of the ownership interest in one business 

11 entity either for cash or in exchange for ownership in the 

12 acquiring entity or an entity controlled by the acquired 

13 entity shall have no direct consequences under the busi14 ness consumption tax. 

15 ‘‘SEC. 214. SPIN-OFFS, SPLIT-OFFS, ETC. 

16 ‘‘A spin-off, split-off or split-up of a business entity 

17 shall have no direct tax consequences under the business 

18 consumption tax. 

19 ‘‘SEC. 215. ALLOCATION OF CERTAIN TAX ATTRIBUTES. 

20 ‘‘The Secretary shall prescribe rules for allocation of 

21 loss carryovers in cases of substantial shifts of assets from 

22 one business entity to another business entity. Under such 

23 rules, a portion of a business entity’s carryovers may be 

24 deemed transferred when assets are transferred. 

25 ‘‘Subchapter D—Accounting Method Rules 

‘‘Sec. 220. General accounting rules. 


rfrederick on DSKD9S0YB1PROD with BILLS
461 

•HR 4529 IH

‘‘Sec. 221. Use of the cash method of accounting. 

‘‘Sec. 222. Taxable year. 

‘‘Sec. 223. Long-term contracts. 

‘‘Sec. 224. Post-sale price adjustments and refunds. 

‘‘Sec. 225. Bad debts. 

‘‘Sec. 226. Transition rules. 

1 ‘‘SEC. 220. GENERAL ACCOUNTING RULES. 

2 ‘‘(a) IN GENERAL.—Except as provided in section 

3 221, a business entity shall use an accrual method of ac4 counting for purposes of determining the timing of rec5 ognition of taxable receipts and deduction of business pur6 chases. All business purchases shall be deducted when in7 curred (in the case of a business entity using the accrual 

8 method of accounting) or when paid (in case of a business 

9 entity using the cash method of accounting) without re10 gard to whether the business purchases are for or relate 

11 to— 

12 ‘‘(1) inventory, 

13 ‘‘(2) assets with a useful life of more than one 

14 year, or 

15 ‘‘(3) property that will be used to produce other 

16 property. 

17 ‘‘(b) ECONOMIC PERFORMANCE.—For purposes of 

18 determining whether an amount has been incurred, the all 

19 events test shall not be treated as met any earlier than 

20 when economic performance with respect to such item oc21 curs. 


rfrederick on DSKD9S0YB1PROD with BILLS
462 

•HR 4529 IH

1 ‘‘(c) CONSISTENT ACCOUNTING METHODS.—Except 

2 as otherwise expressly provided in this chapter, a business 

3 entity shall secure the consent of the Secretary before 

4 changing the method of accounting by which it determines 

5 gross profits. This provision shall not apply to changes 

6 required by the adoption of the business consumption tax. 

7 ‘‘SEC. 221. USE OF THE CASH METHOD OF ACCOUNTING. 

8 ‘‘(a) IN GENERAL.—A business entity that was per9 mitted to use and used the cash method of accounting 

10 under the Internal Revenue Code of 1986 shall be per11 mitted to continue to use the cash method of accounting. 

12 ‘‘(b) NEW BUSINESS ENTITIES.—A new business en13 tity shall be permitted to use the cash method of account14 ing if permitted to under regulations prescribed by the 

15 Secretary. 

16 ‘‘(c) CHANGE OR EXPANSION OF BUSINESS.—Sub17 section (a) shall cease to apply to a business entity that 

18 changes or expands its business such that under regula19 tions prescribed by the Secretary it is no longer eligible 

20 to use the cash method of accounting. 

21 ‘‘(d) REGULATIONS.— 

22 ‘‘(1) USE OF CASH METHOD.—The Secretary 

23 shall prescribe regulations defining which business 

24 entities may use the cash method of accounting. In 

25 general, those regulations shall be consistent with 


rfrederick on DSKD9S0YB1PROD with BILLS
463 

•HR 4529 IH

1 the rules under sections 447 and 448 of the Internal 

2 Revenue Code of 1986. The regulations shall not re3 quire a business entity described in subsection (a) to 

4 convert to the accrual method prior to January 1, 

5 2012. 

6 ‘‘(2) CHANGE IN ACCOUNTING METHOD.—The 

7 Secretary shall prescribe regulations to prevent dou8 ble counting of taxable receipts and deductible ex9 penses in the case of a change in accounting method. 

10 ‘‘SEC. 222. TAXABLE YEAR. 

11 ‘‘(a) COMPUTATION OF GROSS PROFITS.—Gross 

12 profits shall be computed on the basis of a business enti13 ty’s taxable year. 

14 ‘‘(b) TAXABLE YEAR.—‘Taxable year’ means— 

15 ‘‘(1) the taxpayer’s annual accounting period, if 

16 it is a calendar year or a fiscal year; 

17 ‘‘(2) the calendar year, if subsection (g) applies; 

18 or 

19 ‘‘(3) the period for which the return is made if 

20 the return is made for a period of less than 12 

21 months. 

22 ‘‘(c) ANNUAL ACCOUNTING PERIOD.—‘Annual ac23 counting period’ means the annual period on the basis of 

24 which the business entity regularly keeps its books. 


rfrederick on DSKD9S0YB1PROD with BILLS
464 

•HR 4529 IH

1 ‘‘(d) CALENDAR YEAR.—‘Calendar year’ means a pe2 riod of 12 months ending on December 31. 

3 ‘‘(e) FISCAL YEAR.—‘Fiscal year’ means a period of 

4 12 months ending on the last day of any month other than 

5 December. In the case of any business entity that has 

6 made the election provided by subsection (f), the term 

7 means the annual period (varying from 52 to 53 weeks) 

8 so elected. 

9 ‘‘(f) ELECTION OF 52–53 WEEK YEAR.— 

10 ‘‘(1) GENERAL RULE.—A business entity which, 

11 in keeping its books, regularly computes its income 

12 or profits on a basis of an annual period which var13 ies from 52 to 53 weeks and ends always on the 

14 same day of the week and ends always— 

15 ‘‘(A) on whatever date such same day of 

16 the week last occurs in a calendar month, or 

17 ‘‘(B) on whatever date such same day of 

18 the week falls which is nearest to the last day 

19 of a calendar month, may elect to compute its 

20 gross profits on the basis of such annual period. 

21 ‘‘(2) REGULATIONS.—The Secretary shall pre22 scribe such regulations as he deems necessary for 

23 the application of this subsection, including regula24 tions relating to the application of effective dates to 

25 taxpayers using a 52–53 week year. 


rfrederick on DSKD9S0YB1PROD with BILLS
465 

•HR 4529 IH

1 ‘‘(g) CALENDAR YEAR REQUIRED.— 

2 ‘‘(1) NO ACCOUNTING PERIOD.—A business en3 tity’s taxable year shall be the calendar year if the 

4 business entity does not have an annual accounting 

5 period or has an annual accounting period that does 

6 not qualify as a fiscal year. 

7 ‘‘(2) NEW BUSINESS ENTITY.—The taxable 

8 year of a business entity that begins business activ9 ity after December 31, 2010, shall be the calendar 

10 year (or a 52–53 week fiscal year ending in Decem11 ber) unless the business entity can demonstrate a 

12 business reason for selecting an accounting period 

13 other than the calendar year. 

14 ‘‘(h) TRANSITION RULE FOR BUSINESS ENTITIES

15 WITH A FISCAL YEAR.— 

16 ‘‘(1) IN GENERAL.—A business entity with a 

17 taxable year that is not the calendar year shall have 

18 a short taxable year ending on December 31, 2010, 

19 and a subsequent taxable year beginning on January 

20 1, 2011, and ending on the day immediately pre21 ceding the beginning of the business entity’s next 

22 fiscal year. 

23 ‘‘(2) BUSINESS ENTITIES WITH 52–53 WEEK

24 YEAR ENDING IN DECEMBER.— 


rfrederick on DSKD9S0YB1PROD with BILLS
466 

•HR 4529 IH

1 ‘‘(A) IN GENERAL.—If a business entity 

2 has a 52–53 week taxable year (under the In3 ternal Revenue Code of 1986) that ends in De4 cember 2010, it may elect to begin its first tax5 able year for the business consumption tax on 

6 the first day immediately following the last day 

7 of such taxable year. 

8 ‘‘(B) NO ELECTION.—If a business entity 

9 that has a 52–53 week taxable year that ends 

10 in December 2010, does not make the election 

11 under subparagraph (A) or is prohibited from 

12 making such election by subparagraph (C), the 

13 business entity’s taxable year under the Inter14 nal Revenue Code of 1986 that would end in 

15 December 2010 shall end on December 31, 

16 2010. 

17 ‘‘(C) ANTI-ABUSE RULE.—Subparagraph 

18 (A) shall not apply to any taxpayer that enters 

19 into business transactions in 2010 following the 

20 scheduled end of its fiscal year with business 

21 entities that are not subject to the business con22 sumption tax at the time of such transactions 

23 if such transactions deviate from the normal 

24 course of business in order to achieve some tax 

25 benefit. 


rfrederick on DSKD9S0YB1PROD with BILLS
467 

•HR 4529 IH

1 ‘‘SEC. 223. LONG-TERM CONTRACTS. 

2 ‘‘(a) IN GENERAL.—In the case of a long-term con3 tract— 

4 ‘‘(1) CONTRACTOR EXPENSES.—The contractor 

5 shall be entitled to deduct its business purchases 

6 when paid or incurred. 

7 ‘‘(2) CONTRACTOR RECEIPTS.—The contractor 

8 shall recognize taxable receipts— 

9 ‘‘(A) in the case of a project in which the 

10 acquirer has no ownership interest in the 

11 project until delivery— 

12 ‘‘(i) upon delivery of the project, in 

13 the case of an accrual basis contractor, or 

14 ‘‘(ii) upon the later of delivery of the 

15 project or the receipt of payment, in the 

16 case of cash-basis contractor. 

17 ‘‘(B) in the case of a project in which the 

18 acquirer obtains an ownership interest as the 

19 project is constructed— 

20 ‘‘(i) when the contractor has the right 

21 to payments, in the case of an accrual 

22 basis contractor, or 

23 ‘‘(ii) upon the later of when the con24 tractor receives the cash or has the right 

25 to payments, in the case of a cash basis 

26 contractor. 


rfrederick on DSKD9S0YB1PROD with BILLS
468 

•HR 4529 IH

1 ‘‘(3) ACQUIRER EXPENSES.—The acquirer that 

2 is a business entity shall be entitled to deduct its 

3 costs of the business purchase— 

4 ‘‘(A) in the case of a cash-basis acquirer, 

5 at such time as a cash basis contractor would 

6 be required to treat the amounts paid as tax7 able receipts, or 

8 ‘‘(B) in the case of an accrual-basis 

9 acquirer, at such time as an accrual basis con10 tractor would be required to treat the amounts 

11 paid or due as taxable receipts. 

12 ‘‘(b) RIGHT TO PAYMENTS.— 

13 ‘‘(1) IN GENERAL.—A contractor shall be treat14 ed as having a right to payments with respect to a 

15 project at any time to the extent that the contractor 

16 would not be required to return payments received 

17 (or would be entitled to collect payments not yet re18 ceived) if the project were terminated at such time 

19 by the contractor. 

20 ‘‘(2) CONTRACTUAL PROVISIONS.—If a long21 term contract includes a procedure for paying the 

22 contractor as work is completed (for example, by 

23 reason of a draw down from a trust account), the 

24 contractual provisions shall generally govern when a 

25 contractor has a right to payment. 


rfrederick on DSKD9S0YB1PROD with BILLS
469 

•HR 4529 IH

1 ‘‘(3) PERCENTAGE COMPLETION METHOD OF

2 ACCOUNTING.—If a long-term contract does not in3 clude a mechanism for paying the contractor as 

4 work is completed, the percentage-of-completion 

5 method of accounting shall be used to determine the 

6 timing of taxable receipts of the contractor and busi7 ness purchases of the acquirer. 

8 ‘‘(c) LONG-TERM CONTRACT.— 

9 ‘‘(1) IN GENERAL.—‘Long-term contract’ 

10 means— 

11 ‘‘(A) any contract that covers service or 

12 production through parts of two different cal13 endar years if the contract includes a formal 

14 deposit and draw-down mechanism, and 

15 ‘‘(B) any contract for the manufacture, 

16 building, installation, or construction of prop17 erty if such contract is not completed within the 

18 taxable year of the contractor in which such 

19 contract is entered into. 

20 ‘‘(2) EXCEPTION.—A contract for the manufac21 ture of property shall not be treated as a long-term 

22 contract unless such contract involves the manufac23 ture of— 


rfrederick on DSKD9S0YB1PROD with BILLS
470 

•HR 4529 IH

1 ‘‘(A) any unique item of a type which is 

2 not normally included in the finished goods in3 ventory of the taxpayer, or 

4 ‘‘(B) any item which normally requires 

5 more than 12 calendar months to complete. 

6 ‘‘(d) CONSISTENCY.—The Secretary may require 

7 business entities to file statements containing such infor8 mation with respect to long-term contracts as the Sec9 retary may prescribe to ensure consistency in reporting. 

10 ‘‘(e) FOREIGN CONTRACTS.—This section shall not 

11 be construed to permit a deduction for a business purchase 

12 for the cost of property produced outside the United 

13 States pursuant to a long-term contract at any time prior 

14 to the import of such property into the United States. 

15 ‘‘SEC. 224. POST-SALE PRICE ADJUSTMENTS AND REFUNDS. 

16 ‘‘(a) RECEIPT OF PRICE ADJUSTMENT.—In the case 

17 of a post-sale price adjustment attributable to a business 

18 purchase which was taken into account in computing gross 

19 profits for a prior taxable year, the amount of such adjust20 ment shall be treated as a reduction or increase, as the 

21 case may be, in the cost of business purchases for the tax22 able year in which the adjustment is made or incurred. 

23 ‘‘(b) ISSUANCE OF PRICE ADJUSTMENT.—In the case 

24 of a post-sale price adjustment attributable to a sale the 

25 receipts from which were taken into account in deterVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00470 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
471 

•HR 4529 IH

1 mining taxable receipts for a prior taxable year, the 

2 amount of such adjustment shall be treated as a reduction 

3 or increase, as the case may be, in taxable receipts for 

4 the taxable year in which the adjustment is made or in5 curred. 

6 ‘‘(c) POST-SALE PRICE ADJUSTMENT.—‘Post-sale 

7 price adjustment’ means a refund, rebate, or other price 

8 allowance attributable to a sale of property or services or 

9 an upward adjustment in price that was not previously 

10 taken into account under the business entity’s method of 

11 accounting. 

12 ‘‘SEC. 225. BAD DEBTS. 

13 ‘‘(a) SELLER.—If an amount owed to an accrual 

14 basis business entity for property or services sold— 

15 ‘‘(1) was taken into account as a taxable receipt 

16 in a prior taxable year, and 

17 ‘‘(2) becomes wholly or partially uncollectible 

18 during the taxable year, then the seller shall treat 

19 the amount as a reduction in taxable receipts for the 

20 taxable year in which it becomes wholly or partially 

21 uncollectible. 

22 ‘‘(b) NOTICE REQUIREMENT.—No reduction shall be 

23 allowed under subsection (a) unless the seller notifies the 

24 purchaser of the amount which the seller has treated as 

25 wholly or partially uncollectible. 


rfrederick on DSKD9S0YB1PROD with BILLS
472 

•HR 4529 IH

1 ‘‘(c) SUBSEQUENT COLLECTION.—If an amount 

2 which was treated as uncollectible under subsection (a) is 

3 subsequently collected, it shall be treated as a taxable re4 ceipt when collected. 

5 ‘‘(d) PURCHASER.—If a purchaser receives notice 

6 under subsection (b) from a seller and the purchaser has 

7 treated the amount labeled uncollectible as a business pur8 chase in a prior taxable year, then the purchaser shall 

9 treat such amount as a reduction in the cost of business 

10 purchases in the taxable year to which the notice relates. 

11 If the purchaser subsequently repays such amount, the re12 payment shall constitute the cost of a business purchase. 

13 ‘‘SEC. 226. TRANSITION RULES. 

14 ‘‘(a) NO DOUBLE DEDUCTIONS.—A business entity 

15 shall not be entitled to treat as a ‘cost of business pur16 chase’ any amount that the business entity deducted in 

17 computing taxable income under the income tax in effect 

18 prior the effective date of the business consumption tax. 

19 ‘‘(b) NO DOUBLE INCLUSION.—A business entity 

20 shall not be required to include in taxable receipts any 

21 receipt that the business entity took into account in com22 puting taxable income under the income tax in effect prior 

23 to the effect date of the business consumption tax. 

24 ‘‘(c) NO LOSS OF DEDUCTION.—An expense which— 


rfrederick on DSKD9S0YB1PROD with BILLS
473 

•HR 4529 IH

1 ‘‘(1) a business entity would have been able to 

2 deduct as a cost of a business purchase in an ac3 counting period before the effective date of the busi4 ness consumption tax if the business consumption 

5 tax had been in effect in such period, and 

6 ‘‘(2) the business entity would have been able to 

7 deduct as an expense in computing taxable income 

8 in a period after the business consumption tax is ef9 fective if the income tax had continued in effect, 

10 shall be treated as a cost of a business purchase incurred 

11 or paid at the time that it would have been paid or in12 curred under the income tax if the income tax had contin13 ued in effect. This subsection shall not apply to any 

14 amount which is to be taken into account under sub15 chapter L (relating to transition rules), any amounts 

16 which would have been deducted under the income tax 

17 through loss carryover deductions, or any deductions de18 ferred by the uniform capitalization rules under section 

19 263A of the Internal Revenue Code of 1986. 

20 ‘‘(d) ALL TAXABLE RECEIPTS TAXED.—A receipt 

21 which— 

22 ‘‘(1) a business entity would have been required 

23 to treat as a taxable receipt in an accounting period 

24 before the effective date of the business consumption 


rfrederick on DSKD9S0YB1PROD with BILLS
474 

•HR 4529 IH

1 tax if the business consumption tax had been in ef2 fect in such period, and 

3 ‘‘(2) the business entity would have been re4 quired to include in gross income in a period after 

5 the business consumption tax is effective if the in6 come tax had continued in effect, 

7 shall be treated as a taxable receipt at the time that it 

8 would have been included in income if the income tax had 

9 continued in effect. 

10 ‘‘Subchapter E—Land and Rental Property 

‘‘Sec. 230. No deduction for land purchased for nonbusiness use. 

‘‘Sec. 231. Taxable receipts for land held for nonbusiness use. 

‘‘Sec. 232. Certain rental property. 

11 ‘‘SEC. 230. NO DEDUCTION FOR LAND PURCHASED FOR 

12 NONBUSINESS USE. 

13 ‘‘(a) IN GENERAL.—The acquisition of unimproved 

14 land shall not constitute a business purchase if the unim15 proved land is not acquired to be used in a business activ16 ity or if the land is acquired for— 

17 ‘‘(1) speculation, 

18 ‘‘(2) development (including subdivision), or 

19 ‘‘(3) temporary leasing or other use not com20 mensurate with the value of the land, 

21 ‘‘(4) indefinite future use in a business activity, 

22 or 

23 ‘‘(5) use in compensating employees. 


rfrederick on DSKD9S0YB1PROD with BILLS
475 

•HR 4529 IH

1 ‘‘(b) FUTURE USE IN BUSINESS ACTIVITY.—Unim2 proved land will not be considered held for ‘indefinite fu3 ture use in a business activity’ if promptly upon acquisi4 tion, the purchaser or the lessee begins construction of im5 provements on the land (other than improvements, such 

6 as paving or sewage lines, intended for indefinite future 

7 development) that will be used in a business activity. Such 

8 improvement must be commensurate with the value of the 

9 land. 

10 ‘‘(c) UNIMPROVED LAND.—‘Unimproved land’ 

11 means— 

12 ‘‘(1) land with no buildings on it, 

13 ‘‘(2) land with improvements if the value of the 

14 improvements is relatively small in comparison to 

15 the value of the land and it is anticipated that the 

16 improvements will be demolished and not used, 

17 ‘‘(3) land in excess of the amount reasonably 

18 needed for the buildings located on it. 

19 ‘‘(d) CONVERSION TO BUSINESS USE.—If the acqui20 sition of land is not treated as a business purchase by rea21 son of subsection (a) and the land is subsequently used 

22 in a manner for which it could have been treated as a 

23 business purchase, the cost of the land will be treated as 

24 a business purchase when the improvements on the land 


rfrederick on DSKD9S0YB1PROD with BILLS
476 

•HR 4529 IH

1 are placed in service (or in the case of construction for 

2 sale, substantially completed and advertised for sale). 

3 ‘‘SEC. 231. TAXABLE RECEIPTS FROM SALE OF LAND HELD 

4 FOR NONBUSINESS USE. 

5 ‘‘(a) TAX BASIS.—A business entity shall have a tax 

6 basis in land equal to the cost of the land if such cost 

7 is not deductible by reason of section 230(a) and the land 

8 has not been converted to business use for purposes of 

9 section 230(d). 

10 ‘‘(b) TAXABLE RECEIPTS OF A LAND SALE.—The 

11 taxable receipts from the sale of land (or portion thereof) 

12 in which a business entity has a tax basis by reason of 

13 subsection (a) shall be the amount by which the proceeds 

14 exceed the basis of such land (or portion thereof). 

15 ‘‘SEC. 232. CERTAIN RENTAL PROPERTY. 

16 ‘‘(a) IN GENERAL.—Except as provided in subsection 

17 (b), the activity of rental of real estate is a business activ18 ity to which the business consumption tax applies. 

19 ‘‘(b) NOT RENTAL PROPERTY.—Subsection (a) shall 

20 not apply— 

21 ‘‘(1) to property used on more than 14 days 

22 during the taxable year for nonbusiness purposes, or 

23 ‘‘(2) to property rented for no more than 14 

24 days during the taxable year and the total rental reVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00476 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
477 

•HR 4529 IH

1 ceived with respect to such property does not exceed 

2 $10,000. 

3 ‘‘(c) RENTAL PROPERTY BECOMES NONRENTAL

4 PROPERTY.—If property which is considered rental prop5 erty for purposes of subsection (a) in one taxable year 

6 ceases to be rental property (by reason of subsection (b)) 

7 in the following taxable year, the property (and any associ8 ated debt) shall be treated as distributed by the business 

9 entity to its owners. Section 211(a) shall apply to such 

10 distribution. 

11 ‘‘Subchapter F—Insurance and Financial 

12 Products 

‘‘Sec. 241. General rules. 

13 ‘‘SEC. 241. GENERAL RULES. 

14 ‘‘(a) TAXABLE RECEIPTS.—Taxable receipts do not 

15 include financial receipts (as defined in section 203(e)(2)). 

16 ‘‘(b) BUSINESS PURCHASES.—Business purchases do 

17 not include the cost of financial instruments (as defined 

18 in section 203(e)(3)) or payments for use of money or cap19 ital. 

20 ‘‘Subchapter G—Tax-exempt Organizations 

‘‘Sec. 251. Exemption for governmental entities. 

‘‘Sec. 252. Taxable activity of governmental entities. 

‘‘Sec. 253. Tax-exempt organizations. 

‘‘Sec. 254. Special rules for (c)(3) organizations. 

‘‘Sec. 255. Tax on unrelated business activity. 

‘‘Sec. 256. Unrelated business activity. 


rfrederick on DSKD9S0YB1PROD with BILLS
478 

•HR 4529 IH

1 ‘‘SEC. 251. EXEMPTION FOR GOVERNMENTAL ENTITIES. 

2 ‘‘(a) STATES.—Except as provided in section 252, a 

3 state, political subdivision thereof and the District of Co4 lumbia shall be exempt from taxation under this chapter 

5 on any gross profits derived from the exercise of any es6 sential governmental function. 

7 ‘‘(b) POSSESSIONS.—The government of any posses8 sion of the United States shall be exempt from taxation 

9 under this chapter on any gross profits earned by the pos10 session. 

11 ‘‘SEC. 252. TAXABLE ACTIVITY OF GOVERNMENTAL ENTI12 TIES. 

13 ‘‘(a) CERTAIN ACTIVITIES TAXABLE.—A govern14 mental entity shall be considered a business and subject 

15 to tax on any business activity of a type frequently pro16 vided by business entities subject to tax under this chap17 ter. 

18 ‘‘(b) CERTAIN ACTIVITIES TREATED AS ESSENTIAL

19 GOVERNMENT FUNCTIONS.—Subsection (a) shall not 

20 apply to the following activities, which shall be treated as 

21 essential government functions: 

22 ‘‘(1) Provision of mass transportation services. 

23 ‘‘(2) Provision of public utility services. 


rfrederick on DSKD9S0YB1PROD with BILLS
479 

•HR 4529 IH

1 ‘‘SEC. 253. TAX-EXEMPT ORGANIZATIONS. 

2 ‘‘(a) EXEMPTION FROM TAXATION.—An organiza3 tion described in subsection (c) or (d) shall be exempt 

4 from taxation under this chapter. 

5 ‘‘(b) TAX ON UNRELATED BUSINESS ACTIVITY.—An 

6 organization exempt from taxation under subsection (a) 

7 shall be subject to tax to the extent provided in sections 

8 255 and 256, but shall be considered a tax-exempt organi9 zation for purposes of any law that refers to tax-exempt 

10 organizations. 

11 ‘‘(c) LIST OF EXEMPT ORGANIZATIONS.—The fol12 lowing organizations are referred to in subsection (a): 

13 ‘‘(1) INSTRUMENTALITY OF THE UNITED

14 STATES.—Any corporation organized under Act of 

15 Congress which is an instrumentality of the United 

16 States but only if such corporation— 

17 ‘‘(A) is exempt from Federal income 

18 taxes— 

19 ‘‘(i) under such Act as amended and 

20 supplemented before July 18, 1984, or 

21 ‘‘(ii) under this title without regard to 

22 any provision of law which is not contained 

23 in this title and which is not contained in 

24 a revenue Act, or 

25 ‘‘(B) is described in subsection (h). 


rfrederick on DSKD9S0YB1PROD with BILLS
480 

•HR 4529 IH

1 ‘‘(2) TITLE HOLDING COMPANIES.—Corpora2 tions organized for the exclusive purpose of holding 

3 title to property, collecting income therefrom, and 

4 turning over the entire amount thereof, less ex5 penses, to an organization which itself is exempt 

6 under this section. Rules similar to the rules of sub7 paragraph (G) of paragraph (25) shall apply for 

8 purposes of this paragraph. 

9 ‘‘(3) CHARITABLE, EDUCATIONAL AND RELI10 GIOUS ORGANIZATIONS.—Corporations, and any 

11 community chest, fund, or foundation, organized and 

12 operated exclusively for religious, charitable, sci13 entific, testing for public safety, literary, or edu14 cational purposes, or to foster national or inter15 national amateur sports competition (but only if no 

16 part of its activities involve the provision of athletic 

17 facilities or equipment), or for the prevention of cru18 elty to children or animals, no part of the net earn19 ings of which inures to the benefit of any private 

20 shareholder or individual, no substantial part of the 

21 activities of which is carrying on propaganda, or oth22 erwise attempting, to influence legislation (except as 

23 otherwise provided in subsection (g)), and which 

24 does not participate in, or intervene in (including the 

25 publishing or distributing of statements), any politVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00480 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
481 

•HR 4529 IH

1 ical campaign on behalf of (or in opposition to) any 

2 candidate for public office. 

3 ‘‘(4) SOCIAL WELFARE ORGANIZATIONS, ETC.— 

4 ‘‘(A) Civic leagues or organizations not or5 ganized for profit but operated exclusively for 

6 the promotion of social welfare, or local associa7 tions of employees, the membership of which is 

8 limited to the employees of a designated person 

9 or persons in a particular municipality, and the 

10 net earnings of which are devoted exclusively to 

11 charitable, educational, or recreational pur12 poses. 

13 ‘‘(B) Subparagraph (A) shall not apply to 

14 an entity unless no part of the net earnings of 

15 such entity inures to the benefit of any private 

16 shareholder or individual. 

17 ‘‘(5) LABOR AND AGRICULTURAL ORGANIZA18 TIONS.—Labor, agricultural, or horticultural organi19 zations. 

20 ‘‘(6) TRADE ASSOCIATIONS.—Business leagues, 

21 chambers of commerce, real-estate boards, boards of 

22 trade, or professional football leagues (whether or 

23 not administering a pension fund for football play24 ers) not organized for profit and no part of the net 


rfrederick on DSKD9S0YB1PROD with BILLS
482 

•HR 4529 IH

1 earnings of which inures to the benefit of any pri2 vate shareholder or individual. 

3 ‘‘(7) SOCIAL CLUBS.—Clubs organized for 

4 pleasure, recreation, and other nonprofitable pur5 poses, substantially all of the activities of which are 

6 for such purposes and no part of the net earnings 

7 of which inures to the benefit of any private share8 holder. 

9 ‘‘(8) CERTAIN FRATERNAL SOCIETIES.—Fra10 ternal beneficiary societies, orders, or associations— 

11 ‘‘(A) operating under the lodge system or 

12 for the exclusive benefit of the members of a 

13 fraternity itself operating under the lodge sys14 tem, and 

15 ‘‘(B) providing for the payment of life, 

16 sick, accident, or other benefits to the members 

17 of such society, order, or association or their 

18 dependents. 

19 ‘‘(9) VEBAS.—Voluntary employees’ beneficiary 

20 associations providing for the payment of life, sick, 

21 accident, or other benefits to the members of such 

22 association or their dependents or designated bene23 ficiaries, if no part of the net earnings of such asso24 ciation inures (other than through such payments) 


rfrederick on DSKD9S0YB1PROD with BILLS
483 

•HR 4529 IH

1 to the benefit of any private shareholder or indi2 vidual. 

3 ‘‘(10) OTHER FRATERNAL ORGANIZATIONS.— 

4 Domestic fraternal societies, orders, or associations, 

5 operating under the lodge system— 

6 ‘‘(A) the net earnings of which are devoted 

7 exclusively to religious, charitable, scientific, lit8 erary, educational, and fraternal purposes, and 

9 ‘‘(B) which do not provide for the payment 

10 of life, sick, accident, or other benefits. 

11 ‘‘(11) LOCAL TEACHERS’ RETIREMENT

12 FUNDS.—Teachers’ retirement fund associations of a 

13 purely local character, if— 

14 ‘‘(A) no part of their net earnings inures 

15 (other than through payment of retirement ben16 efits) to the benefit of any private shareholder 

17 or individual, and 

18 ‘‘(B) the income consists solely of amounts 

19 received from public taxation, amounts received 

20 from assessments on the teaching salaries of 

21 members, and income in respect of investments. 

22 ‘‘(12) CERTAIN COOPERATIVES.— 

23 ‘‘(A) Benevolent life insurance associations 

24 of a purely local character, mutual ditch or irri25 gation companies, mutual or cooperative teleVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00483 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
484 

•HR 4529 IH

1 phone companies, or like organizations; but only 

2 if 85 percent or more of the income consists of 

3 amounts collected from members for the sole 

4 purpose of meeting losses and expenses. 

5 ‘‘(B) In the case of a mutual or coopera6 tive telephone company, subparagraph (A) shall 

7 be applied without taking into account any in8 come received or accrued— 

9 ‘‘(i) from a nonmember telephone 

10 company for the performance of commu11 nication services which involve members of 

12 the mutual or cooperative telephone com13 pany, 

14 ‘‘(ii) from qualified pole rentals, 

15 ‘‘(iii) from the sale of display listings 

16 in a directory furnished to the members of 

17 the mutual or cooperative telephone com18 pany, or 

19 ‘‘(iv) from the prepayment of a loan 

20 under section 306A, 306B, or 311 of the 

21 Rural Electrification Act of 1936 (as in ef22 fect on January 1, 1987). 

23 ‘‘(C) In the case of a mutual or cooperative 

24 electric company, subparagraph (A) shall be apVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00484 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
485 

•HR 4529 IH

1 plied without taking into account any income 

2 received or accrued— 

3 ‘‘(i) from qualified pole rentals, or 

4 ‘‘(ii) from the prepayment of a loan 

5 under section 306A, 306B, or 311 of the 

6 Rural Electrification Act of 1936 (as in ef7 fect on January 1, 1987). 

8 ‘‘(D) For purposes of this paragraph, the 

9 term ‘qualified pole rental’ means any rental of 

10 a pole (or other structure used to support 

11 wires) if such pole (or other structure)— 

12 ‘‘(i) is used by the telephone or elec13 tric company to support one or more wires 

14 which are used by such company in pro15 viding telephone or electric services to its 

16 members, and 

17 ‘‘(ii) is used pursuant to the rental to 

18 support one or more wires (in addition to 

19 the wires described in clause (i)) for use in 

20 connection with the transmission by wire 

21 of electricity or of telephone or other com22 munications. 

23 For purposes of the preceding sentence, the 

24 term ‘rental’ includes any sale of the right to 

25 use the pole (or other structure). 


rfrederick on DSKD9S0YB1PROD with BILLS
486 

•HR 4529 IH

1 ‘‘(13) NONPROFIT CEMETERIES.—Cemetery 

2 companies owned and operated exclusively for the 

3 benefit of their members or which are not operated 

4 for profit; and any corporation chartered solely for 

5 the purpose of the disposal of bodies by burial or 

6 cremation which is not permitted by its charter to 

7 engage in any business not necessarily incident to 

8 that purpose and no part of the net earnings of 

9 which inures to the benefit of any private share10 holder or individual. 

11 ‘‘(14) GRANDFATHERED MUTUAL FINANCIAL

12 INSTITUTIONS.— 

13 ‘‘(A) Credit unions without capital stock 

14 organized and operated for mutual purposes 

15 and without profit. 

16 ‘‘(B) Certain corporations or associations 

17 organized before September 1, 1957, and de18 scribed in subparagraphs (B) or (C) of section 

19 501(c)(14) of the Internal Revenue Code of 

20 1986. 

21 ‘‘(15) GRANDFATHERED SMALL INSURANCE

22 COMPANIES.—Insurance companies described in sec23 tion 501(c)(15) of the Internal Revenue Code of 

24 1986. 


rfrederick on DSKD9S0YB1PROD with BILLS
487 

•HR 4529 IH

1 ‘‘(16) CROP FINANCING ASSOCIATIONS.—Cor2 porations organized by an association subject to part 

3 IV of this subchapter or members thereof, for the 

4 purpose of financing the ordinary crop operations of 

5 such members or other producers, and operated in 

6 conjunction with such association. Exemption shall 

7 not be denied any such corporation because it has 

8 capital stock, if the dividend rate of such stock is 

9 fixed at not to exceed the legal rate of interest in the 

10 State of incorporation or 8 percent per annum, 

11 whichever is greater, on the value of the consider12 ation for which the stock was issued, and if substan13 tially all such stock (other than nonvoting preferred 

14 stock, the owners of which are not entitled or per15 mitted to participate, directly or indirectly, in the 

16 profits of the corporation, on dissolution or other17 wise, beyond the fixed dividends) is owned by such 

18 association, or members thereof; nor shall exemption 

19 be denied any such corporation because there is ac20 cumulated and maintained by it a reserve required 

21 by State law or a reasonable reserve for any nec22 essary purpose. 

23 ‘‘(17) SUPPLEMENTAL EMPLOYMENT BENEFIT

24 TRUST.— 


rfrederick on DSKD9S0YB1PROD with BILLS
488 

•HR 4529 IH

1 ‘‘(A) A trust or trusts forming part of a 

2 plan providing for the payment of supplemental 

3 unemployment compensation benefits, if— 

4 ‘‘(i) under the plan, it is impossible, 

5 at any time prior to the satisfaction of all 

6 liabilities, with respect to employees under 

7 the plan, for any part of the corpus or in8 come to be (within the taxable year or 

9 thereafter) used for, or diverted to, any 

10 purpose other than the providing of supple11 mental unemployment compensation bene12 fits, 

13 ‘‘(ii) such benefits are payable to em14 ployees under a classification which is set 

15 forth in the plan and which is found by the 

16 Secretary not to be discriminatory in favor 

17 of employees who are highly compensated 

18 employees (within the meaning of section 

19 414(q)), and 

20 ‘‘(iii) such benefits do not discrimi21 nate in favor of employees who are highly 

22 compensated employees (within the mean23 ing of section 414(q). A plan shall not be 

24 considered discriminatory within the mean25 ing of this clause merely because the beneVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00488 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
489 

•HR 4529 IH

1 fits received under the plan bear a uniform 

2 relationship to the total compensation, or 

3 the basic or regular rate of compensation, 

4 of the employees covered by the plan. 

5 ‘‘(B) Rules similar to those contained in 

6 subparagraphs (B) through (E) of section 

7 501(c)(7) of the Internal Revenue Code of 1986 

8 shall apply to subparagraph (A). 

9 ‘‘(18) GRANDFATHERED TRUSTS.—A trust or 

10 trusts created before June 25, 1959, and described 

11 in section 501(c)(18) of the Internal Revenue Code 

12 of 1986. 

13 ‘‘(19) CERTAIN VETERANS’ ORGANIZATIONS.— 

14 A post or organization of past or present members 

15 of the Armed Forces of the United States, or an 

16 auxiliary unit or society of, or a trust or foundation 

17 for, any such post or organization— 

18 ‘‘(A) organized in the United States or any 

19 of its possessions, 

20 ‘‘(B) at least 75 percent of the members of 

21 which are past or present members of the 

22 Armed Forces of the United States and sub23 stantially all of the other members of which are 

24 individuals who are cadets or are spouses, wid25 ows, or widowers of past or present members of 


rfrederick on DSKD9S0YB1PROD with BILLS
490 

•HR 4529 IH

1 the Armed Forces of the United States or of 

2 cadets, and 

3 ‘‘(C) no part of the net earnings of which 

4 inures to the benefit of any private shareholder 

5 or individual. 

6 ‘‘(20) LEGAL SERVICE PLAN TRUSTS.—An or7 ganization or trust created or organized in the 

8 United States, the exclusive function of which is to 

9 form part of a qualified group legal services plan or 

10 plans. 

11 ‘‘(21) BLACK LUNG ACT TRUSTS.—A trust or 

12 trusts established in writing, created or organized in 

13 the United States, and contributed to by any person 

14 (except an insurance company) if— 

15 ‘‘(A) the purpose of such trust or trusts is 

16 exclusively— 

17 ‘‘(i) to satisfy, in whole or in part, the 

18 liability of such person for, or with respect 

19 to, claims for compensation for disability 

20 or death due to pneumoconiosis under 

21 Black Lung Acts, 

22 ‘‘(ii) to pay premiums for insurance 

23 exclusively covering such liability, 

24 ‘‘(iii) to pay administrative and other 

25 incidental expenses of such trust in connecVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00490 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
491 

•HR 4529 IH

1 tion with the operation of the trust and the 

2 processing of claims against such person 

3 under Black Lung Acts, and 

4 ‘‘(iv) to pay accident or health bene5 fits for retired miners and their spouses 

6 and dependents (including administrative 

7 and other incidental expenses of such trust 

8 in connection therewith) or premiums for 

9 insurance exclusively covering such bene10 fits; and 

11 ‘‘(B) such trusts meets requirements simi12 lar to those contained in section 501(c)(21) of 

13 the Internal Revenue Code of 1986. 

14 ‘‘(22) MULTIEMPLOYER ERISA TRUST.—A trust 

15 created or organized in the United States and estab16 lished in writing by the plan sponsors of multiem17 ployer plans if— 

18 ‘‘(A) the purpose of such trust is exclu19 sively— 

20 ‘‘(i) to pay any amount described in 

21 section 4223(c) or (h) of the Employee Re22 tirement Income Security Act of 1974, and 

23 ‘‘(ii) to pay reasonable and necessary 

24 administrative expenses in connection with 

25 the establishment and operation of the 


rfrederick on DSKD9S0YB1PROD with BILLS
492 

•HR 4529 IH

1 trust and the processing of claims against 

2 the trust, 

3 ‘‘(B) no part of the assets of the trust may 

4 be used for, or diverted to, any purpose other 

5 than— 

6 ‘‘(i) the purposes described in sub7 paragraph (A), or 

8 ‘‘(ii) prudent investment in securities, 

9 obligations, or time or demand deposits, 

10 ‘‘(C) such trust meets the requirements of 

11 paragraphs (2), (3), and (4) of section 4223(b), 

12 4223(h), or, if applicable, section 4223(c) of the 

13 Employee Retirement Income Security Act of 

14 1974, and 

15 ‘‘(D) the trust instrument provides that, 

16 on dissolution of the trust, assets of the trust 

17 may not be paid other than to plans which have 

18 participated in the plan or, in the case of a 

19 trust established under section 4223(h) of such 

20 Act, to plans with respect to which employers 

21 have participated in the fund. 

22 ‘‘(23) GRANDFATHERED VETERANS’ INSURANCE

23 ORGANIZATION.—Any association organized before 

24 1880 more than 75 percent of the members of which 

25 are present or past members of the Armed Forces 


rfrederick on DSKD9S0YB1PROD with BILLS
493 

•HR 4529 IH

1 and a principal purpose of which is to provide insur2 ance and other benefits to veterans or their depend3 ents. 

4 ‘‘(24) ERISA TRUST.—A trust described in sec5 tion 4049 of the Employee Retirement Income Secu6 rity Act of 1974 (as in effect on the date of the en7 actment of the Single-Employer Pension Plan 

8 Amendments Act of 1986). 

9 ‘‘(25) REAL TITLE HOLDING CORPORATION OR

10 TRUST.— 

11 ‘‘(A) Any corporation or trust which— 

12 ‘‘(i) has no more than 35 shareholders 

13 or beneficiaries, 

14 ‘‘(ii) has only 1 class of stock or bene15 ficial interest, and 

16 ‘‘(iii) is organized for the exclusive 

17 purposes of— 

18 ‘‘(I) acquiring real property and 

19 holding title to, and collecting income 

20 from, such property, and 

21 ‘‘(II) remitting the entire amount 

22 of income from such property (less ex23 penses) to 1 or more organizations de24 scribed in subparagraph (C) which are 


rfrederick on DSKD9S0YB1PROD with BILLS
494 

•HR 4529 IH

1 shareholders of such corporation or 

2 beneficiaries of such trust. 

3 For purposes of clause (iii), the term ‘real prop4 erty’ shall not include any interest as a tenant 

5 in common (or similar interest) and shall not 

6 include any indirect interest. 

7 ‘‘(B) A corporation or trust shall be de8 scribed in subparagraph (A) without regard to 

9 whether the corporation or trust is organized by 

10 1 or more organizations described in subpara11 graph (C). 

12 ‘‘(C) An organization is described in this 

13 subparagraph if such organization is— 

14 ‘‘(i) a qualified pension, profit shar15 ing, or stock bonus plan that meets the re16 quirements of section 401(a), 

17 ‘‘(ii) a governmental plan (within the 

18 meaning of section 414(d)), 

19 ‘‘(iii) the United States, any State or 

20 political subdivision thereof, or any agency 

21 or instrumentality of any of the foregoing, 

22 or 

23 ‘‘(iv) any organization described in 

24 paragraph (3). 


rfrederick on DSKD9S0YB1PROD with BILLS
495 

•HR 4529 IH

1 ‘‘(D) A corporation or trust shall in no 

2 event be treated as described in subparagraph 

3 (A) unless such corporation or trust permits its 

4 shareholders or beneficiaries— 

5 ‘‘(i) to dismiss the corporation’s or 

6 trust’s investment adviser, following rea7 sonable notice, upon a vote of the share8 holders or beneficiaries holding a majority 

9 of interest in the corporation or trust, and 

10 ‘‘(ii) to terminate their interest in the 

11 corporation or trust by either, or both, of 

12 the following alternatives, as determined by 

13 the corporation or trust: 

14 ‘‘(I) by selling or exchanging 

15 their stock in the corporation or inter16 est in the trust (subject to any Fed17 eral or State securities law) to any or18 ganization described in subparagraph 

19 (C) so long as the sale or exchange 

20 does not increase the number of 

21 shareholders or beneficiaries in such 

22 corporation or trust above 35, or 

23 ‘‘(II) by having their stock or in24 terest redeemed by the corporation or 

25 trust after the shareholder or beneVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00495 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
496 

•HR 4529 IH

1 ficiary has provided 90 days notice to 

2 such corporation or trust. 

3 ‘‘(E)(i) For purposes of this paragraph— 

4 ‘‘(I) a corporation which is a qualified 

5 subsidiary shall not be treated as a sepa6 rate corporation, and 

7 ‘‘(II) all assets, liabilities, and items 

8 of income, deduction, and credit of a quali9 fied subsidiary shall be treated as assets, 

10 liabilities, and such items (as the case may 

11 be) of the corporation or trust described in 

12 subparagraph (A). 

13 ‘‘(ii) For purposes of this subparagraph, 

14 the term ‘qualified subsidiary’ means any cor15 poration if, at all times during the period such 

16 corporation was in existence, 100 percent of the 

17 stock of such corporation is held by the cor18 poration or trust described in subparagraph 

19 (A). 

20 ‘‘(iii) For purposes of this subtitle, if any 

21 corporation which was a qualified subsidiary 

22 ceases to meet the requirements of clause (ii), 

23 such corporation shall be treated as a new cor24 poration acquiring all of its assets (and assum25 ing all of its liabilities) immediately before such 


rfrederick on DSKD9S0YB1PROD with BILLS
497 

•HR 4529 IH

1 cessation from the corporation or trust de2 scribed in subparagraph (A) in exchange for its 

3 stock. 

4 ‘‘(F) For purposes of subparagraph (A), 

5 the term ‘real property’ includes any personal 

6 property which is leased under, or in connection 

7 with, a lease of real property, but only if the 

8 rent attributable to such personal property for 

9 the taxable year does not exceed 15 percent of 

10 the total rent for the taxable year attributable 

11 to both the real and personal property leased 

12 under, or in connection with, such lease. 

13 ‘‘(G)(i) An organization shall not be treat14 ed as failing to be described in this paragraph 

15 merely by reason of the receipt of any otherwise 

16 disqualifying income which is incidentally de17 rived from the holding of real property. 

18 ‘‘(ii) Clause (i) shall not apply if the 

19 amount of gross income described in such 

20 clause exceeds 10 percent of the organization’s 

21 gross income for the taxable year unless the or22 ganization establishes to the satisfaction of the 

23 Secretary that the receipt of gross income de24 scribed in clause (i) in excess of such limitation 

25 was inadvertent and reasonable steps are being 


rfrederick on DSKD9S0YB1PROD with BILLS
498 

•HR 4529 IH

1 taken to correct the circumstances giving rise to 

2 such income. 

3 ‘‘(26) STATE ESTABLISHED MEDICAL CARE IN4 SURER.—Any membership organization if— 

5 ‘‘(A) such organization is established by a 

6 State exclusively to provide coverage for medical 

7 care on a not-for-profit basis to individuals de8 scribed in subparagraph (B) through— 

9 ‘‘(i) insurance issued by the organiza10 tion, or 

11 ‘‘(ii) a health maintenance organiza12 tion under an arrangement with the orga13 nization, 

14 ‘‘(B) the only individuals receiving such 

15 coverage through the organization are individ16 uals— 

17 ‘‘(i) who are residents of such State, 

18 and 

19 ‘‘(ii) who, by reason of the existence 

20 or history of a medical condition— 

21 ‘‘(I) are unable to acquire med22 ical care coverage for such condition 

23 through insurance or from a health 

24 maintenance organization, or 


rfrederick on DSKD9S0YB1PROD with BILLS
499 

•HR 4529 IH

1 ‘‘(II) are able to acquire such 

2 coverage only at a rate which is sub3 stantially in excess of the rate for 

4 such coverage through the member5 ship organization, 

6 ‘‘(C) the composition of the membership in 

7 such organization is specified by such State, 

8 and 

9 ‘‘(D) no part of the net earnings of the or10 ganization inures to the benefit of any private 

11 shareholder or individual. A spouse and any 

12 qualifying child) of an individual described in 

13 subparagraph (B) (without regard to this sen14 tence) shall be treated as described in subpara15 graph (B). 

16 ‘‘(27) GRANDFATHERED WORKERS COMPENSA17 TION ORGANIZATION.—Any membership organiza18 tion established before June 1, 1996, by a State ex19 clusively to reimburse its members for losses arising 

20 under workmen’s compensation acts, and described 

21 in section 501(c)(27) of the Internal Revenue Code 

22 of 1986. 

23 ‘‘(d) RELIGIOUS AND APOSTOLIC ORGANIZATIONS.— 

24 The following organizations are referred to in subsection 

25 (a): Religious or apostolic associations or corporations, if 


rfrederick on DSKD9S0YB1PROD with BILLS
500 

•HR 4529 IH

1 such associations or corporations have a common treasury 

2 or community treasury, even if such associations or cor3 porations engage in business for the common benefit of 

4 the members, but only if such activity is treated as unre5 lated business activity. 

6 ‘‘(e) COOPERATIVE HOSPITAL SERVICE ORGANIZA7 TIONS.—For purposes of this chapter, an organization 

8 shall be treated as an organization organized and operated 

9 exclusively for charitable purposes, if— 

10 ‘‘(1) such organization is organized and oper11 ated solely— 

12 ‘‘(A) to perform, on a centralized basis, 

13 one or more of the following services which, if 

14 performed on its own behalf by a hospital which 

15 is an organization described in subsection (c)(3) 

16 and exempt from taxation under subsection (a), 

17 would constitute activities in exercising or per18 forming the purpose or function constituting 

19 the basis for its exemption: data processing, 

20 purchasing (including the purchasing of insur21 ance on a group basis), warehousing, billing 

22 and collection, food, clinical, industrial engi23 neering, laboratory, printing, communications, 

24 record center, and personnel (including selecVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00500 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
501 

•HR 4529 IH

1 tion, testing, training, and education of per2 sonnel) services; and 

3 ‘‘(B) to perform such services solely for 

4 two or more hospitals each of which is— 

5 ‘‘(i) an organization described in sub6 section (c)(3) which is exempt from tax7 ation under subsection (a), 

8 ‘‘(ii) a constituent part of an organi9 zation described in subsection (c)(3) which 

10 is exempt from taxation under subsection 

11 (a) and which, if organized and operated 

12 as a separate entity, would constitute an 

13 organization described in subsection (c)(3), 

14 or 

15 ‘‘(iii) owned and operated by the 

16 United States, a State, the District of Co17 lumbia, or a possession of the United 

18 States, or a political subdivision or an 

19 agency or instrumentality of any of the 

20 foregoing; 

21 ‘‘(2) such organization is organized and oper22 ated on a cooperative basis and allocates or pays, 

within 81 23 ⁄2 months after the close of its taxable year, 

24 all net earnings to patrons on the basis of services 

25 performed for them; and 


rfrederick on DSKD9S0YB1PROD with BILLS
502 

•HR 4529 IH

1 ‘‘(3) if such organization has capital stock, all 

2 of such stock outstanding is owned by its patrons. 

3 For purposes of this title, any organization which, by rea4 son of the preceding sentence, is an organization described 

5 in subsection (c)(3) and exempt from taxation under sub6 section (a), shall be treated as a hospital and as an organi7 zation the principal purpose or functions of which are the 

8 providing of medical or hospital care or medical education 

9 or medical research, if the organization is a hospital, or 

10 if the organization is a medical research organization di11 rectly engaged in the continuous active conduct of medical 

12 research in conjunction with a hospital. 

13 ‘‘(f) COOPERATIVE SERVICE ORGANIZATIONS OF OP14 ERATING EDUCATIONAL ORGANIZATIONS.—For purposes 

15 of this chapter— 

16 ‘‘(1) If an organization is— 

17 ‘‘(A) organized and operated solely to hold, 

18 commingle, and collectively invest and reinvest 

19 (including arranging for and supervising the 

20 performance by independent contractors of in21 vestment services related thereto) in stocks and 

22 securities, the moneys contributed thereto by 

23 each of the members of such organization, and 

24 to collect income therefrom and turn over the 


rfrederick on DSKD9S0YB1PROD with BILLS
503 

•HR 4529 IH

1 entire amount thereof, less expenses, to such 

2 members, 

3 ‘‘(B) organized and controlled by one or 

4 more such members, and 

5 ‘‘(C) comprised solely of members that are 

6 organizations described in paragraph (2) or 

7 (3)— 

8 ‘‘(i) which are exempt from taxation 

9 under subsection (a), or 

10 ‘‘(ii) the gross profits of which are ex11 cluded from taxation under section 251(a), 

12 then such organization shall be treated as an 

13 organization organized and operated exclusively 

14 for charitable purposes. 

15 ‘‘(2) An organization is described in this para16 graph if the organization is an educational organiza17 tion which normally maintains a regular faculty and 

18 curriculum and normally has a regularly enrolled 

19 body of pupils or students in attendance at the place 

20 where its educational activities are regularly carried 

21 on. 

22 ‘‘(3) An organization is described in this para23 graph if the organization is an organization which 

24 normally receives a substantial part of its support 

25 (exclusive of income received in the exercise or perVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00503 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
504 

•HR 4529 IH

1 formance by such organization of its charitable, edu2 cational, or other purpose or function constituting 

3 the basis for its exemption under section 253(a)) 

4 from the United States or any State or political sub5 division thereof or from direct or indirect contribu6 tions from the general public, and which is organized 

7 and operated exclusively to receive, hold, invest, and 

8 administer property and to make expenditures to or 

9 for the benefit of a college or university which is an 

10 organization referred to in clause (ii) of this sub11 paragraph and which is an agency or instrumentality 

12 of a State or political subdivision thereof, or which 

13 is owned or operated by a State or political subdivi14 sion thereof or by an agency or instrumentality of 

15 one or more States or political subdivisions. 

16 ‘‘(g) EXPENDITURES BY PUBLIC CHARITIES TO IN17 FLUENCE LEGISLATION.— 

18 ‘‘(1) GENERAL RULE.—In the case of an orga19 nization to which this subsection applies, exemption 

20 from taxation under subsection (a) shall be denied 

21 because a substantial part of the activities of such 

22 organization consists of carrying on propaganda, or 

23 otherwise attempting, to influence legislation, but 

24 only if such organization normally— 


rfrederick on DSKD9S0YB1PROD with BILLS
505 

•HR 4529 IH

1 ‘‘(A) makes lobbying expenditures in ex2 cess of the lobbying ceiling amount for such or3 ganization for each taxable year, or 

4 ‘‘(B) makes grass roots expenditures in ex5 cess of the grass roots ceiling amount for such 

6 organization for each taxable year. 

7 ‘‘(2) DEFINITIONS.—For purposes of this sub8 section— 

9 ‘‘(A) LOBBYING EXPENDITURES.—‘Lob10 bying expenditures’ means expenditures for the 

11 purpose of influencing legislation (as defined in 

12 section 4911(d)). 

13 ‘‘(B) LOBBYING CEILING AMOUNT.—The 

14 lobbying ceiling amount for any organization 

15 for any taxable year is 150 percent of the lob16 bying nontaxable amount for such organization 

17 for such taxable year, determined under section 

18 4911. 

19 ‘‘(C) GRASS ROOTS EXPENDITURES.— 

20 ‘Grass roots expenditures’ means expenditures 

21 for the purpose of influencing legislation (as de22 fined in section 4911(d) without regard to para23 graph (1)(B) thereof). 

24 ‘‘(D) GRASS ROOTS CEILING AMOUNT.— 

25 The grass roots ceiling amount for any organiVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00505 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
506 

•HR 4529 IH

1 zation for any taxable year is 150 percent of 

2 the grass roots nontaxable amount for such or3 ganization for such taxable year, determined 

4 under section 4911. 

5 ‘‘(3) ORGANIZATIONS TO WHICH THIS SUB6 SECTION APPLIES.—This subsection shall apply to 

7 any organization which has elected (in such manner 

8 and at such time as the Secretary may prescribe) to 

9 have the provisions of this subsection apply to such 

10 organization and which, for the taxable year which 

11 includes the date the election is made, is described 

12 in subsection (c)(3) and is not described in para13 graph (4) and is not a private foundation. 

14 ‘‘(4) DISQUALIFIED ORGANIZATIONS.—This 

15 subsection does not apply to— 

16 ‘‘(A) a church, 

17 ‘‘(B) an integrated auxiliary of a church or 

18 of a convention or association of churches, or 

19 ‘‘(C) a member of an affiliated group of or20 ganizations (within the meaning of section 

21 4911(f)(2)) if one or more members of such 

22 group is described in subparagraph (A) or (B). 

23 ‘‘(5) YEARS FOR WHICH ELECTION IS EFFEC24 TIVE.—An election by an organization under this 


rfrederick on DSKD9S0YB1PROD with BILLS
507 

•HR 4529 IH

1 subsection shall be effective for all taxable years of 

2 such organization which— 

3 ‘‘(A) end after the date the election is 

4 made, and 

5 ‘‘(B) begin before the date the election is 

6 revoked by such organization (under regulations 

7 prescribed by the Secretary). 

8 ‘‘(6) NO EFFECT ON CERTAIN ORGANIZA9 TIONS.—With respect to any organization for a tax10 able year for which— 

11 ‘‘(A) such organization is described in 

12 paragraph (5), or 

13 ‘‘(B) an election under this subsection is 

14 not in effect for such organization, nothing in 

15 this subsection or in section 4911 shall be con16 strued to affect the interpretation of the phrase, 

17 ‘no substantial part of the activities of which is 

18 carrying on propaganda, or otherwise attempt19 ing, to influence legislation,’ under subsection 

20 (c)(3). 

21 ‘‘(h) GOVERNMENT CORPORATIONS EXEMPT UNDER

22 SUBSECTION (c)(1).—For purposes of subsection (c)(1), 

23 the following organizations are described in this sub24 section: 


rfrederick on DSKD9S0YB1PROD with BILLS
508 

•HR 4529 IH

1 ‘‘(1) The Central Liquidity Facility established 

2 under title III of the Federal Credit Union Act (12 

3 U.S.C. 1795 et seq.). 

4 ‘‘(2) The Resolution Trust Corporation estab5 lished under section 21A of the Federal Home Loan 

6 Bank Act. 

7 ‘‘(3) The Resolution Funding Corporation es8 tablished under section 21B of the Federal Home 

9 Loan Bank Act. 

10 ‘‘(i) CERTAIN EDUCATIONAL ORGANIZATIONS.—An 

11 organization shall not be eligible for exemption as an edu12 cational organization under subsection (c)(3) if a substan13 tial amount of its activities and funds are devoted to— 

14 ‘‘(1) conducting seminars and other similar pro15 grams, 

16 ‘‘(2) conducting research to educate Congress 

17 or the general public about public policy issues, 

18 ‘‘(3) producing books and pamphlets, or 

19 ‘‘(4) a combination of the foregoing. 

20 ‘‘SEC. 254. SPECIAL RULES FOR (c)(3) ORGANIZATIONS. 

21 ‘‘(a) NEW ORGANIZATIONS MUST NOTIFY SEC22 RETARY.—Except as provided in subsection (c), an organi23 zation shall not be treated as an organization described 

24 in section 253(c)(3)— 


rfrederick on DSKD9S0YB1PROD with BILLS
509 

•HR 4529 IH

1 ‘‘(1) unless that it has given notice to the Sec2 retary, in such manner as the Secretary may pre3 scribe, that it is applying for recognition of such sta4 tus, or 

5 ‘‘(2) for any period before giving of such notice, 

6 if such notice is given after the time prescribed by 

7 the Secretary by regulations for giving notice under 

8 this subsection. 

9 ‘‘(b) PRESUMPTION THAT ORGANIZATIONS ARE PRI10 VATE FOUNDATIONS.—Except as provided in subsection 

11 (c), any organization described in section 253(c)(3) and 

12 which does not notify the Secretary, at such time and in 

13 such manner as the Secretary may by regulations pre14 scribe, that it is not a private foundation shall be pre15 sumed to be a private foundation. 

16 ‘‘(c) EXCEPTIONS.—Subsections (a) and (b) shall not 

17 apply to— 

18 ‘‘(1) organizations organized before October 10, 

19 1969; 

20 ‘‘(2) organizations which obtained recognition 

21 of tax-exempt status under section 501(c)(3) of the 

22 Internal Revenue Code of 1986 (in the case of sub23 section (a) only); 


rfrederick on DSKD9S0YB1PROD with BILLS
510 

•HR 4529 IH

1 ‘‘(3) organizations which were determined not 

2 to be private foundations under the Internal Rev3 enue Code of 1986; 

4 ‘‘(4) churches, their integrated auxiliaries, and 

5 conventions and associations of churches; 

6 ‘‘(5) any organization that is not a private 

7 foundation and the gross receipts of which in each 

8 taxable year are not more than $25,000, or 

9 ‘‘(6) such other classes of organizations which 

10 the Secretary may exempt. 

11 ‘‘SEC. 255. TAX ON UNRELATED BUSINESS ACTIVITY. 

12 ‘‘(a) IN GENERAL.—Each organization described in 

13 subsection (b) shall be subject to the Competitive Amer14 ican Business Tax for businesses under section 201 on its 

15 gross profits from its unrelated business activity. 

16 ‘‘(b) ORGANIZATIONS SUBJECT TO TAX.—This sec17 tion shall apply to— 

18 ‘‘(1) organizations exempt from the business 

19 consumption tax under section 253(a), other than 

20 instrumentalities of the United States described in 

21 section 253(c)(1). 

22 ‘‘(2) colleges and universities which are instru23 mentalities of any government and corporations 

24 owned by one or more such colleges or universities. 


rfrederick on DSKD9S0YB1PROD with BILLS
511 

•HR 4529 IH

1 ‘‘SEC. 256. UNRELATED BUSINESS ACTIVITY. 

2 ‘‘(a) IN GENERAL.—‘Unrelated business activity’ 

3 means any trade or business the conduct of which is not 

4 substantially related (aside from the need of such organi5 zation for income or funds or the use it makes of the prof6 its derived) to the exercise or performance by such organi7 zation of its charitable, educational, or other purpose or 

8 function constituting the basis for its exemption under 

9 section 253, except that such term does not include any 

10 trade or business— 

11 ‘‘(1) in which substantially all the work in car12 rying on such trade or business is performed for the 

13 organization without compensation; or 

14 ‘‘(2) which is carried on, in the case of an orga15 nization described in section 253(c)(3) or in the case 

16 of a college or university described in section 255(b), 

17 by the organization primarily for the convenience of 

18 its members, students, patients, officers, or employ19 ees, which is the selling by the organization of items 

20 of work-related clothes and equipment and items 

21 normally sold through vending machines, through 

22 food dispensing facilities, or by snack bars, for the 

23 convenience of its members at their usual places of 

24 employment; or 


rfrederick on DSKD9S0YB1PROD with BILLS
512 

•HR 4529 IH

1 ‘‘(3) which is the selling of merchandise, sub2 stantially all of which has been received by the orga3 nization as gifts or contributions. 

4 ‘‘(b) ADVERTISING, ETC., ACTIVITIES.—For purposes 

5 of this section, ‘trade or business’ includes any activity 

6 which is carried on for the production of income from the 

7 sale of goods or the performance of services. For purposes 

8 of the preceding sentence, an activity does not lose identity 

9 as a trade or business merely because it is carried on with10 in a larger aggregate of similar activities or within a larger 

11 complex of other endeavors which may, or may not, be 

12 related to the exempt purposes of the organization. Where 

13 an activity carried on for profit constitutes an unrelated 

14 trade or business, no part of such trade or business shall 

15 be excluded from such classification merely because it does 

16 not result in profit. 

17 ‘‘(c) TRADE OR BUSINESS.— 

18 ‘‘(1) CERTAIN BUSINESS ACTIVITIES.—An ac19 tivity shall not be considered a ‘trade or business’ 

20 solely because the activity is a business activity 

21 (such as certain passive rental activity) that would 

22 be subject to the business consumption tax if con23 ducted by a business entity other than a tax-exempt 

24 organization. 


rfrederick on DSKD9S0YB1PROD with BILLS
513 

•HR 4529 IH

1 ‘‘(2) REGULATIONS.—The Secretary shall pre2 scribe regulations defining a ‘trade or business’. 

3 Such regulations shall be consistent with the provi4 sions under sections 511 through 513 of the Internal 

5 Revenue Code of 1986, except to the extent such 

6 provisions are inconsistent with other principles of 

7 the business consumption tax. The regulations shall 

8 include exclusions from the definition of ‘trade or 

9 business’ similar to those contained in section 513 of 

10 the Internal Revenue Code for— 

11 ‘‘(A) certain bingo games, 

12 ‘‘(B) certain hospital services, and 

13 ‘‘(C) certain public entertainment activity 

14 at fairs and expositions by an organization 

15 which regularly conducts, as one of its substan16 tial exempt purposes, an agricultural or edu17 cational fair or exhibition. 

18 ‘‘(3) TRADE SHOWS.—The conduct of trade 

19 shows and conventions shall not be excluded from 

20 the definition of trade or business. 

21 ‘‘Subchapter H—Cooperatives 

‘‘Sec. 260. Patronage dividends of cooperatives. 

22 ‘‘SEC. 260. PATRONAGE DIVIDENDS OF COOPERATIVES. 

23 ‘‘(a) PATRONAGE DIVIDENDS PAID BY SUPPLY CO24 OPERATIVES.—A qualified patronage dividend paid by a 


rfrederick on DSKD9S0YB1PROD with BILLS
514 

•HR 4529 IH

1 supply cooperative to a patron shall be treated as if it is 

2 a refund of a portion of the amounts paid by the patron 

3 for goods, services, or use of capital. In general, if the 

4 supply cooperative included the amount received from the 

5 patron in taxable receipts, the dividend shall reduce tax6 able receipts in the year incurred. If the recipient of the 

7 dividend is a business entity which deducted the cost of 

8 business purchases to which the dividend related, the re9 cipient will reduce its cost of business purchases by the 

10 amount of the dividend in the year the dividend is paid 

11 or incurred. 

12 ‘‘(b) PATRONAGE DIVIDENDS PAID BY MARKETING

13 COOPERATIVES.—A qualified patronage dividend paid to 

14 a patron by a marketing cooperative shall be treated as 

15 an upward price adjustment in the amount received by the 

16 patron for its goods marketed by the cooperative. In gen17 eral, the cooperative will increase its cost of business pur18 chases by the amount of the qualified patronage dividend 

19 and the recipient will increase its taxable receipts by the 

20 amount of the qualified patronage dividend. 

21 ‘‘(c) DIVIDEND TREATMENT.—Only the portion of a 

22 patronage dividend that is not a qualified patronage divi23 dend shall be treated as a dividend under this chapter and 

24 chapter 2. 

25 ‘‘(d) DEFINITIONS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
515 

•HR 4529 IH

1 ‘‘(1) QUALIFIED PATRONAGE DIVIDEND.—A 

2 ‘qualified patronage dividend’ is that part of a pa3 tronage dividend that is attributable to the patron’s 

4 allocable share of patronage earnings of a marketing 

5 cooperative or a supply cooperative. 

6 ‘‘(2) SUPPLY COOPERATIVE.—A ‘supply cooper7 ative’ is a cooperative that sells goods or service to 

8 patrons and provided patronage dividends with re9 spect to the quantity of purchases of the patrons. 

10 ‘‘(3) MARKETING COOPERATIVE.—A ‘marketing 

11 cooperative’ is a cooperative that sells goods pro12 duced by its members and provides patronage divi13 dends to the members based on the quantities of 

14 goods sold or provided for sale. 

15 ‘‘(e) SPECIAL RULES.— 

16 ‘‘(1) NOTICES OF ALLOCATION AND PER-UNIT

17 RETAIN CERTIFICATES.—Except as provided in 

18 paragraph (2), a notice of allocation, per-unit retain 

19 certificate, or other similar document shall not be 

20 treated as a patronage dividend until it is redeemed 

21 in cash or property. 

22 ‘‘(2) OPPORTUNITY TO RECEIVE CASH.—If a 

23 patron is given an opportunity to receive a patron24 age dividend in cash, but instead chooses to accept 

25 a per-unit retain certificate or a qualified notice of 


rfrederick on DSKD9S0YB1PROD with BILLS
516 

•HR 4529 IH

1 allocation, the patron will be treated as receiving 

2 cash and simultaneously contributing to the capital 

3 of the cooperative. 

4 ‘‘(3) APPLICATION LIMITED TO QUALIFIED CO5 OPERATIVES.—Under rules to be prescribed by the 

6 Secretary, this section shall apply only to coopera7 tives to which one of the following provisions of the 

8 Internal Revenue Code of 1986 would have applied: 

9 ‘‘(A) Section 501(c)(12) (relating to coop10 erative telephone companies and similar organi11 zations). 

12 ‘‘(B) Section 501(c)(14) (relating to cer13 tain cooperative banks). 

14 ‘‘(C) Section 521 (relating to farm co15 operatives). 

16 ‘‘(D) Section 1381 (relating to coopera17 tives generally). 

18 ‘‘(4) REGULATIONS.—The Secretary shall pre19 scribe regulations for the application of this section. 

20 The regulations shall generally be consistent with 

21 subchapter T of chapter 1 of the Internal Revenue 

22 Code of 1986 except to the extent that such rules 

23 are inconsistent with provisions of this chapter. 

24 ‘‘Subchapter I—Sourcing Rules 

‘‘Sec. 265. Exports of property or services. 

‘‘Sec. 266. Imports of property or services. 

‘‘Sec. 267. Import or export of services. 


rfrederick on DSKD9S0YB1PROD with BILLS
517 

•HR 4529 IH

‘‘Sec. 268. International transportation services. 

‘‘Sec. 269. International communications. 

‘‘Sec. 270. Insurance. 

‘‘Sec. 271. Banking services. 

1 ‘‘SEC. 265. EXPORTS OF PROPERTY OR SERVICES. 

2 ‘‘(a) GENERAL RULE.—Taxable receipts do not in3 clude amounts received by the exporter thereof for prop4 erty or services exported from the United States for use 

5 or consumption outside the United States. 

6 ‘‘(b) EXPORT THROUGH NONBUSINESS ENTITY.— 

7 For purposes of subsection (a), if property or services are 

8 sold to a governmental entity or a tax-exempt organization 

9 for export and are exported other than in an activity of 

10 such entity which is subject to the business consumption 

11 tax, then the seller of such property or services is deemed 

12 to be the exporter thereof. 

13 ‘‘(c) EXPORT OF SERVICES.—See section 267 for 

14 rules for determining whether services are exported or im15 ported. 

16 ‘‘SEC. 266. IMPORTS OF PROPERTY OR SERVICES. 

17 ‘‘(a) IN GENERAL.—The import of property or serv18 ices for consumption in the United States shall constitute 

19 a business purchase if such property or service is to be 

20 used in a business activity in the United States. Property 

21 being held for sale or retail by a business entity that is 

22 in the business of selling goods shall be considered held 

23 for ‘use in a business activity’. 


rfrederick on DSKD9S0YB1PROD with BILLS
518 

•HR 4529 IH

1 ‘‘(b) AMOUNT OF BUSINESS PURCHASE.— 

2 ‘‘(1) IN GENERAL.—The cost of business pur3 chases with respect to the import of property or 

4 services for use or consumption in the United States 

5 is the customs value, price or other amount used for 

6 purposes of determining the import tax under sec7 tion 281 or section 282. 

8 ‘‘(2) IMPORT TAX.—The cost of business pur9 chases does not include any import tax paid. No de10 duction shall be allowed with respect to property or 

11 service imported by a business entity unless the im12 port tax is paid with respect to such import. 

13 ‘‘SEC. 267. IMPORT OR EXPORT OF SERVICES. 

14 ‘‘(a) IN GENERAL.—Except as otherwise provided in 

15 this subchapter, services shall not be treated as imported 

16 or exported from the location in which they are performed. 

17 ‘‘(b) IMPORT OF SERVICES.—A business entity shall 

18 be treated as importing a service if— 

19 ‘‘(1) the entire benefit of the service will be re20 alized in the United States, and 

21 ‘‘(2) the benefit will be realized in connection 

22 with the United States business activities of the 

23 business entity. 

24 ‘‘(c) EXPORT OF SERVICES.—A business will be 

25 treated as exporting a service if— 


rfrederick on DSKD9S0YB1PROD with BILLS
519 

•HR 4529 IH

1 ‘‘(1) the entire benefit of the service will be re2 alized outside of the United States, and 

3 ‘‘(2) the benefit will be realized solely in con4 nection with the activities of the purchaser occurring 

5 outside the United States. 

6 ‘‘(d) SERVICES ACQUIRED FROM SERVICE PROVIDER

7 THAT PROVIDES SERVICES IN AND OUTSIDE THE

8 UNITED STATES.— 

9 ‘‘(1) IN GENERAL.—If a business entity ac10 quires services from a service provider that provides 

11 services both in and outside the United States and 

12 the service provider shows on the invoice where the 

13 services are provided— 

14 ‘‘(A) the business entity shall treat the 

15 services as provided where stated on the invoice, 

16 and 

17 ‘‘(B) the service provider shall treat as tax18 able receipts any services listed as provided in 

19 the United States. 

20 ‘‘(2) NO INVOICE.—If a business entity acquires 

21 services from a service provider that provides serv22 ices both in and outside the United States and the 

23 service provider does not show on an invoice where 

24 such services are provided— 


rfrederick on DSKD9S0YB1PROD with BILLS
520 

•HR 4529 IH

1 ‘‘(A) the business entity shall treat the 

2 services as if provided in the location to which 

3 payment is sent, and 

4 ‘‘(B) the service provider shall treat as tax5 able receipts any payments received in the 

6 United States. 

7 ‘‘(e) SPECIAL RULES PREVAIL.—See sections 268 

8 and 269 for special rule relating to transportation and 

9 communication services. 

10 ‘‘SEC. 268. INTERNATIONAL TRANSPORTATION SERVICES. 

11 ‘‘(a) TRANSPORTATION OF PROPERTY.— 

12 ‘‘(1) TAXABLE RECEIPTS.— 

13 ‘‘(A) EXPORTS.—Taxable receipts do not 

14 include receipts from the transportation of 

15 property exported from the United States. 

16 ‘‘(B) IMPORTS.—Taxable receipts include 

17 receipts from transportation of property im18 ported into the United States only if such costs 

19 are not taken into account in determining the 

20 import tax. 

21 ‘‘(C) PRESUMPTIONS.—The Secretary shall 

22 prescribe regulations describing situations in 

23 which a transporter of property must presume 

24 that no import tax has been paid on the cost of 

25 its services. 


rfrederick on DSKD9S0YB1PROD with BILLS
521 

•HR 4529 IH

1 ‘‘(2) BUSINESS PURCHASES.— 

2 ‘‘(A) EXPORTS.—Business purchases do 

3 not include amounts paid or incurred for the 

4 cost of transportation of property exported from 

5 the United States. 

6 ‘‘(B) IMPORTS.—Amounts paid or incurred 

7 for transportation of goods imported into the 

8 United States, shall constitute a cost of busi9 ness purchase only to the extent that they are 

10 taken into account in determining the customs 

11 value for purposes of section 281(a) (relating to 

12 the import tax). 

13 ‘‘(b) TRANSPORTATION OF PASSENGERS.— 

14 ‘‘(1) TAXABLE RECEIPTS.—Taxable receipts— 

15 ‘‘(A) include receipts from the transpor16 tation of passengers from the United States to 

17 a destination outside the United States, but 

18 ‘‘(B) do not include receipts from the 

19 transportation of passengers from outside the 

20 United States to a destination in the United 

21 States. 

22 ‘‘(2) BUSINESS PURCHASES.—Business pur23 chases— 

24 ‘‘(A) include amounts paid or incurred in 

25 a business activity for the transportation of 


rfrederick on DSKD9S0YB1PROD with BILLS
522 

•HR 4529 IH

1 passengers from the United States to a destina2 tion outside the United States, but 

3 ‘‘(B) do not include amounts paid or in4 curred for transportation of passengers from 

5 outside the United States to a destination in 

6 the United States. 

7 ‘‘(3) SIMPLIFYING RULES.—The Secretary may 

8 provide rules that simplify this subsection, including 

9 rules under which— 

10 ‘‘(A) half of receipts attributable to trans11 portation to or from the United States are 

12 treated as taxable receipts, 

13 ‘‘(B) half of the cost for business trips to 

14 and from the United States are treated as busi15 ness purchases, and 

16 ‘‘(C) all transportation expenses of a busi17 ness entity that has no regular business outside 

18 the United States are treated as business pur19 chases. 

20 ‘‘SEC. 269. INTERNATIONAL COMMUNICATIONS. 

21 ‘‘(a) IN GENERAL.—For purposes of section 266, 

22 communications services shall be treated as provided at 

23 the point of origin of the communications and shall not 

24 be treated as imported or exported. 


rfrederick on DSKD9S0YB1PROD with BILLS
523 

•HR 4529 IH

1 ‘‘(b) COMMUNICATIONS SERVICES.—Communications 

2 services include— 

3 ‘‘(1) internet services, 

4 ‘‘(2) telephone and electronic email communica5 tions services, 

6 ‘‘(3) courier services (except in the case of 

7 transportation of property that is imported or ex8 ported), 

9 ‘‘(4) satellite transmission services, 

10 ‘‘(5) telegraph services, 

11 ‘‘(6) facsimile transmission services, and 

12 ‘‘(7) other similar services. 

13 ‘‘SEC. 270. INSURANCE. 

14 ‘‘(a) IN GENERAL.—Insurance services will be treat15 ed as provided at the location of the insurance company 

16 providing the services. Except as the Secretary may pre17 scribe by regulations, insurance companies will be treated 

18 as providing services at the location to which insurance 

19 payments are made. 

20 ‘‘(b) INSURED RISKS IN THE UNITED STATES.—If 

21 insurance services are provided outside the United States 

22 and the insured risk is located in the United States— 

23 ‘‘(1) the insurance service shall be treated as 

24 imported, 


rfrederick on DSKD9S0YB1PROD with BILLS
524 

•HR 4529 IH

1 ‘‘(2) the insurance premiums shall be subject to 

2 the import tax, and 

3 ‘‘(3) payments of insurance benefits shall not be 

4 treated as imported. 

5 ‘‘(c) INSURED RISK OUTSIDE THE UNITED

6 STATES.—If insurance services are provided inside the 

7 United States and the insured risk is located outside the 

8 United States— 

9 ‘‘(1) insurance services shall be treated as ex10 ported, 

11 ‘‘(2) payments of insurance benefits shall be 

12 treated as payments for services outside the United 

13 States, and shall not be deducted as business pur14 chases. 

15 ‘‘(d) INSURANCE SERVICES.—Insurance services 

16 means the provision of insurance and services related to 

17 insurance other than insurance that is treated as a savings 

18 asset. 

19 ‘‘SEC. 271. BANKING SERVICES. 

20 ‘‘The Secretary shall prescribe regulations on the lo21 cation of banking services and the extent to which such 

22 services are to be treated as imported or exported. 

23 ‘‘Subchapter J—Business Conducted in a 

24 Possession 

‘‘Sec. 276. Treatment of possessions. 


rfrederick on DSKD9S0YB1PROD with BILLS
525 

•HR 4529 IH

1 ‘‘SEC. 276. TREATMENT OF POSSESSIONS. 

2 ‘‘(a) IN GENERAL.—For purposes of the business 

3 consumption tax imposed by this chapter, the U.S. posses4 sions shall not be treated as part of the United States. 

5 ‘‘(b) POSSESSION.—For purposes of this subchapter, 

6 ‘U.S. possession’ or ‘possession’ means a possession of the 

7 United States and includes the Commonwealth of Puerto 

8 Rico and the Virgin Islands. 

9 ‘‘Subchapter K—Import Tax 

‘‘Sec. 281. Imposition of tax on property. 

‘‘Sec. 282. Imposition of tax on import of services. 

‘‘Sec. 283. General rules for the import tax. 

10 ‘‘SEC. 281. IMPOSITION OF TAX ON PROPERTY. 

11 ‘‘(a) GENERAL RULE.—There is hereby imposed a 

12 tax equal to 8.5 percent of the customs value of all prop13 erty entered into the United States for consumption, use 

14 or warehousing. 

15 ‘‘(b) LIABILITY FOR TAX.—The tax imposed on the 

16 import of property by subsection (a) shall be paid by the 

17 person entering the property into the United States for 

18 consumption, use or warehousing. Such tax shall be due 

19 and payable at the time of import. 

20 ‘‘(c) IMPORTS OF PREVIOUSLY EXPORTED PROP21 ERTY.—In the case of any article that is classified under 

22 a heading or subheading of subchapter I or II of chapter 

23 98 of the Tariff Schedules of the United States, the tax 

24 under this section shall be imposed only on that portion 


rfrederick on DSKD9S0YB1PROD with BILLS
526 

•HR 4529 IH

1 of the customs value of such article that is dutiable under 

2 such heading or subheading. 

3 ‘‘(d) IMPORTS FOR PERSONAL CONSUMPTION.—The 

4 import tax imposed by this section shall not apply to any 

5 article entered into the United States duty free under sub6 chapters I through VII of chapter 98 of the Tariff Sched7 ules of the United States. 

8 ‘‘(e) EXCEPTION FOR CERTAIN COMMODITIES AND

9 PRODUCTS.—The import tax imposed by this section shall 

10 not apply to petroleum, petroleum products or such com11 modities or products as the President shall by Executive 

12 Order determine to be in short supply and vital to national 

13 security. 

14 ‘‘SEC. 282. IMPOSITION OF TAX ON IMPORT OF SERVICES. 

15 ‘‘(a) GENERAL RULE.—There is hereby imposed a 

16 tax equal to 8.5 percent of the cost of all services treated 

17 as imported into the United States during the taxable year 

18 of the service recipient. 

19 ‘‘(b) LIABILITY FOR THE TAX.—The tax on the im20 port of services imposed by subsection (a) shall be paid 

21 by the person who receives the imported services. The tax 

22 shall be payable as if it were an addition to the business 

23 consumption tax imposed by section 201. 

24 ‘‘(c) IMPORTED SERVICES.—For purposes of this sec25 tion, services shall be treated as imported if they are treatVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00526 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
527 

•HR 4529 IH

1 ed as imported under section 267 (general rules on import 

2 or export of services) or section 270 (related to insurance). 

3 ‘‘(d) SPECIAL RULE FOR INSURANCE.—The seller of 

4 insurance that is treated as imported under section 270 

5 shall be liable for the collection of the tax imposed by sub6 section (a) on the insurance and for paying such tax to 

7 the Secretary. The first sentence of subsection (b) (relat8 ing to the person liable for the tax) shall apply to insur9 ance only to the extent that the seller of the insurance 

10 services does not collect such tax. 

11 ‘‘SEC. 283. GENERAL RULES FOR THE IMPORT TAX. 

12 ‘‘ ‘Import tax’ means the tax imposed by section 281 

13 on the import of property and the tax imposed by section 

14 282 on the import of services. 

15 ‘‘Subchapter L—Transition Rules 

‘‘Sec. 290. Amortization of transition basis. 

16 ‘‘SEC. 290. AMORTIZATION OF TRANSITION BASIS. 

17 ‘‘(a) TRANSITION BASIS DEDUCTION.—The ‘transi18 tion basis deduction’ for a taxable year is the sum of the 

19 amortization allowance determined under this section for 

20 the taxable year. 

21 ‘‘(b) TREATMENT OF INTEREST FLOWS.—Interest 

22 flows between non-financial businesses shall be treated as 

23 under current law, phased out over 5 years. 


rfrederick on DSKD9S0YB1PROD with BILLS
528 

•HR 4529 IH

1 ‘‘(c) AMORTIZATION RULES.—The amortization al2 lowance to all property placed in service before the effec3 tive date of this section shall be the lesser of— 

4 ‘‘(1) the amortization period under current law 

5 remaining on such date, or 

6 ‘‘(2) a 5-year ratable period beginning on such 

7 date. 

8 ‘‘Subchapter M—Rules for Administration, 

9 Consolidated Returns 

‘‘Sec. 301. Returns, due dates, etc. 

‘‘Sec. 302. Consolidated returns. 

10 ‘‘SEC. 301. RETURNS, DUE DATES, ETC. 

11 ‘‘(a) IN GENERAL.—Until subtitle F is amended to 

12 reflect the adoption of this chapter, the rules of subtitle 

13 F relating to C corporations shall apply to business enti14 ties with respect to— 

15 ‘‘(1) returns and records; 

16 ‘‘(2) time and place for paying tax; 

17 ‘‘(3) assessment of taxes; 

18 ‘‘(4) collections and liens; 

19 ‘‘(5) abatements, credits, and refunds; 

20 ‘‘(6) interest on underpayments and overpay21 ments; 

22 ‘‘(7) additions to tax and penalties; 

23 ‘‘(8) closing agreements and compromises; 

24 ‘‘(9) crimes; 


rfrederick on DSKD9S0YB1PROD with BILLS
529 

•HR 4529 IH

1 ‘‘(10) judicial proceedings; 

2 ‘‘(11) discovery of liability and enforcement; 

3 and 

4 ‘‘(12) estimated taxes. 

5 ‘‘(b) INDIVIDUALS ENGAGING IN BUSINESS ACTIVI6 TIES.—Under rules prescribed by the Secretary, individ7 uals engaging in business activities on their own or with 

8 their spouses shall be permitted to file their business con9 sumption tax returns with their individual tax returns and 

10 shall be subject to estimated tax rules for individual in11 come tax returns. Such rules shall include rules to prevent 

12 the avoidance or abuse of this chapter and chapter 1. 

13 ‘‘SEC. 302. CONSOLIDATED RETURNS. 

14 ‘‘(a) IN GENERAL.—Business entities may file con15 solidated returns of business consumption tax if they 

16 would have been permitted to file consolidated returns 

17 under section 1501 of the Internal Revenue Code and such 

18 section were applied by treating each business entity as 

19 a corporation and its owners or partners as shareholders. 

20 ‘‘(b) FINANCIAL INSTITUTIONS.—Financial inter21 mediation businesses may be included in consolidated re22 turns. 

23 ‘‘(c) INTERCOMPANY TRANSACTIONS.—In computing 

24 the gross profits of a consolidated group, intercompany 

25 transactions can be taken into account, or at the election 


rfrederick on DSKD9S0YB1PROD with BILLS
530 

•HR 4529 IH

1 of the filer, be disregarded (except in the case of trans2 actions with financial intermediation businesses). 

3 ‘‘Subchapter N—Definitions and Rules of 

4 Application 

‘‘Sec. 310. Definitions. 

‘‘Sec. 311. Rules of application. 

5 ‘‘SEC. 310. DEFINITIONS. 

6 ‘‘When used in this chapter, where not otherwise dis7 tinctly expressed or manifestly incompatible with the in8 tent thereof— 

9 ‘‘(1) INTERNAL REVENUE CODE OF 1986.—‘In10 ternal Revenue Code of 1986’ means the Internal 

11 Revenue Code of 1986 as in effect immediately be12 fore the enactment of the Competitive American 

13 Business Tax. 

14 ‘‘(2) UNITED STATES.—‘United States’ means 

15 the States and the District of Columbia. 

16 ‘‘SEC. 311. RULES OF APPLICATION. 

17 ‘‘(a) DEFINITIONS.—Any definition included in this 

18 chapter shall apply for all purposes of this chapter un19 less— 

20 ‘‘(1) such definition is limited to the purposes 

21 of a particular chapter, section, or subsection, or 

22 ‘‘(2) the definition clearly would not be applica23 ble in a particular context. 


rfrederick on DSKD9S0YB1PROD with BILLS
531 

•HR 4529 IH

1 ‘‘(b) INTERPRETATIONS CONSISTENT WITH INTER2 NAL REVENUE CODE OF 1986.—Terms not defined in this 

3 chapter or elsewhere in this title, but defined in the Inter4 nal Revenue Code of 1986, shall be interpreted in a man5 ner consistent with the Internal Revenue Code of 1986, 

6 except to the extent such interpretation would be incon7 sistent with the principles and purposes of this chapter.’’. 

8 (b) The amendments made by this section shall be 

9 effective on January 1, 2011, except to the extent other10 wise specifically provided in the text of such amendments. 

11 SEC. 603. REPEAL OF CHAPTER 6. 

12 Chapter 6 of the Code (relating to consolidated re13 turns) is repealed as of January 1, 2011. 

14 TITLE VII—JOB TRAINING 

15 RESULTS ACT OF 2010 

16 SEC. 701. SHORT TITLE. 

17 This title may be cited as the ‘‘Job Training Results 

18 Act of 2010’’. 

19 SEC. 702. PURPOSE. 

20 The purpose of this title is to ensure accountability 

21 and job training results in Federal job training programs. 


rfrederick on DSKD9S0YB1PROD with BILLS
532 

•HR 4529 IH

1 SEC. 703. IMPROVEMENT OF JOB TRAINING PROGRAMS; 

2 PERFORMANCE METRICS FOR WIA JOB 

3 TRAINING PROGRAMS. 

4 Title V of the Workforce Investment Act of 1998 (20 

5 U.S.C. 9271 et seq.) is amended— 

6 (1) by redesignating section 507 as section 510; 

7 and 

8 (2) by inserting after section 506, the following: 

9 ‘‘SEC. 507. IMPROVEMENT OF JOB TRAINING PROGRAMS. 

10 ‘‘(a) GENERAL RULES.— 

11 ‘‘(1) GRANT COMPETITION.—In order to en12 courage competition under the grant programs for 

13 providers of job training programs authorized under 

14 this Act, any grants under such grant programs 

15 shall be awarded on a competitive basis. 

16 ‘‘(2) PRIORITY.—In awarding grants under this 

17 Act, the Secretary shall give priority to applicants 

18 that leverage private resources. 

19 ‘‘(3) GRANT RENEWAL.— 

20 ‘‘(A) THRESHOLD DETERMINATION.—The 

21 Secretary shall not renew a grant for a provider 

22 of a training program under this Act that fails 

23 to demonstrate, in accordance with the perform24 ance measures described section 508(b), that at 

25 least 50 percent of the participants of such pro26 gram were employed for at least 1 year in an 


rfrederick on DSKD9S0YB1PROD with BILLS
533 

•HR 4529 IH

1 occupation related to the training provided 

2 under the program. 

3 ‘‘(B) PRIORITY.—In renewing grants for 

4 providers who meet the requirement described 

5 in subparagraph (A), the Secretary shall give 

6 priority to those providers that have the great7 est percentage of participants who— 

8 ‘‘(i) were employment for at least 1 

9 year in an occupation related to the train10 ing provided under the program; and 

11 ‘‘(ii) as a result of the training pro12 vided under the program— 

13 ‘‘(I) have the highest income lev14 els; and 

15 ‘‘(II) the lowest percentage of 

16 participants receiving Federal assist17 ance. 

18 ‘‘(b) EXCEPTIONS.—Subsection (a) shall not apply to 

19 State allotments made under sections 127 and 132. 

20 ‘‘(c) ENROLLMENT PROHIBITION AND REQUIRE21 MENT.— 

22 ‘‘(1) PROHIBITION.—A provider of a job train23 ing program under this Act may not in any way 

24 limit recruitment for, or enrollment in, such pro25 gram to individuals who are more likely to be sucVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00533 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
534 

•HR 4529 IH

1 cessful in obtaining employment or earning a higher 

2 income after the completion of the program, as com3 pared to other individuals. 

4 ‘‘(2) REQUIREMENT.—An individual who par5 ticipates in, or receives any service under, a training 

6 program shall be considered to be enrolled as a par7 ticipant in the program. 

8 ‘‘(d) DEFINITIONS.—For purposes of this section and 

9 section 508: 

10 ‘‘(1) FEDERAL ASSISTANCE.— 

11 ‘‘(A) IN GENERAL.—The term ‘Federal as12 sistance’ includes— 

13 ‘‘(i) supplemental nutrition assistance 

14 authorized under the Food and Nutrition 

15 Act of 2008 (7 U.S.C. 2011 et seq.); 

16 ‘‘(ii) the case where a participant’s 

17 adjusted gross income (or, if greater, 

18 earned income) for the most recently ended 

19 taxable year exceeds the amount of ad20 justed gross income, or earned income, as 

21 the case may be, which would cause the 

22 credit allowable to the participant for such 

23 taxable year under paragraph (1) of sec24 tion 32(a) of the Internal Revenue Code of 


rfrederick on DSKD9S0YB1PROD with BILLS
535 

•HR 4529 IH

1 1986 to be reduced by reason of paragraph 

2 (2) of such section; 

3 ‘‘(iii) supplemental security income 

4 benefits under title XVI of the Social Secu5 rity Act (42 U.S.C. 1382 et seq.); 

6 ‘‘(iv) assistance under the State med7 icaid program under title XIX of the Social 

8 Security Act (42 U.S.C. 1396 et seq.); and 

9 ‘‘(v) benefits under the temporary as10 sistance for needy families program funded 

11 under part A of title IV of the Social Secu12 rity Act (42 U.S.C. 601 et seq.). 

13 ‘‘(B) DEFINED TERMS.—The terms ‘ad14 justed gross income’, ‘earned income’, and 

15 ‘phaseout amount’ shall have the respective 

16 meanings given such terms by section 32 of the 

17 Internal Revenue Code of 1986. 

18 ‘‘(2) JOB TRAINING PROGRAM.—The term ‘job 

19 training program’ includes the following programs: 

20 ‘‘(A) Programs for migrant youth author21 ized under section 127. 

22 ‘‘(B) Native American Programs author23 ized under section 166. 

24 ‘‘(C) Migrant and seasonal farm workers 

25 programs authorized under section 167. 


rfrederick on DSKD9S0YB1PROD with BILLS
536 

•HR 4529 IH

1 ‘‘(D) Youth Opportunity Grant authorized 

2 under section 169. 

3 ‘‘(E) Grants to States for Incarcerated 

4 Youth Offenders authorized under section 171. 

5 ‘‘(F) Programs for the reintegration of ex6 offenders authorized under section 171. 

7 ‘‘(G) Responsible Reintegration of Youth 

8 Offenders program authorized under section 

9 171. 

10 ‘‘(H) Program of Competitive Grants for 

11 Worker Training and Placement in High 

12 Growth and Emerging Industry Sectors author13 ized under section 171. 

14 ‘‘(I) Energy Efficiency and Renewable 

15 Worker Training Programs authorized under 

16 section 171(e). 

17 ‘‘(J) Youthbuild Program authorized under 

18 section 173A. 

19 ‘‘(K) Veterans’ Workforce Investment Pro20 gram authorized under section 168. 

21 ‘‘(L) The program of workforce investment 

22 activities for youth authorized under chapter 4 

23 of subtitle B of title I. 


rfrederick on DSKD9S0YB1PROD with BILLS
537 

•HR 4529 IH

1 ‘‘(M) The program of workforce invest2 ment activities for adults authorized under 

3 chapter 5 of subtitle B of title I. 

4 ‘‘(N) The program of workforce investment 

5 activities for dislocated workers under chapter 5 

6 of subtitle B of title I. 

7 ‘‘(O) Job Corps program authorized under 

8 subtitle C of title I. 

9 ‘‘(P) The Adult Education and Family Lit10 eracy Act authorized under title II. 

11 ‘‘(3) PARTICIPANT.—The term ‘participant’ 

12 means an individual who participated in, or received 

13 a service under, a job training program that is fund14 ed under this Act. 

15 ‘‘(4) PROVIDER.—The term ‘provider’— 

16 ‘‘(A) has the meaning given the term ‘eligi17 ble provider’ in section 101(12); 

18 ‘‘(B) has the meaning given the term ‘serv19 ice provider’ in section 142(10); and 

20 ‘‘(C) means any other agency, entity, or 

21 provider that is responsible for administering, 

22 or carrying out, a job training program under 

23 this Act. 


rfrederick on DSKD9S0YB1PROD with BILLS
538 

•HR 4529 IH

1 ‘‘SEC. 508. PERFORMANCE MEASURES FOR JOB TRAINING 

2 PROGRAMS. 

3 ‘‘(a) IN GENERAL.—Notwithstanding any other pro4 vision of law, each provider of a job training program 

5 under this Act shall, annually— 

6 ‘‘(1) use the performance measures described in 

7 subsection (b) to assess the effectiveness of such job 

8 training program; and 

9 ‘‘(2) submit the results of such assessment to 

10 the Secretary. 

11 ‘‘(b) PERFORMANCE MEASURES.—In carrying out 

12 the assessment described in subsection (a), a provider of 

13 a job training program shall include the following perform14 ance measures in the assessment: 

15 ‘‘(1) The type of job training each participant 

16 received under the program and the program costs 

17 (such as tuition and fees) for each participant. 

18 ‘‘(2) The employment status of each partici19 pant— 

20 ‘‘(A) 1 year after the participant completes 

21 the program; 

22 ‘‘(B) 3 years after the participant com23 pletes the program; and 

24 ‘‘(C) 5 years after the participant com25 pletes the program. 


rfrederick on DSKD9S0YB1PROD with BILLS
539 

•HR 4529 IH

1 ‘‘(3) The percentage and number of partici2 pants who obtained employment after the completion 

3 of the program in an occupation related to the train4 ing provided under the program. 

5 ‘‘(4) The income level of each participant— 

6 ‘‘(A) 2 years prior to participating in the 

7 program; and 

8 ‘‘(B) every year, up to 5 years, after par9 ticipation in the program. 

10 ‘‘(5) The percentage and number of partici11 pants receiving Federal assistance— 

12 ‘‘(A) prior to participating in the program; 

13 and 

14 ‘‘(B) every year, up to 5 years, after par15 ticipation in the program. 

16 ‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec17 tion shall be construed to prohibit a provider of a job 

18 training program from assessing the program by using (in 

19 addition to the performance measures described in sub20 section (b)) a performance measure— 

21 ‘‘(1) not described in subsection (b); or 

22 ‘‘(2) that was being used by the provider on the 

23 day before the date of the enactment of this section. 

24 ‘‘(d) AUDITS.— 


rfrederick on DSKD9S0YB1PROD with BILLS
540 

•HR 4529 IH

1 ‘‘(1) IN GENERAL.—The Inspector General of 

2 the Department of Labor and the Comptroller Gen3 eral of the United States shall conduct periodic au4 dits to ensure that providers of job training pro5 grams are— 

6 ‘‘(A) accurately assessing the programs, in7 cluding the outcomes of all participants of such 

8 programs, using the performance measures re9 quired under this section; and 

10 ‘‘(B) in compliance with section 507(c). 

11 ‘‘(2) REQUIREMENTS.— 

12 ‘‘(A) IN GENERAL.—In carrying out any 

13 audit under this section (other than any initial 

14 audit survey or any audit investigating possible 

15 criminal or fraudulent conduct), either directly 

16 or through grant or contract, the Inspector 

17 General of the Department of Labor and the 

18 Comptroller General of the United States shall 

19 furnish to the providers of job training pro20 grams, or other entity to be audited, advance 

21 notification of the overall objectives and pur22 poses of the audit, and any extensive record23 keeping or data requirements to be met, not 

24 later than 14 days (or as soon as practicable), 

25 prior to the commencement of the audit. 


rfrederick on DSKD9S0YB1PROD with BILLS
541 

•HR 4529 IH

1 ‘‘(B) NOTIFICATION REQUIREMENT.—If 

2 the scope, objectives, or purposes of the audit 

3 change substantially during the course of the 

4 audit, the entity being audited shall be notified 

5 of the change as soon as practicable. 

6 ‘‘(C) ADDITIONAL REQUIREMENT.—The 

7 reports on the results of such audits shall cite 

8 the law, regulation, policy, or other criteria ap9 plicable to any finding contained in the reports. 

10 ‘‘(D) RULE OF CONSTRUCTION.—Nothing 

11 contained in this title shall be construed so as 

12 to be inconsistent with the Inspector General 

13 Act of 1978 (5 U.S.C. App.) or government au14 diting standards issued by the Comptroller Gen15 eral of the United States.’’. 

16 SEC. 704. OTHER JOB TRAINING PROGRAMS. 

17 (a) IN GENERAL.—The appropriate Secretaries 

18 shall— 

19 (1) require that the providers of job training 

20 programs, as such term is defined by such Secre21 taries, under the programs described in subsection 

22 (b), conduct an annual assessment of the programs 

23 in accordance with section 508(b) of the Workforce 

24 Investment Act of 1998; and 


rfrederick on DSKD9S0YB1PROD with BILLS
542 

•HR 4529 IH

1 (2) award grants under the programs described 

2 in subsection (b) on a competitive basis. 

3 (b) JOB TRAINING PROGRAMS.—Subsection (a) shall 

4 apply to the following programs: 

5 (1) The Disabled Veterans Outreach Program 

6 authorized under section 4103A of title 38, United 

7 States Code. 

8 (2) The Local Veterans’ Employment Rep9 resentative Program authorized under section 4104 

10 of title 38, United States Code. 

11 (3) The Homeless Veterans’ Reintegration Pro12 gram authorized under section 2021 of title 38, 

13 United States Code. 

14 (4) Vocational Rehabilitation for Disabled Vet15 erans authorized under chapter 31 of title 38, 

16 United States Code. 

17 (5) The National Guard Challenge Program au18 thorized under section 509 of title 32, United States 

19 Code. 

20 (6) The Older American Community Service 

21 Program authorized under title V of the Older 

22 Americans Act of 1965 (42 U.S.C. 3056 et seq.). 

23 (7) The Native American Vocational and Tech24 nical Education Program authorized under section 


rfrederick on DSKD9S0YB1PROD with BILLS
543 

•HR 4529 IH

1 116 of the Carl D. Perkins Career and Technical 

2 Education Act of 2006 (29 U.S.C. 741). 

3 (8) Tribally Controlled Post-secondary Voca4 tional and Technical Institutions programs author5 ized under section 117 of the Carl D. Perkins Ca6 reer and Technical Education Act of 2006 (20 

7 U.S.C. 2327). 

8 (9) The Native Hawaiian Vocational Education 

9 Program authorized under section 116 of the Carl 

10 D. Perkins Career and Technical Education Act of 

11 2006 (29 U.S.C. 741). 

12 (10) Career and Technical Assistance to the 

13 States authorized under section title I of the Carl D. 

14 Perkins Career and Technical Education Act of 

15 2006 (20 U.S.C. 2321 et seq.). 

16 (11) Tech Prep Education Program authorized 

17 under title II of the Carl D. Perkins Career and 

18 Technical Education Act of 2006 (29 U.S.C. 2371 

19 et seq.). 

20 (12) Migrant and Seasonal Farmworkers Pro21 gram authorized under section 304 of the Rehabili22 tation Act of 1973 (29 U.S.C. 774). 

23 (13) Projects with industry authorized under 

24 section 611 of the Rehabilitation Act of 1973 (29 

25 U.S.C. 795). 


rfrederick on DSKD9S0YB1PROD with BILLS
544 

•HR 4529 IH

1 (14) Vocational Rehabilitation Services author2 ized under title I of the Rehabilitation Act of 1973 

3 (29 U.S.C. 720 et seq.). 

4 (15) American Indian Vocational Rehabilitation 

5 Services authorized under part C of title I of the Re6 habilitation Act of 1973 (29 U.S.C. 741 et seq.). 

7 (16) Coordination of Migrant Education Activi8 ties authorized under section 1308 of the Elemen9 tary and Secondary Education Act of 1965 (20 

10 U.S.C. 6398). 

11 (17) Programs authorized under the Commu12 nity Services Block Grant Act (42 U.S.C. 9901 et 

13 seq.). 

14 (18) The Tribal Work Grants program author15 ized under section 412(a)(2) of Social Security Act 

16 (42 U.S.C. 612(a)(2)). 

17 (19) Job training grants authorized under sec18 tion 414(c) of the American Competitiveness and 

19 Workforce Improvement Act of 1998 (29 U.S.C. 

20 2916a). 

21 (20) Indian Employment, Job Placement As22 sistance, and Vocational Training programs author23 ized under the Indian Self-Determination Act (25 

24 U.S.C. 450 et seq.). 


rfrederick on DSKD9S0YB1PROD with BILLS
545 

•HR 4529 IH

1 (21) Programs authorized under part A of title 

2 IV of the Social Security Act (42 U.S.C. 601 et 

3 seq.). 

4 (22) Refugee assistance programs authorized 

5 under chapter 2 of title IV of the Immigration and 

6 Nationality Act (8 U.S.C. 1521 et seq.). 

7 (23) Targeted assistance programs for refugees 

8 and entrants authorized under chapter 2 of title IV 

9 of the Immigration and Nationality Act (8 U.S.C. 

10 1521 et seq.). 

11 (24) Programs authorized under section 16(h) 

12 of the Food and Nutrition Act of 2008 (7 U.S.C. 

13 2025(h)). 

14 (25) The Federal Prisoner Reentry Initiative 

15 authorized under section 231(i) of Second Chance 

16 Act of 2007 (42 U.S.C. 17541(i)). 

17 (26) Employment services authorized under the 

18 Wagner-Peyser Act of 1933 (29 U.S.C. 49 et seq.). 

19 (27) Training programs under section 236 of 

20 part II of subchapter B of chapter 2 of title II of 

21 the Trade Adjustment Assistance Act of 1974 (19 

22 U.S.C. 2296). 

23 (c) DEFINITION.—The term ‘‘appropriate Secretary’’ 

24 means the head of the Federal agency who exercises adVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00545 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
546 

•HR 4529 IH

1 ministrative authority over a program described in sub2 section (b). 

3 SEC. 705. TRANSPARENCY. 

4 Section 136(d)(3)(A) of the Workforce Investment 

5 Act of 1998 (29 U.S.C. 2871) is amended to read as fol6 lows: 

7 ‘‘(A) shall make available to the general 

8 public the information contained in such reports 

9 and the results of an assessment using the per10 formance measures described in section 508(b) 

11 with respect to the workforce investment activi12 ties authorized under this subtitle— 

13 ‘‘(i) through publication; and 

14 ‘‘(ii) by posting such information and 

15 results on the Internet website of the De16 partment of Labor in a format and lan17 guage understandable by the general pub18 lic.’’. 

19 SEC. 706. EVALUATIONS. 

20 (a) EVALUATIONS.—Section 172 of the Workforce 

21 Investment Act of 1998 (29 U.S.C. 2917) is amended— 

22 (1) in subsection (a)— 

23 (A) in the matter preceding paragraph 

24 (1)— 


rfrederick on DSKD9S0YB1PROD with BILLS
547 

•HR 4529 IH

1 (i) by inserting ‘‘impact’’ after ‘‘con2 tinuing’’; and 

3 (ii) by inserting ‘‘impact’’ after 

4 ‘‘Such’’; and 

5 (B) in paragraph (1)— 

6 (i) by striking ‘‘the general effective7 ness’’ and inserting ‘‘outcomes measuring 

8 of the effectiveness’’; 

9 (ii) in subparagraph (A), by striking 

10 ‘‘and’’ after the semicolon; 

11 (iii) in subparagraph (B)— 

12 (I) by striking ‘‘to the extent fea13 sible,’’; and 

14 (II) by inserting ‘‘and’’ after the 

15 semicolon; and 

16 (iv) by adding at the end the fol17 lowing: 

18 ‘‘(C) increase the incomes and hourly 

19 wages of participants in comparison to similarly 

20 situated individuals who did not participate in 

21 such programs and activities.’’; 

22 (2) in subsection (b), by inserting ‘‘impact’’ 

23 after ‘‘conduct’’; 

24 (3) in subsection (c)— 


rfrederick on DSKD9S0YB1PROD with BILLS
548 

•HR 4529 IH

1 (A) by striking ‘‘Evaluations’’ and insert2 ing ‘‘Impact evaluations’’; 

3 (B) by inserting ‘‘intervention and’’ after 

4 ‘‘, including the use of’ ’’ 

5 (C) by inserting ‘‘The Secretary for each 

6 impact evaluation shall fulfill all the notification 

7 and reporting requirements under subsections 

8 (d), (e), and (f).’’ after ‘‘assignment methodolo9 gies.’’; and 

10 (D) by striking ‘‘by the end of fiscal year 

11 2005’’ and inserting ‘‘not later than 3 years 

12 after the date of the enactment of the Job 

13 Training Results Act of 2010’’; 

14 (4) by redesignating subsections (c) through (f), 

15 as subsections (d) through (g), respectively; and 

16 (5) by inserting after subsection (c), the fol17 lowing: 

18 ‘‘(a) NOTIFICATION OF IMPACT EVALUATION

19 PROGRESS.— 

20 ‘‘(1) REPORTS TO CONGRESS.—Not later than 

21 1 year after the date of the enactment of the Job 

22 Training Results Act of 2010, and annually there23 after, the Secretary shall transmit to the Committee 

24 on Education and the Labor, and the Committee on 

25 the Budget, of the House of Representatives and the 


rfrederick on DSKD9S0YB1PROD with BILLS
549 

•HR 4529 IH

1 Committee on Health, Education, Labor, and Pen2 sions, and the Committee on Budget, of the Senate 

3 a report on the progress the Secretary is making in 

4 evaluating the programs and activities carried out 

5 under this section. 

6 ‘‘(2) AVAILABILITY TO GENERAL PUBLIC.—Not 

7 later than 1 year after the date of the enactment of 

8 the Job Training Results Act of 2010, and annually 

9 thereafter not later than 30 days after the trans10 mission of an annual report under paragraph (1), 

11 the Secretary shall make available the reports to the 

12 general public on the Internet website of the Depart13 ment of Labor.’’; 

14 (6) by amending subsection (e) (as so redesig15 nated), by inserting ‘‘impact’’ after ‘‘carrying out 

16 an’’; 

17 (7) by amending subsection (f) (as so redesig18 nated)— 

19 (A) by striking ‘‘Workforce’’ and inserting 

20 ‘‘, Labor and the Committee on the Budget,’’; 

21 (B) by striking ‘‘Committee on Labor and 

22 Human Resources’’ and inserting ‘‘Committee 

23 on Health, Education, Labor, and Pensions, 

24 and the Committee on Budget,’’; 


rfrederick on DSKD9S0YB1PROD with BILLS
550 

•HR 4529 IH

1 (C) by striking ‘‘30 days’’ and inserting 

2 ‘‘60 days’’; and 

3 (D) by inserting the following: ‘‘All reports 

4 transmitted under this subsection shall be made 

5 available to the general public on the Internet 

6 website of the Department of Labor.’’; and 

7 (8) by adding at the end the following: 

8 ‘‘(h) GAO REPORT.—Not later than 3 years after the 

9 date of the enactment of the Job Training Results Act 

10 of 2010, and every 3 years thereafter, the Comptroller 

11 General of the United States shall conduct a study and 

12 submit a report to Congress that evaluates— 

13 ‘‘(1) the effectiveness of the impact evaluations 

14 conducted under this section; and 

15 ‘‘(2) the impact of such evaluations on the as16 sessments conducted under section 508(b) with re17 spect to the programs and activities carried out 

18 under this title. 

19 ‘‘(i) DEFINITIONS.—In this section: 

20 ‘‘(1) IMPACT EVALUATION.—The term ‘impact 

21 evaluation’ means an evaluative study that evaluates, 

22 in accordance with subsection (a), the outcomes of 

23 programs and activities carried out under this title, 

24 including the impact on social conditions such pro25 grams and activities are intended to improve. 


rfrederick on DSKD9S0YB1PROD with BILLS
551 

•HR 4529 IH

1 ‘‘(2) SCIENTIFIC RANDOM ASSIGNMENT METH2 ODOLOGIES.—The term ‘scientific random assign3 ment methodologies’ means research designs con4 ducted in program settings in which intervention 

5 and control groups are— 

6 ‘‘(A) formed by random assignment; and 

7 ‘‘(B) compared on the basis of outcome 

8 measures for the purpose of determining the 

9 impact of the programs and activities carried 

10 out under this title on participants. 

11 ‘‘(3) CONTROL GROUP.—The term ‘control 

12 group’ means a group of individuals— 

13 ‘‘(A) who did not participate in the pro14 grams and activities carried out under this title; 

15 and 

16 ‘‘(B) whose outcome measures are com17 pared to the outcome measures of individuals in 

18 an intervention group. 

19 ‘‘(4) INTERVENTION GROUP.—The term ‘inter20 vention group’ means a group of individuals— 

21 ‘‘(A) who participated in the programs and 

22 activities carried out under this title; and 

23 ‘‘(B) whose outcome measures are com24 pared to the outcome measures of individuals in 

25 a control group.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
552 

•HR 4529 IH

1 SEC. 707. ENCOURAGING INNOVATION. 

2 (a) STATE BLOCK GRANT.—Section 192 (29 U.S.C. 

3 2942) is amended to read as follows: 

4 ‘‘SEC. 192. JOB TRAINING IMPROVEMENT PLAN. 

5 ‘‘(a) STATE BLOCK GRANT.— 

6 ‘‘(1) IN GENERAL.—Not earlier than 1 year of 

7 the date of the enactment of the ‘Job Training Re8 sults Act of 2010’, a State may submit to the Sec9 retary, and the Secretary (in cooperation with the 

10 appropriate Secretaries) may approve a Job Train11 ing Improvement Plan (in this section referred to as 

12 a ‘Plan’) submitted by a State pursuant to sub13 section (d) under which the State is authorized to— 

14 ‘‘(A) integrate any of the funds that the 

15 State is eligible to receive under the job train16 ing programs described in subsection (g) to im17 prove job training results in the State; and 

18 ‘‘(B) waive, in accordance with the Plan 

19 and except as otherwise indicated in this sub20 section, any of the statutory and regulatory re21 quirements— 

22 ‘‘(i) applicable under this title to local 

23 areas; and 

24 ‘‘(ii) applicable under the programs 

25 described in subsection (g), the funds of 


rfrederick on DSKD9S0YB1PROD with BILLS
553 

•HR 4529 IH

1 which will be integrated under a Plan sub2 mitted under this section. 

3 ‘‘(2) ELIGIBILITY.—In order for a State’s Plan 

4 to be approved under this section, the providers of 

5 training programs in the State shall have carried out 

6 at least 1 assessment pursuant to section 508 with 

7 respect to such programs. 

8 ‘‘(b) PERIODS.— 

9 ‘‘(1) IN GENERAL.—The Secretary (in coopera10 tion with other appropriate Secretaries) may— 

11 ‘‘(A) approve a State’s Plan under this 

12 section for a period of not more than 3 years; 

13 and 

14 ‘‘(B) renew a State’s Plan under this sec15 tion for additional 3-year periods if the State 

16 demonstrates a significant improvement in job 

17 training results at the end of the preceding 3- 

18 year period. 

19 ‘‘(c) DEFINITIONS.—For purposes of this section: 

20 ‘‘(1) JOB TRAINING RESULTS.— 

21 ‘‘(A) IN GENERAL.—The term ‘job training 

22 results’ means an improvement in the assess23 ment carried out pursuant to section 508 with 

24 respect to the job training programs conducted 

25 in a State, as compared to the assessment of 


rfrederick on DSKD9S0YB1PROD with BILLS
554 

•HR 4529 IH

1 such programs carried out in the most recent 

2 preceding fiscal year. 

3 ‘‘(B) IMPROVEMENTS.—An improvement 

4 in an assessment described in subparagraph (A) 

5 shall include— 

6 ‘‘(i) an increase in the percentage of 

7 participants— 

8 ‘‘(I) who were employed for at 

9 least 1 year in an occupation related 

10 to the training provided under the 

11 program; 

12 ‘‘(II) who are employed at higher 

13 income levels; and 

14 ‘‘(ii) a decrease in the percentage of 

15 participants who are receiving Federal as16 sistance 

17 ‘‘(2) APPROPRIATE SECRETARY.—The term ‘ap18 propriate Secretary’ means the head of the Federal 

19 agency who exercises administrative authority over a 

20 program described in subsection (g). 

21 ‘‘(d) CONTENTS OF PLAN.—To have a Plan approved 

22 under this subsection, a State, after consultation with 

23 State and local workforce investment boards, shall submit 

24 a Plan to the Secretary at such time, in such manner, 


rfrederick on DSKD9S0YB1PROD with BILLS
555 

•HR 4529 IH

1 and containing such information as the Secretary may re2 quire, including— 

3 ‘‘(1) identification of the funds the State is eli4 gible to receive under the job training programs de5 scribed in subsection (g) that will be integrated; 

6 ‘‘(2) a description of how the Plan, including 

7 how the integration of funds under the Plan will re8 sult in a significant improvement in job training re9 sults in the State; 

10 ‘‘(3) a description of how the State will main11 tain accurate records of the performance measures 

12 for the assessments required pursuant to section 

13 508; 

14 ‘‘(4) assurances that in carrying out the Plan— 

15 ‘‘(A) the State will serve populations con16 sistent with the populations served by the funds 

17 which are being integrated, and will provide 

18 such populations universal access to work ready 

19 services as described in section 134(d)(2) of 

20 this Act; 

21 ‘‘(B) of the funds expended under the plan 

22 each fiscal year, not more than 10 percent of 

23 such funds will be expended on the costs of ad24 ministration (as defined by the Secretary); and 


rfrederick on DSKD9S0YB1PROD with BILLS
556 

•HR 4529 IH

1 ‘‘(C) the State will comply with require2 ments under this title and the programs to be 

3 integrated relating to wage and labor standards 

4 (including nondisplacement provisions), griev5 ance procedures and judicial review, and non6 discrimination; 

7 ‘‘(5) identification of private resources that will 

8 be used to assist in improving job training results; 

9 and 

10 ‘‘(6) a description of the job training awareness 

11 campaign that the State will carry out as part of 

12 such Plan. 

13 ‘‘(e) INTEGRATION OF JOB TRAINING PROGRAMS AU14 THORIZED.— 

15 ‘‘(1) AUTHORIZATION FOR INTEGRATION.—In 

16 carrying out this subsection, the Secretary, in co17 operation with the appropriate Secretaries, shall, 

18 upon the approval of the Plan submitted under sub19 section (d), authorize a State to integrate, as de20 scribed in paragraph (2) the portion of the funds the 

21 State is eligible to receive under the programs de22 scribed in subsection (g) to assist in implementing 

23 such Plan. 


rfrederick on DSKD9S0YB1PROD with BILLS
557 

•HR 4529 IH

1 ‘‘(2) INTEGRATION.—The authorization shall 

2 give the State the authority to integrate, in accord3 ance with the State’s Plan, funds the State— 

4 ‘‘(A) is eligible to receive under the pro5 grams described in subsection (g); and 

6 ‘‘(B) has identified under the Plan as 

7 funds to be integrated. 

8 ‘‘(f) EFFECT ON PROGRAM REQUIREMENTS.—The 

9 State may use the integrated funds used to carry out any 

10 of the activities authorized under any of the programs de11 scribed in subsection (g), but shall not be required to carry 

12 out any requirements of the statutes authorizing the pro13 grams, except as otherwise specified in this section. 

14 ‘‘(g) JOB TRAINING PROGRAMS.—Funds that shall 

15 be made available for integration under an approved Plan 

16 are funds provided under the following programs: 

17 ‘‘(1) Programs for migrant youth authorized 

18 under section 127. 

19 ‘‘(2) Native American Programs authorized 

20 under section 166. 

21 ‘‘(3) Migrant and seasonal farm workers pro22 grams authorized under section 167. 

23 ‘‘(4) Youth Opportunity Grant authorized 

24 under section 169. 


rfrederick on DSKD9S0YB1PROD with BILLS
558 

•HR 4529 IH

1 ‘‘(5) Grants to States for Incarcerated Youth 

2 Offenders authorized under section 171. 

3 ‘‘(6) Programs for the reintegration of ex-of4 fenders authorized under section 171. 

5 ‘‘(7) Responsible Reintegration of Youth Of6 fenders program authorized under section 171. 

7 ‘‘(8) Program of Competitive Grants for Work8 er Training and Placement in High Growth and 

9 Emerging Industry Sectors authorized under section 

10 171. 

11 ‘‘(9) Energy Efficiency and Renewable Worker 

12 Training Programs authorized under section 171(e). 

13 ‘‘(10) Youthbuild Program authorized under 

14 section 173A. 

15 ‘‘(11) Veterans’ Workforce Investment Program 

16 authorized under section 168. 

17 ‘‘(12) The program of workforce investment ac18 tivities for youth authorized under chapter 4 of sub19 title B of title I. 

20 ‘‘(13) The program of workforce investment ac21 tivities for adults authorized under chapter 5 of sub22 title B of title I. 

23 ‘‘(14) The program of workforce investment ac24 tivities for dislocated workers under chapter 5 of 

25 subtitle B of title I. 


rfrederick on DSKD9S0YB1PROD with BILLS
559 

•HR 4529 IH

1 ‘‘(15) The Adult Education and Family Lit2 eracy Act authorized under title II. 

3 ‘‘(16) The Disabled Veterans Outreach Pro4 gram authorized under section 4103A of title 38, 

5 United States Code. 

6 ‘‘(17) The Local Veterans’ Employment Rep7 resentative Program authorized under section 4104 

8 of title 38, United States Code. 

9 ‘‘(18) The Homeless Veterans’ Reintegration 

10 Program authorized under section 2021 of title 38, 

11 United States Code. 

12 ‘‘(19) Vocational Rehabilitation for Disabled 

13 Veterans authorized under chapter 31 of title 38, 

14 United States Code. 

15 ‘‘(20) The National Guard Challenge Program 

16 authorized under section 509 of title 32, United 

17 States Code. 

18 ‘‘(21) The Older American Community Service 

19 Program authorized under title V of the Older 

20 Americans Act of 1965 (42 U.S.C. 3056 et seq.). 

21 ‘‘(22) The Native American Vocational and 

22 Technical Education Program authorized under sec23 tion 116 of the Carl D. Perkins Career and Tech24 nical Education Act of 2006 (29 U.S.C. 741). 


rfrederick on DSKD9S0YB1PROD with BILLS
560 

•HR 4529 IH

1 ‘‘(23) Tribally Controlled Post-secondary Voca2 tional and Technical Institutions programs author3 ized under section 117 of the Carl D. Perkins Ca4 reer and Technical Education Act of 2006 (20 

5 U.S.C. 2327). 

6 ‘‘(24) The Native Hawaiian Vocational Edu7 cation Program authorized under section 116 of the 

8 Carl D. Perkins Career and Technical Education 

9 Act of 2006 (29 U.S.C. 741). 

10 ‘‘(25) Career and Technical Assistance to the 

11 States authorized under section title I of the Carl D. 

12 Perkins Career and Technical Education Act of 

13 2006 (20 U.S.C. 2321 et seq.). 

14 ‘‘(26) Tech Prep Education Program author15 ized under title II of the Carl D. Perkins Career and 

16 Technical Education Act of 2006 (29 U.S.C. 2371 

17 et seq.). 

18 ‘‘(27) Migrant and Seasonal Farmworkers Pro19 gram authorized under section 304 of the Rehabili20 tation Act of 1973 (29 U.S.C. 774). 

21 ‘‘(28) Projects with industry authorized under 

22 section 611 of the Rehabilitation Act of 1973 (29 

23 U.S.C. 795). 


rfrederick on DSKD9S0YB1PROD with BILLS
561 

•HR 4529 IH

1 ‘‘(29) Vocational Rehabilitation Services au2 thorized under title I of the Rehabilitation Act of 

3 1973 (29 U.S.C. 720 et seq.). 

4 ‘‘(30) American Indian Vocational Rehabilita5 tion Services authorized under part C of title I of 

6 the Rehabilitation Act of 1973 (29 U.S.C. 741 et 

7 seq.). 

8 ‘‘(31) Coordination of Migrant Education Ac9 tivities authorized under section 1308 of the Ele10 mentary and Secondary Education Act of 1965 (20 

11 U.S.C. 6398). 

12 ‘‘(32) Programs authorized under the Commu13 nity Services Block Grant Act (42 U.S.C. 9901 et 

14 seq.). 

15 ‘‘(33) The Tribal Work Grants program author16 ized under section 412(a)(2) of Social Security Act 

17 (42 U.S.C. 612(a)(2)). 

18 ‘‘(34) Job training grants authorized under sec19 tion 414(c) of the American Competitiveness and 

20 Workforce Improvement Act of 1998 (29 U.S.C. 

21 2916a). 

22 ‘‘(35) Indian Employment, Job Placement As23 sistance, and Vocational Training programs author24 ized under the Indian Self-Determination Act (25 

25 U.S.C. 450 et seq.). 


rfrederick on DSKD9S0YB1PROD with BILLS
562 

•HR 4529 IH

1 ‘‘(36) Programs authorized under part A of 

2 title IV of the Social Security Act (42 U.S.C. 601 

3 et seq.). 

4 ‘‘(37) Refugee assistance programs authorized 

5 under chapter 2 of title IV of the Immigration and 

6 Nationality Act (8 U.S.C. 1521 et seq.). 

7 ‘‘(38) Targeted assistance programs for refu8 gees and entrants authorized under chapter 2 of title 

9 IV of the Immigration and Nationality Act (8 

10 U.S.C. 1521 et seq.). 

11 ‘‘(39) Programs authorized under section 16(h) 

12 of the Food and Nutrition Act of 2008 (7 U.S.C. 

13 2025(h)). 

14 ‘‘(40) The Federal Prisoner Reentry Initiative 

15 authorized under section 231(i) of Second Chance 

16 Act of 2007 (42 U.S.C. 17541(i)). 

17 ‘‘(41) Employment services authorized under 

18 the Wagner-Peyser Act of 1933 (29 U.S.C. 49 et 

19 seq.). 

20 ‘‘(42) Training programs under section 236 of 

21 part II of subchapter B of chapter 2 of title II of 

22 the Trade Adjustment Assistance Act of 1974 (19 

23 U.S.C. 2296). 

24 ‘‘(h) PERFORMANCE MEASURES AND REPORTING.— 


rfrederick on DSKD9S0YB1PROD with BILLS
563 

•HR 4529 IH

1 ‘‘(1) PERFORMANCE MEASURES.—Each State 

2 with an approved Plan under this section shall carry 

3 out an assessment pursuant to section 508 of all the 

4 job training programs conducted in such State that 

5 receive funding under the Plan for each fiscal year 

6 the Plan is approved under this section. 

7 ‘‘(2) REPORTING.—Each State with an ap8 proved Plan under this section shall ensure that 

9 records are maintained and reports are submitted, in 

10 such form and containing such information, as the 

11 Secretary may require regarding the performance of 

12 job training programs funded pursuant to this sec13 tion. 

14 ‘‘(i) TECHNICAL ASSISTANCE AND EVALUATION.— 

15 ‘‘(1) TECHNICAL ASSISTANCE.—The Secretary 

16 shall provide such staff training, technical assist17 ance, and other activities as the Secretary deems ap18 propriate to support the implementation of this sec19 tion. 

20 ‘‘(2) EVALUATION.—The Secretary may require 

21 that States with an approved Plan under this section 

22 participate in an evaluation of job training programs 

23 funded pursuant to this subsection, including an 

24 evaluation using the techniques described in section 

25 172(c). 


rfrederick on DSKD9S0YB1PROD with BILLS
564 

•HR 4529 IH

1 ‘‘(j) PLAN REVIEW.— 

2 ‘‘(1) IN GENERAL.—Upon receipt of a Plan 

3 from the Governor, the Secretary shall consult with 

4 the appropriate Secretaries in reviewing and approv5 ing such plan. Such plan shall be approved if it 

6 meets the requirements described in subsection (d). 

7 ‘‘(2) PLAN APPROVAL.— 

8 ‘‘(A) 90-DAY PERIOD.—Subject to subpara9 graph (B), a Plan that is submitted to the Sec10 retary under this section shall be considered to 

11 be approved by the Secretary at the end of the 

12 90-day period beginning on the day the Sec13 retary receives the Plan, unless the Secretary 

14 denies the Plan during the 90-day period. 

15 ‘‘(B) 30-DAY EXTENSIONS.—If the Sec16 retary is in good faith negotiations with a State 

17 with respect to the State’s Plan— 

18 ‘‘(i) at the end of the 90-day period 

19 described in subparagraph (A), the Sec20 retary may have an additional 30 days to 

21 determine whether to approve the Plan; or 

22 ‘‘(ii) at the end of the 30 days de23 scribed in clause (i), the Secretary may 

24 have an additional 30 days to determine 

25 whether to approve the Plan. 


rfrederick on DSKD9S0YB1PROD with BILLS
565 

•HR 4529 IH

1 ‘‘(3) PLAN DENIAL.—In the case where the 

2 Secretary denies a Plan submitted by a State under 

3 this section, the Secretary shall— 

4 ‘‘(A) provide a written explanation to the 

5 State for the denial of the Plan; and 

6 ‘‘(B) make such written explanation acces7 sible to the general public. 

8 ‘‘(k) FEDERAL RESPONSIBILITIES.— 

9 ‘‘(1) INTERAGENCY MEMORANDUM OF UNDER10 STANDING.—Within 90 days following the date of 

11 enactment of this section, the Secretary and the ap12 propriate Secretaries shall enter into an interdepart13 mental memorandum of agreement providing for the 

14 implementation of the Plans with respect to the inte15 gration of funds administered by each Secretary. 

16 ‘‘(2) INTERAGENCY FUNDS TRANSFERS AU17 THORIZED.—The Secretary and the appropriate Sec18 retaries responsible for the programs that are in19 cluded in a Plan approved are authorized to take 

20 such action as may be necessary to provide for intra21 agency or interagency transfers of funds otherwise 

22 available to a State in order to further the purposes 

23 of this section.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
566 

•HR 4529 IH

1 SEC. 708. MAKING WIA TRAINING VOUCHERS MORE ACCES2 SIBLE AND FLEXIBLE. 

3 (a) USE OF FUNDS FOR EMPLOYMENT AND TRAIN4 ING ACTIVITIES.— 

5 (1) WORK READY SERVICES.—Section 

6 134(d)(2) (29 U.S.C. 2864(c)(2)) is amended— 

7 (A) in the heading, by striking ‘‘CORE

8 SERVICES’’ and inserting ‘‘WORK READY SERV9 ICES’’; 

10 (B) by striking ‘‘core services’’ and insert11 ing ‘‘work ready services’’; 

12 (C) by striking ‘‘paragraph (1)(A)’’ and in13 serting ‘‘paragraph (1)(A)(i)’’; 

14 (D) by striking ‘‘who are adults or dis15 located workers’’; 

16 (E) in subparagraph (A), by inserting 

17 ‘‘and assistance in obtaining eligibility deter18 minations under the other one-stop partner pro19 grams through such activities as assisting in 

20 the submission of applications, the provision of 

21 information on the results of such applications, 

22 the provision of intake services and information, 

23 and, where appropriate and consistent with the 

24 authorizing statute of the one-stop partner pro25 gram, determinations of eligibility’’ after ‘‘sub26 title’’; 


rfrederick on DSKD9S0YB1PROD with BILLS
567 

•HR 4529 IH

1 (F) by amending subparagraph (D) to 

2 read as follows: 

3 ‘‘(D) labor exchange services, including— 

4 ‘‘(i) job search and placement assist5 ance, and where appropriate career coun6 seling; 

7 ‘‘(ii) appropriate recruitment services 

8 for employers, including small employers, 

9 in the local area, which may include serv10 ices described in this subsection, including 

11 information and referral to specialized 

12 business services not traditionally offered 

13 through the one-stop delivery system; and 

14 ‘‘(iii) reemployment services provided 

15 to unemployment claimants, including 

16 claimants identified as in need of such 

17 services under the worker profiling system 

18 established under section 303(j) of the So19 cial Security Act (42 U.S.C. 503(j));’’; 

20 (G) in subparagraph (I), by inserting ‘‘and 

21 the administration of the work test for the un22 employment compensation system’’ after ‘‘com23 pensation’’; and 

24 (H) by striking subparagraph (H) and in25 serting the following: 


rfrederick on DSKD9S0YB1PROD with BILLS
568 

•HR 4529 IH

1 ‘‘(H) provision of accurate information, in 

2 formats that are usable and understandable to 

3 all one-stop center customers, relating to the 

4 availability of supportive services or assistance, 

5 including child care, child support, medical or 

6 child health assistance under title XIX or XXI 

7 of the Social Security Act (42 U.S.C. 1396 et 

8 seq. and 1397aa et seq.), benefits under the 

9 Food Stamp Act of 1977 (7 U.S.C. 2011 et 

10 seq.), the earned income tax credit under sec11 tion 32 of the Internal Revenue Code of 1986, 

12 and assistance under a State program funded 

13 under part A of title IV of the Social Security 

14 Act (42 U.S.C. 601 et seq.) and other sup15 portive services and transportation provided 

16 through funds made available under such part, 

17 available in the local area, and referral to such 

18 services or assistance as appropriate;’’; and 

19 (I) by amending subparagraph (J) to read 

20 as follows: 

21 ‘‘(J) assistance in establishing eligibility 

22 for programs of financial aid assistance for 

23 training and education programs that are not 

24 funded under this Act and are available in the 

25 local area; and’’; and 


rfrederick on DSKD9S0YB1PROD with BILLS
569 

•HR 4529 IH

1 (J) by redesignating subparagraph (K) as 

2 subparagraph (M); and 

3 (K) by inserting the following new sub4 paragraphs after subparagraph (J)): 

5 ‘‘(K) the provision of information from of6 ficial publications of the Internal Revenue Serv7 ice, regarding Federal tax credits available to 

8 individuals relating to education, job training 

9 and employment, including the Hope Scholar10 ship Credit and the Lifetime Learning Credit 

11 (26 U.S.C. 25A), and the Earned Income Tax 

12 Credit (26 U.S.C. 32); 

13 ‘‘(L) services relating to the Work Oppor14 tunity Tax Credit (26 U.S.C. 51); 

15 ‘‘(M) comprehensive and specialized assess16 ments of the skill levels and service needs of 

17 adults and dislocated workers, which may in18 clude— 

19 ‘‘(i) diagnostic testing and use of 

20 other assessment tools; and 

21 ‘‘(ii) in-depth interviewing and evalua22 tion to identify employment barriers and 

23 appropriate employment goals; 

24 ‘‘(N) development of an individual employ25 ment plan, to identify the employment goals, 


rfrederick on DSKD9S0YB1PROD with BILLS
570 

•HR 4529 IH

1 appropriate achievement objectives, and appro2 priate combination of services for the participa3 tion to achieve the employment goals; 

4 ‘‘(O) group counseling; 

5 ‘‘(P) individual counseling and career plan6 ning; 

7 ‘‘(Q) case management; 

8 ‘‘(R) short-term prevocational services, in9 cluding development of learning skills, commu10 nications skills, interviewing skills, punctuality, 

11 personal maintenance skills, and professional 

12 conduct, to prepare individuals for unsubsidized 

13 employment or training; 

14 ‘‘(S) internships and work experience; 

15 ‘‘(T) literacy activities relating to basic 

16 work readiness, information and communication 

17 technology literacy activities, and financial lit18 eracy activities, if such activities are not avail19 able to participants in the local area under pro20 grams administered under the Adult Education 

21 and Family Literacy Act (20 U.S.C. 2901 et 

22 seq.); and 

23 ‘‘(U) out-of-area job search assistance and 

24 relocation assistance.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
571 

•HR 4529 IH

1 (L) DELIVERY OF SERVICES.—Section 

2 134(c)(3) (29 U.S.C. 2864(c)(3)) is amended to 

3 read as follows: 

4 ‘‘(3) DELIVERY OF SERVICES.—The work ready 

5 services described in paragraph (M) through (U) 

6 shall be provided through the one-stop delivery sys7 tem and may be provided through contracts with 

8 public, private for-profit, and private nonprofit serv9 ice providers, approved by the local board.’’. 

10 (M) TRAINING SERVICES.—Section 

11 134(c)(4) is amended— 

12 (i) by amending subparagraph (A) to 

13 read as follows: 

14 ‘‘(A) IN GENERAL.—Funds allocated to a 

15 local area under section 133(b) shall be used to 

16 provide training services to adults who— 

17 ‘‘(i) after an interview, evaluation, or 

18 assessment, and case management, have 

19 been determined by a one-stop operator or 

20 one-stop partner, as appropriate, to— 

21 ‘‘(I) be in need of training serv22 ices to obtain or retain suitable em23 ployment; and 

24 ‘‘(II) have the skills and quali25 fications to successfully participate in 


rfrederick on DSKD9S0YB1PROD with BILLS
572 

•HR 4529 IH

1 the selected program of training serv2 ices; 

3 ‘‘(ii) select programs of training serv4 ices that are directly linked to the employ5 ment opportunities in the local area in6 volved or in another area in which the 

7 adults receiving such services are willing to 

8 commute or relocate; 

9 ‘‘(iii) who meet the requirements of 

10 subparagraph (B); and 

11 ‘‘(iv) who are determined eligible in 

12 accordance with the priority system in ef13 fect under subparagraph (E).’’; 

14 (ii) in subparagraph (B)(i), by strik15 ing ‘‘Except’’ and inserting ‘‘Notwith16 standing section 479B of the Higher Edu17 cation Act of 1965 (20 U.S.C. 1087uu) 

18 and except’’; 

19 (iii) by amending subparagraph (D) to 

20 read as follows: 

21 ‘‘(D) TRAINING SERVICES.—Training serv22 ices authorized under this paragraph may in23 clude— 

24 ‘‘(i) occupational skills training; 

25 ‘‘(ii) on-the-job training; 


rfrederick on DSKD9S0YB1PROD with BILLS
573 

•HR 4529 IH

1 ‘‘(iii) skill upgrading and retraining; 

2 ‘‘(iv) entrepreneurial training; 

3 ‘‘(v) education activities leading to a 

4 high school diploma or its equivalent, in5 cluding a General Educational Develop6 ment credential, in combination with, con7 currently or subsequently, occupational 

8 skills training; 

9 ‘‘(vi) adult education and literacy ac10 tivities provided in conjunction with other 

11 training authorized under this subpara12 graph; 

13 ‘‘(vii) workplace training combined 

14 with related instruction; and 

15 ‘‘(viii) occupational skills training that 

16 incorporates English language acquisi17 tion.’’; 

18 (iv) by amending subparagraph (E) to 

19 read as follows: 

20 ‘‘(E) PRIORITY.— 

21 ‘‘(i) IN GENERAL.—A priority shall be 

22 given to dislocated workers or workers who 

23 are in danger of being dislocated for the 

24 provision of intensive and training services 

25 under this subsection. 


rfrederick on DSKD9S0YB1PROD with BILLS
574 

•HR 4529 IH

1 ‘‘(ii) DETERMINATIONS.—The Gov2 ernor and the appropriate local board shall 

3 direct the one-stop operators in the local 

4 area with regard to making determinations 

5 with respect to the priority of service under 

6 this subparagraph.’’; 

7 (v) in subparagraph (F), by striking 

8 clause (iii) and inserting the following: 

9 ‘‘(iii) ENHANCED INDIVIDUAL TRAIN10 ING ACCOUNTS.—An individual who seeks 

11 training services and who is eligible pursu12 ant to subparagraph (A), may, in consulta13 tion with a case manager, select an eligible 

14 provider of training services from the list 

15 or identifying information for providers de16 scribed in clause (ii)(I). Upon such selec17 tion, the one-stop operator involved shall, 

18 to the extent practicable, refer such indi19 vidual to the eligible provider of training 

20 services, and arrange for payment for such 

21 services through a enhanced individual 

22 training account. 

23 ‘‘(iv) COORDINATION.—Each local 

24 board may, through one-stop centers, co25 ordinate enhanced individual training acVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00574 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
575 

•HR 4529 IH

1 counts with other Federal, State, local, or 

2 private job training programs or sources to 

3 assist the individual in obtaining training 

4 services. 

5 ‘‘(v) ENHANCED INDIVIDUAL TRAIN6 ING ACCOUNTS.—Each local board may, 

7 through one-stop centers, assist individuals 

8 receiving enhanced individual training ac9 counts through the establishment of such 

10 accounts that include, in addition to the 

11 funds provided under this paragraph, 

12 funds from other programs and sources 

13 that will assist the individual in obtaining 

14 training services.’’; and 

15 (vi) in subparagraph (G)— 

16 (I) in the subparagraph heading, 

17 by striking ‘‘INDIVIDUAL TRAINING

18 ACCOUNTS’’ and inserting ‘‘EN19 HANCED INDIVIDUAL TRAINING AC20 COUNTS’’; 

21 (II) in clause (i) by striking ‘‘in22 dividual training accounts’’ and in23 serting ‘‘enhanced individual training 

24 accounts’’; 

25 (III) in clause (ii)— 


rfrederick on DSKD9S0YB1PROD with BILLS
576 

•HR 4529 IH

1 (aa) by striking ‘‘an indi2 vidual training account’’ and in3 serting ‘‘a enhanced individual 

4 training account’’; 

5 (bb) in subclause (II), by 

6 striking ‘‘individual training ac7 counts’’ and inserting ‘‘enhanced 

8 individual training accounts’’; 

9 (cc) in subclause (II) by 

10 striking ‘‘or’’ after the semicolon; 

11 (dd) in subclause (III) by 

12 striking the period and inserting 

13 ‘‘; or’’; and 

14 (ee) by adding at the end of 

15 the following: 

16 ‘‘(IV) The local board determines 

17 that it would be most appropriate to 

18 award a contract to an institution of 

19 higher education in order to facilitate 

20 the training of multiple individuals in 

21 high-demand occupations, if such con22 tract does not limit customer choice.’’. 

23 (IV) in clause (iv)— 

24 (aa) by redesignating sub25 clause (IV) as subclause (V) and 


rfrederick on DSKD9S0YB1PROD with BILLS
577 

•HR 4529 IH

1 inserting after subclause (III) the 

2 following: 

3 ‘‘(IV) Individuals with disabil4 ities.’’. 

5 (2) PERMISSIBLE ACTIVITIES.—Section 134(c) 

6 is amended by amending paragraph (1) to read as 

7 follows: 

8 ‘‘(1) DISCRETIONARY ONE-STOP DELIVERY AC9 TIVITIES.— 

10 ‘‘(A) IN GENERAL.—Funds allocated to a 

11 local area under section 133(b) may be used to 

12 provide, through the one-stop delivery system— 

13 ‘‘(i) customized screening and referral 

14 of qualified participants in training serv15 ices to employers; 

16 ‘‘(ii) customized employment-related 

17 services to employers on a fee-for-service 

18 basis; 

19 ‘‘(iii) customer support to navigate 

20 among multiple services and activities for 

21 special participant populations that face 

22 multiple barriers to employment, including 

23 individuals with disabilities; 

24 ‘‘(iv) employment and training assist25 ance provided in coordination with child 


rfrederick on DSKD9S0YB1PROD with BILLS
578 

•HR 4529 IH

1 support enforcement activities of the State 

2 agency carrying out subtitle D of title IV 

3 of the Social Security Act (42 U.S.C. 651 

4 et seq.); 

5 ‘‘(v) activities to improve services to 

6 local employers, including small employers 

7 in the local area, and increase linkages be8 tween the local workforce investment sys9 tem and employers; 

10 ‘‘(vi) activities to facilitate remote ac11 cess to services provided through a one12 stop delivery system, including facilitating 

13 access through the use of technology; and 

14 ‘‘(vii) activities to carry out business 

15 services and strategies that meet the work16 force investment needs of local area em17 ployers, as determined by the local board, 

18 consistent with the local plan under section 

19 118, which services— 

20 ‘‘(I) may be provided through ef21 fective business intermediaries work22 ing in conjunction with the local 

23 board, and may also be provided on a 

24 fee-for-service basis or through the 

25 leveraging of economic development 


rfrederick on DSKD9S0YB1PROD with BILLS
579 

•HR 4529 IH

1 and other resources as determined ap2 propriate by the local board; and 

3 ‘‘(II) may include— 

4 ‘‘(aa) identifying and dis5 seminating to business, edu6 cators, and job seekers, informa7 tion related to the workforce, eco8 nomic and community develop9 ment needs, and opportunities of 

10 the local economy; 

11 ‘‘(bb) development and deliv12 ery of innovative workforce in13 vestment services and strategies 

14 for area businesses, which may 

15 include sectoral, industry cluster, 

16 regional skills alliances, career 

17 ladder, skills upgrading, skill 

18 standard development and certifi19 cation, apprenticeship, and other 

20 effective initiatives for meeting 

21 the workforce investment needs 

22 of area employers and workers; 

23 ‘‘(cc) participation in semi24 nars and classes offered in part25 nership with relevant organizaVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00579 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
580 

•HR 4529 IH

1 tions focusing on the workforce2 related needs of area employers 

3 and job seekers; 

4 ‘‘(dd) training consulting, 

5 needs analysis, and brokering 

6 services for area businesses, in7 cluding the organization and ag8 gregation of training (which may 

9 be paid for with funds other than 

10 those provided under this title), 

11 for individual employers and coa12 litions of employers with similar 

13 interests, products, or workforce 

14 needs; 

15 ‘‘(ee) assistance to area em16 ployers in the aversion of layoffs 

17 and in managing reductions in 

18 force in coordination with rapid 

19 response activities; 

20 ‘‘(ff) the marketing of busi21 ness services offered under this 

22 title, to appropriate area employ23 ers, including small and mid24 sized employers; 


rfrederick on DSKD9S0YB1PROD with BILLS
581 

•HR 4529 IH

1 ‘‘(gg) information referral 

2 on concerns affecting local em3 ployers; and 

4 ‘‘(hh) other business services 

5 and strategies designed to better 

6 engage employers in workforce 

7 investment activities and to make 

8 the workforce investment system 

9 more relevant to the workforce 

10 investment needs of area busi11 nesses, as determined by the local 

12 board to be consistent with the 

13 objectives of this title.’’. 

14 SEC. 709. LIFE LONG LEARNING AWARENESS CAMPAIGNS. 

15 (a) FEDERAL COMMUNICATIONS COMMISSION.— 

16 (1) IN GENERAL.—The Federal Communica17 tions Commission shall require that each licensed 

18 broadcaster keep a record of the number and dura19 tion of public service announcements voluntarily 

20 broadcast with respect to the job training opportuni21 ties and services described in section 509 of the 

22 Workforce Investment Act of 1998. 

23 (2) DEADLINE.—Not later than 90 days after 

24 the date of the enactment of this Act, the Federal 

25 Communications Commission shall take all actions 


rfrederick on DSKD9S0YB1PROD with BILLS
582 

•HR 4529 IH

1 necessary to adopt a regulation to implement para2 graph (1). 

3 (3) REQUIREMENT.—The Federal Communica4 tions Commission shall consider the voluntary broad5 cast of any public service announcement described in 

6 paragraph (1) as— 

7 (A) fulfilling part of a broadcaster’s obliga8 tion to serve the public interest; and 

9 (B) demonstrating such service for the 

10 purposes of license renewal. 

11 (b) JOB TRAINING PROVIDERS.—Title V of the 

12 Workforce Investment Act of 1998 (20 U.S.C. 9271 et 

13 seq.) is further amended by adding at the end the fol14 lowing: 

15 ‘‘SEC. 509. PUBLIC SERVICE ANNOUNCEMENTS. 

16 ‘‘(a) IN GENERAL.—Each provider of a job training 

17 program shall make periodic public service announcements 

18 to inform the general public about job training opportuni19 ties and services, including— 

20 ‘‘(1) the availability of job training opportuni21 ties under the program; 

22 ‘‘(2) Federal Pell Grants available under title 

23 IV of the Higher Education Act of 1965 (20 U.S.C. 

24 1070 et seq.); 

25 ‘‘(3) the Job Corps centers; 


rfrederick on DSKD9S0YB1PROD with BILLS
583 

•HR 4529 IH

1 ‘‘(4) the one-stop delivery systems; and 

2 ‘‘(5) community colleges. 

3 ‘‘(b) REGULATIONS.—The Secretary shall promul4 gate regulations to assist providers of job training pro5 grams in carrying out the requirements described in sub6 section (a). In promulgating such regulations, the Sec7 retary shall consider whether the requirements may be sat8 isfied by— 

9 ‘‘(1) posting the required information on an 

10 Internet Web site; 

11 ‘‘(2) publishing the required information in a 

12 newspaper; or 

13 ‘‘(3) making an announcement containing the 

14 required information on the television or radio. 

15 ‘‘(c) DEFINITION.—The term ‘job training program’ 

16 has the meaning given such term in section 507(d).’’. 

17 SEC. 710. GAO REPORTS. 

18 (a) IDENTIFYING DUPLICATION.—Not later than 1 

19 year after the date of the enactment of this Act, the Comp20 troller General of the United States shall conduct a study 

21 and submit a report to Congress on job training programs 

22 that— 

23 (1) identifies duplications among such pro24 grams; and 


rfrederick on DSKD9S0YB1PROD with BILLS
584 

•HR 4529 IH

1 (2) if applicable, recommends the consolidation 

2 of such programs. 

3 (b) EFFECTIVENESS OF PROGRAMS.—Not later than 

4 2 years after the date of the enactment of this Act, and 

5 every 2 years thereafter, the Comptroller General of the 

6 United States shall conduct a study and submit a report 

7 to Congress that evaluates the effectiveness of job training 

8 programs based on the assessments of such programs car9 ried out under section 508(b) of the Workforce Investment 

10 Act of 1998 (as amended by this Act). 

11 (c) DEFINITION.—For purposes of this section, the 

12 term ‘‘job training program’’ has the meaning given such 

13 term in 507(d) of the Workforce Investment Act of 1998 

14 (as amended by this Act). 

15 TITLE VIII—SPENDING LIMITS 

16 AND DEFICIT CONTROL 

17 SEC. 800. SHORT TITLE. 

18 This title may be cited as the ‘‘Spending Enforcement 

19 and Control Act of 2010’’. 

20 Subtitle A—Spending Limits and 

21 Deficit Control 

22 SEC. 801. DISCRETIONARY SPENDING LIMITS. 

23 (a) DISCRETIONARY SPENDING LIMITS.—Section 

24 251 of the Balanced Budget and Emergency Deficit Con25 trol of Act of 1985 is amended to read as follows: 


rfrederick on DSKD9S0YB1PROD with BILLS
585 

•HR 4529 IH

1 ‘‘(a) DISCRETIONARY SPENDING LIMITS.—The fiscal 

2 years for the discretionary spending limits shall be as fol3 lows: 

4 ‘‘(1) Fiscal year 2011: $1,203,000,000,000 in 

5 outlays. 

6 ‘‘(2) Fiscal year 2012: $1,144,000,000,000 in 

7 outlays. 

8 ‘‘(3) Fiscal year 2013: $1,143,000,000,000 in 

9 outlays. 

10 ‘‘(4) Fiscal year 2014: $1,143,000,000,000 in 

11 outlays. 

12 ‘‘(5) Fiscal year 2015: $1,149,000,000,000 in 

13 outlays. 

14 ‘‘(6) Fiscal year 2016: $1,165,000,000,000 in 

15 outlays. 

16 ‘‘(7) Fiscal year 2017: $1,176,000,000,000 in 

17 outlays. 

18 ‘‘(8) Fiscal year 2018: $1,184,000,000,000 in 

19 outlays. 

20 ‘‘(9) Fiscal year 2019: $1,202,000,000,000 in 

21 outlays. 

22 ‘‘(b) SPENDING REDUCTION ORDER.—A spending re23 duction ordered shall be implemented using the procedures 

24 set forth in section 256.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
586 

•HR 4529 IH

1 (b) CONFORMING AMENDMENT.—The item relating 

2 to section 251 in the table of contents set forth in 250(c) 

3 of the Balanced Budget and Emergency Deficit Control 

4 Act of 1985 is amended to read as follows: 

‘‘Sec. 251. Discretionary spending limits.’’. 

5 SEC. 802. TOTAL SPENDING LIMITS. 

6 (a) TOTAL SPENDING LIMITS.—After section 252 of 

7 the Balanced Budget and Emergency Deficit Control Act 

8 of 1985, add the following new section: 

9 ‘‘SEC. 252A. TOTAL SPENDING LIMITS. 

10 ‘‘(a) PROJECTIONS.— 

11 ‘‘(1) OMB REPORT.—OMB shall prepare a re12 port comparing projected total spending under sec13 tion 257 and the total spending limits in subsection 

14 (d), and include such report in the budget as sub15 mitted by the President annually under section 

16 1105(a) of title 31, United States Code. 

17 ‘‘(2) CBO REPORT.—CBO shall prepare a re18 port comparing projected total spending under sec19 tion 257 and the total spending limits in subsection 

20 (d) and include such report in the CBO annual base21 line and reestimate of the President’s budget. 

22 ‘‘(3) INCLUSION IN SPENDING REDUCTION OR23 DERS.—Reports prepared pursuant to this sub24 section shall be included in the spending reduction 

25 report. 


rfrederick on DSKD9S0YB1PROD with BILLS
587 

•HR 4529 IH

1 ‘‘(b) SPENDING REDUCTION ORDER.—A spending re2 duction order shall be implemented using the procedures 

3 set forth in section 256. 

4 ‘‘(c) FISCAL YEARS OF THE TOTAL SPENDING PE5 RIOD.—The fiscal years within the total spending period 

6 shall be as follows: 

7 ‘‘(1) Fiscal year 2011: 22.8 percent. 

8 ‘‘(2) Fiscal year 2012: 21.6 percent. 

9 ‘‘(3) Fiscal year 2013: 21.8 percent. 

10 ‘‘(4) Fiscal year 2014: 21.9 percent. 

11 ‘‘(5) Fiscal year 2015: 21.7 percent. 

12 ‘‘(6) Fiscal year 2016: 22.0 percent. 

13 ‘‘(7) Fiscal year 2017: 21.7 percent. 

14 ‘‘(8) Fiscal year 2018: 21.6 percent. 

15 ‘‘(9) Fiscal year 2019: 22.3 percent. 

16 ‘‘(10) Fiscal year 2020: 22.3 percent. 

17 ‘‘(11) Fiscal year 2021: 22.4 percent. 

18 ‘‘(12) Fiscal year 2022: 22.6 percent. 

19 ‘‘(13) Fiscal year 2023: 22.8 percent. 

20 ‘‘(14) Fiscal year 2024: 22.9 percent. 

21 ‘‘(15) Fiscal year 2025: 22.9 percent. 

22 ‘‘(16) Fiscal year 2026: 23.2 percent. 

23 ‘‘(17) Fiscal year 2027: 23.5 percent. 

24 ‘‘(18) Fiscal year 2028: 23.6 percent. 

25 ‘‘(19) Fiscal year 2029: 23.7 percent. 


rfrederick on DSKD9S0YB1PROD with BILLS
588 

•HR 4529 IH

1 ‘‘(20) Fiscal year 2030: 23.8 percent. 

2 ‘‘(21) Fiscal year 2031: 23.9 percent. 

3 ‘‘(22) Fiscal year 2032: 24.0 percent. 

4 ‘‘(23) Fiscal year 2033: 24.1 percent. 

5 ‘‘(24) Fiscal year 2034: 24.1 percent. 

6 ‘‘(25) Fiscal year 2035: 24.1 percent. 

7 ‘‘(26) Fiscal year 2036: 24.1 percent. 

8 ‘‘(27) Fiscal year 2037: 24.1 percent. 

9 ‘‘(28) Fiscal year 2038: 23.9 percent. 

10 ‘‘(29) Fiscal year 2039: 23.7 percent. 

11 ‘‘(30) Fiscal year 2040: 23.5 percent. 

12 ‘‘(31) Fiscal year 2041: 23.5 percent. 

13 ‘‘(32) Fiscal year 2042: 23.4 percent. 

14 ‘‘(33) Fiscal year 2043: 23.1 percent. 

15 ‘‘(34) Fiscal year 2044: 23.0 percent. 

16 ‘‘(35) Fiscal year 2045: 22.7 percent. 

17 ‘‘(36) Fiscal year 2046: 22.4 percent. 

18 ‘‘(37) Fiscal year 2047: 22.2 percent. 

19 ‘‘(38) Fiscal year 2048: 21.9 percent. 

20 ‘‘(39) Fiscal year 2049: 21.7 percent. 

21 ‘‘(40) Fiscal year 2050: 21.6 percent. 

22 ‘‘(41) Fiscal year 2051: 21.4 percent. 

23 ‘‘(42) Fiscal year 2052: 21.2 percent. 

24 ‘‘(43) Fiscal year 2053: 20.9 percent. 

25 ‘‘(44) Fiscal year 2054: 20.9 percent. 


rfrederick on DSKD9S0YB1PROD with BILLS
589 

•HR 4529 IH

1 ‘‘(45) Fiscal year 2055: 20.6 percent. 

2 ‘‘(46) Fiscal year 2056: 20.3 percent. 

3 ‘‘(47) Fiscal year 2057: 20.1 percent. 

4 ‘‘(48) Fiscal year 2058: 20.0 percent. 

5 ‘‘(49) Fiscal year 2059: 19.7 percent. 

6 ‘‘(50) Fiscal year 2060: 19.6 percent. 

7 ‘‘(51) Fiscal year 2061: 19.4 percent. 

8 ‘‘(52) Fiscal year 2062: 19.2 percent. 

9 ‘‘(53) Fiscal year 2063: 18.9 percent. 

10 ‘‘(54) Fiscal year 2064: 18.8 percent. 

11 ‘‘(55) Fiscal year 2065: 18.4 percent. 

12 ‘‘(56) Fiscal year 2066: 18.2 percent. 

13 ‘‘(57) Fiscal year 2067: 18.1 percent. 

14 ‘‘(58) Fiscal year 2068: 17.6 percent. 

15 ‘‘(59) Fiscal year 2069: 17.5 percent. 

16 ‘‘(60) Fiscal year 2070: 17.1 percent. 

17 ‘‘(61) Fiscal year 2071: 16.8 percent. 

18 ‘‘(62) Fiscal year 2072: 16.6 percent. 

19 ‘‘(63) Fiscal year 2073: 16.2 percent. 

20 ‘‘(64) Fiscal year 2074: 16.0 percent. 

21 ‘‘(65) Fiscal year 2075: 15.6 percent. 

22 ‘‘(66) Fiscal year 2076: 15.4 percent. 

23 ‘‘(67) Fiscal year 2077: 15.0 percent. 

24 ‘‘(68) Fiscal year 2078: 14.7 percent. 

25 ‘‘(69) Fiscal year 2079: 14.3 percent. 


rfrederick on DSKD9S0YB1PROD with BILLS
590 

•HR 4529 IH

1 ‘‘(70) Fiscal year 2080: 14.0 percent. 

2 ‘‘(71) Fiscal year 2081: 13.6 percent. 

3 ‘‘(72) Fiscal year 2082: 13.4 percent. 

4 ‘‘(73) Fiscal year 2083: 13.0 percent.’’. 

5 (b) DEFINITIONS.—Section 3 of the Congressional 

6 Budget and Impoundment Control Act of 1974 (2 U.S.C. 

7 622) is amended by adding at the end the following new 

8 paragraph: 

9 ‘‘(11) The term ‘total spending’ means all out10 lays of the Federal Government including those from 

11 off-budget entities and budget authority and outlays 

12 flowing therefrom, as applicable, designated as emer13 gencies.’’. 

14 (c) CONFORMING AMENDMENT.—The table of con15 tents set forth in 250(c) of the Balanced Budget and 

16 Emergency Deficit Control Act of 1985 is amended by in17 serting after the item relating to section 252A the fol18 lowing new item: 

‘‘Sec. 252A. Total spending limits.’’. 

19 Subtitle B—Reports and Orders 

20 SEC. 811. REPORTS AND ORDERS. 

21 Section 254 of the Balanced Budget and Emergency 

22 Deficit Control Act of 1985 is amended to read as follows: 

23 ‘‘SEC. 254. REPORTS AND ORDERS. 

24 ‘‘(a) TIMETABLE.— 

‘‘Date: Action to be completed: 


rfrederick on DSKD9S0YB1PROD with BILLS
591 

•HR 4529 IH

5 days before the President’s 

budget submission.

CBO sequestration preview report. 

President’s budget submission .. OMB sequestration preview report. 

August 10 .................................. CBO sequestration update report. 

August 20 .................................. OMB sequestration update report. 

10 days after end of session ...... CBO sequestration final report. 

15 days after end of session ...... OMB sequestration final report; Presidential 

order. 

1 ‘‘(b) SUBMISSION AND AVAILABILITY OF REPORTS.— 

2 Each report required by this section shall be submitted 

3 to the Committees on the Budget of the House of Rep4 resentatives and the Senate. On the following day a notice 

5 of the report shall be printed in the Federal Register. 

6 ‘‘(c) SEQUESTRATION PREVIEW REPORT.— 

7 ‘‘(1) REPORTING REQUIREMENT.—On the dates 

8 specified in subsection (a), OMB and CBO shall 

9 issue a preview report regarding discretionary limits 

10 and total spending limits, sequestration based on 

11 laws enacted through those dates. 

12 ‘‘(2) DISCRETIONARY SPENDING LIMIT SEQUES13 TRATION REPORT.—The preview report shall set 

14 forth for the current year and the budget year the 

15 following: 

16 ‘‘(A) The discretionary spending limit; 

17 ‘‘(B) The estimated discretionary spending 

18 amount; and 

19 ‘‘(C) The amount of reductions required 

20 under section 251. 


rfrederick on DSKD9S0YB1PROD with BILLS
592 

•HR 4529 IH

1 ‘‘(3) TOTAL SPENDING LIMIT SEQUESTRATION

2 REPORT.—The preview reports shall set forth for the 

3 budget year estimates for the following: 

4 ‘‘(A) The total spending limit; 

5 ‘‘(B) The estimated total spending 

6 amount; and 

7 ‘‘(C) The amount of reductions required 

8 under section 252A. 

9 ‘‘(4) EXPLANATION OF DIFFERENCES.—The 

10 OMB reports shall explain the differences between 

11 OMB and CBO estimates for each item set forth in 

12 this subsection. 

13 ‘‘(d) SEQUESTRATION UPDATE REPORT.—On the 

14 dates specified in subsection (a), OMB and CBO shall 

15 issue a sequestration update report, reflecting laws en16 acted through those dates, containing all of the informa17 tion required in the sequestration preview report. 

18 ‘‘(e) SEQUESTRATION FINAL REPORT.— 

19 ‘‘(1) REPORTING REQUIREMENT.—On the dates 

20 specified in subsection (a), OMB and CBO shall 

21 issue a sequestration final report, reflecting laws en22 acted through those dates, containing all of the in23 formation required in the sequestration preview re24 port. 


rfrederick on DSKD9S0YB1PROD with BILLS
593 

•HR 4529 IH

1 ‘‘(2) PRESIDENTIAL ORDER.—On the date spec2 ified in subsection (a), if in its sequestration final 

3 report OMB estimates that any sequestration is re4 quired, the President shall issue an order fully im5 plementing without change all sequestrations re6 quired by the OMB calculations set forth in that re7 port. This order shall be effective on issuance. 

8 ‘‘(f) GAO COMPLIANCE REPORT.—Upon request of 

9 the Committee on the Budget of the House of Representa10 tives or the Senate, the Comptroller General shall submit 

11 to the Congress and the President a report on— 

12 ‘‘(1) the extent to which each order issued by 

13 the President under this section complies with all of 

14 the requirements contained in this part, either certi15 fying that the order fully and accurately complies 

16 with such requirements or indicating the respects in 

17 which it does not; and 

18 ‘‘(2) the extent to which each report issued by 

19 OMB or CBO under this section complies with all of 

20 the requirements contained in this part, either certi21 fying that the report fully and accurately complies 

22 with such requirements or indicating the respects in 

23 which it does not. 

24 ‘‘(g) LOW-GROWTH REPORT.—At any time, CBO and 

25 OMB shall notify the Congress if— 


rfrederick on DSKD9S0YB1PROD with BILLS
594 

•HR 4529 IH

1 ‘‘(1) during the period consisting of the quarter 

2 during which such notification is given, the quarter 

3 preceding such notification, and the 4 quarters fol4 lowing such notification, CBO or OMB has deter5 mined that real economic growth is projected or esti6 mated to be less than zero with respect to each of 

7 any 2 consecutive quarters within such period; or 

8 ‘‘(2) the most recent of the Department of 

9 Commerce’s advance preliminary or final reports of 

10 actual real economic growth indicate that the rate of 

11 real economic growth for each of the most recently 

12 reported quarter and the immediately preceding 

13 quarter is less than one percent. 

14 ‘‘(h) ECONOMIC AND TECHNICAL ASSUMPTIONS.—In 

15 all reports required by this section, OMB shall use the 

16 same economic and technical assumptions as used in the 

17 most recent budget submitted by the President under sec18 tion 1105(a) of title 31, United States Code’’. 

19 SEC. 812. SPENDING LIMITS ENFORCEMENT. 

20 (a) CONFORMING AMENDMENTS TO SECTION 312.— 

21 Section 312 of the Congressional Budget Act of 1974 is 

22 amended— 

23 (1) by striking subsection (a) and inserting the 

24 following: 


rfrederick on DSKD9S0YB1PROD with BILLS
595 

•HR 4529 IH

1 ‘‘(a) BUDGET COMMITTEE DETERMINATIONS.—For 

2 purposes of this title, the levels of new budget authority, 

3 outlays, direct spending, deficits, revenues, and debt, or 

4 the increases or decreases of such levels for purpose of 

5 section 303, shall be determined on the basis of estimates 

6 made by the Committee on the Budget of the House of 

7 Representatives or the Senate, as applicable.’’. 

8 (2) by striking subsections (b) and (c) and re9 designating subsections (d), (e), and (f) as (g), (h), 

10 and (i), respectively. 

11 (b) ENFORCEMENT AMENDMENTS TO SECTION

12 312.—Section 312 of the Congressional Budget Act of 

13 1974 is further amended by adding the following new sub14 sections: 

15 ‘‘(b) DISCRETIONARY SPENDING LIMIT POINT OF

16 ORDER.—It shall not be in order in the House of Rep17 resentatives or the Senate to consider any bill, joint resolu18 tion, amendment, or conference report that— 

19 ‘‘(1) causes the discretionary spending limits 

20 for the budget year to be breached; or 

21 ‘‘(2) increases the discretionary spending limits 

22 for the budget year or any ensuing fiscal year. 

23 ‘‘(c) TOTAL SPENDING LIMIT POINT OF ORDER.— 

24 It shall not be in order in the House of Representatives 


rfrederick on DSKD9S0YB1PROD with BILLS
596 

•HR 4529 IH

1 or the Senate to consider any bill, joint resolution, amend2 ment, or conference report that— 

3 ‘‘(1) causes the total spending limits for the 

4 budget year, as a percentage of gross domestic prod5 uct, to be breached; or 

6 ‘‘(2) increases the total spending limits for the 

7 budget year or any ensuing fiscal year after the 

8 budget year, as a percentage of gross domestic prod9 uct. 

10 ‘‘(d) REVENUE LIMIT POINT OF ORDER.—It shall 

11 not be in order in the House of Representatives or the 

12 Senate to consider any bill, joint resolution, amendment, 

13 or conference report that increases levels of revenue above 

14 19 percent of gross domestic product, as estimated by the 

15 Committee on the Budget of the applicable House. 

16 ‘‘(e) WAIVER OR SUSPENSION.—The provisions of 

17 this section may be waived or suspended: 

18 ‘‘(1) IN THE SENATE.—In the Senate only by 

19 the affirmative vote of three-fifths of the Members, 

20 duly chosen and sworn. 

21 ‘‘(2) IN THE HOUSE OF REPRESENTATIVES.—In 

22 the House of Representatives: 

23 ‘‘(A) Only by a rule or order proposing 

24 only to waive such provisions by an affirmative 


rfrederick on DSKD9S0YB1PROD with BILLS
597 

•HR 4529 IH

1 vote of two-thirds of the Members, duly chosen 

2 and sworn. 

3 ‘‘(B) It shall not be in order to consider a 

4 rule or order that waives the application of sub5 paragraph (A). 

6 ‘‘(C) It shall not be in order for the Speak7 er to entertain a motion to suspend the applica8 tion of this section under clause 1 of rule XV 

9 of the Rules of the House of Representatives.’’. 

10 SEC. 813. SPENDING REDUCTION ORDERS. 

11 (a) IN GENERAL.—Section 256 of the Balanced 

12 Budget and Emergency Deficit Control Act of 1985 is 

13 amended to read as follows: 

14 ‘‘SEC. 256. SPENDING REDUCTION ORDER. 

15 ‘‘(a) GENERAL RULES.— 

16 ‘‘(1) CALCULATION OF SPENDING REDUCTION

17 PERCENTAGE.—OMB shall include in its final 

18 spending sequestration report a requirement that 

19 each nonexempt spending account shall be reduced 

20 by an amount of budget authority calculated by mul21 tiplying the baseline level of budgetary resources in 

22 that account at that time by the uniform percentage 

23 necessary to reduce outlays sufficient to eliminate an 

24 excess spending amount. 


rfrederick on DSKD9S0YB1PROD with BILLS
598 

•HR 4529 IH

1 ‘‘(2) EXEMPTIONS.—The following shall be ex2 empt from reduction under any order issued under 

3 this part: 

4 ‘‘(A) Payments for net interest. 

5 ‘‘(B) Benefits payable under the old-age, 

6 survivors, and disability insurance program es7 tablished under title II of the Social Security 

8 Act if— 

9 ‘‘(i) OASDI Trust Funds are actuari10 ally solvent in the 75-year period utilized 

11 in the most recent annual report of the 

12 Board of Trustees provided pursuant to 

13 section 201(C)(2) of the Social Security 

14 Act; and 

15 ‘‘(ii) OASDI Trust Funds have not 

16 run a cash deficit in the fiscal year prior 

17 to the transmittal of the most recent Se18 questration Preview Report. 

19 ‘‘(C) Benefits provided to veterans defined 

20 as direct spending payable by the Department 

21 of Veterans Affairs. 

22 ‘‘(D) Obligated balances of budget author23 ity carried over from prior fiscal years. 

24 ‘‘(E) Any obligations of the Federal Gov25 ernment required to be paid under the United 


rfrederick on DSKD9S0YB1PROD with BILLS
599 

•HR 4529 IH

1 States Constitution or legally contractual obli2 gations. 

3 ‘‘(F) Any program whose growth in the 

4 budget year is equal to or less than the con5 sumer price index. 

6 ‘‘(G) Intergovernmental transfers. 

7 ‘‘(3) ONE-PERCENT REDUCTION LIMITATION.— 

8 No program shall be subject to a spending reduction 

9 of more than one percent of its budgetary resources. 

10 ‘‘(4) CALCULATION OF SPENDING REDUC11 TION.—The percentage required to produce a spend12 ing reduction, as ordered by a spending reduction 

13 order, shall be calculated by OMB by adding all 

14 budgetary resources of the Government, and reduc15 ing that amount by an amount sufficient to reduce 

16 the total amount of outlays of the Government to 

17 equal, or lower, a level of outlays than the amount 

18 set forth in the guideline period. 

19 ‘‘(5) APPLICATION.—Once issued, a spending 

20 reduction shall be applied to nonexempt programs as 

21 follows: 

22 ‘‘(A) Budgetary resources subject to a 

23 spending reduction to any discretionary account 

24 shall be permanently canceled. 


rfrederick on DSKD9S0YB1PROD with BILLS
600 

•HR 4529 IH

1 ‘‘(B) The same percentage spending reduc2 tion shall apply to all programs, projects, and 

3 activities within a budget account (with pro4 grams, projects, and activities as delineated in 

5 the appropriation Act or accompanying report 

6 for the relevant fiscal year covering that ac7 count, or for accounts not included in appro8 priation Acts, as delineated in the most recently 

9 submitted President’s budget). 

10 ‘‘(C) Administrative regulations imple11 menting a spending reduction shall be made 

12 within 120 days of the issue of a spending re13 duction order. 

14 ‘‘(6) OASDI SPECIAL PROCEDURES.—If the 

15 OASDI Trust Funds are subject to sequestration, 

16 then payments from such Trust Funds shall be 

17 treated the same as other programs, except— 

18 ‘‘(A) reductions from such Trust Funds 

19 shall not exceed one percent of the 75-year un20 funded liability set forth in the most current 

21 Social Security Trustees Report; 

22 ‘‘(B) reduction in individual benefits shall 

23 be implemented by increasing the Normal Re24 tirement Age (NRA) by an amount certified by 

25 the Social Security Office of the Chief Actuary; 


rfrederick on DSKD9S0YB1PROD with BILLS
601 

•HR 4529 IH

1 ‘‘(C) the increase in the NRA shall not be 

2 applied to any beneficiary born in a year 55 

3 years or before— 

4 ‘‘(i) the year of the enactment of the 

5 Roadmap for America’s Future Act of 

6 2010; or 

7 ‘‘(ii) the year in which the final 

8 spending sequestration report is issued; 

9 and 

10 ‘‘(D) no change in the NRA shall be made 

11 before it is fully phased-in under the Social Se12 curity Act as in effect before the date of enact13 ment of the Roadmap for America’s Future Act 

14 of 2010. 

15 ‘‘(b) EMERGENCIES.—No program shall be subject to 

16 sequestration or counted for purposes of calculating a se17 quester if it is designated as an emergency under this sec18 tion and so designated by the President.’’. 

19 (b) LOW-GROWTH AMENDMENT.—Section 258(b) of 

20 the Balanced Budget and Emergency Deficit Control Act 

21 of 1985 is amended to read as follows: 

22 ‘‘(b) SUSPENSION OF SEQUESTRATION PROCE23 DURES.—Upon the enactment of a declaration of war or 

24 a joint resolution described in subsection (a)— 


rfrederick on DSKD9S0YB1PROD with BILLS
602 

•HR 4529 IH

1 ‘‘(1) the subsequent issuance of any sequestra2 tion report to enforce the spending limits in sections 

3 251 and 252A order is precluded; 

4 ‘‘(2) sections 302(f), 310(d), and 311(a), of the 

5 Congressional Budget Act of 1974 are suspended; 

6 and 

7 ‘‘(3) section 1103 of title 31, United States 

8 Code, is suspended.’’. 

9 (c) TECHNICAL AND CONFORMING AMENDMENTS.— 

10 (1) REPEALS.—Sections 255 and 275 of the 

11 Balanced Budget and Emergency Deficit Control 

12 Act of 1985 are repealed. 

13 (2) CONFORMING AMENDMENT.—The item re14 lating to section 256 in the table of contents set 

15 forth in section 250(a) of the Balanced Budget and 

16 Emergency Deficit Control Act of 1985 is amended 

17 to read as follows: 

‘‘Sec. 256. Spending reduction order.’’. 

18 SEC. 814. ALTERNATE SPENDING REDUCTION LEGISLATION 

19 IN THE HOUSE OF REPRESENTATIVES. 

20 (a) INTRODUCTION OF JOINT RESOLUTION.—At any 

21 time after the Director of OMB issues a final order for 

22 a fiscal year, but before the end of the session of Congress 

23 in session on the date of the issuance of such order, the 

24 majority leader of the House of Representatives may in25 troduce a joint resolution which contains provisions directVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00602 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
603 

•HR 4529 IH

1 ing the President to modify the most recent final order 

2 issued pursuant to this title, or provide an alternative to 

3 eliminate the spending excess for such fiscal year or years. 

4 After the introduction of the first such joint resolution in 

5 either House of Congress in any calendar year, then no 

6 other joint resolution introduced pursuant to this section 

7 shall be subject to the procedures set forth in this section. 

8 (b) PROCEDURES FOR CONSIDERATION OF JOINT

9 RESOLUTIONS.— 

10 (1) Any committee of the House of Representa11 tives to which an alternative spending compliance 

12 measure is referred shall report it to the House 

13 without amendment not later than the seventh legis14 lative day after the date of its introduction. If a 

15 committee fails to report the bill within that period 

16 or the House has adopted a concurrent resolution 

17 providing for adjournment sine die at the end of a 

18 Congress, it shall be in order to move that the 

19 House discharge the committee from further consid20 eration of the bill. Such a motion shall be in order 

21 only at a time designated by the Speaker in the leg22 islative schedule within two legislative days after the 

23 day on which the proponent announces his intention 

24 to offer the motion. Such a motion shall not be in 

25 order after a committee has reported a spending 


rfrederick on DSKD9S0YB1PROD with BILLS
604 

•HR 4529 IH

1 compliance measure with respect to that special mes2 sage or after the House has disposed of a motion to 

3 discharge with respect to that special message. The 

4 previous question shall be considered as ordered on 

5 the motion to its adoption without intervening mo6 tion except twenty minutes of debate equally divided 

7 and controlled by the proponent and an opponent. If 

8 such a motion is adopted, the House shall proceed 

9 immediately to consider the spending compliance 

10 measure bill in accordance with paragraph (3). A 

11 motion to reconsider the vote by which the motion 

12 is disposed of shall not be in order. 

13 (2) After a spending compliance measure is re14 ported or a committee has been discharged from fur15 ther consideration, or the House has adopted a con16 current resolution providing for adjournment sine 

17 die at the end of a Congress, it shall be in order to 

18 move to proceed to consider the spending compliance 

19 measure in the House. Such a motion shall be in 

20 order only at a time designated by the Speaker in 

21 the legislative schedule within two legislative days 

22 after the day on which the proponent announces his 

23 intention to offer the motion. Such a motion shall 

24 not be in order after the House has disposed of a 

25 motion to proceed with respect to that special mesVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00604 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
605 

•HR 4529 IH

1 sage. The previous question shall be considered as 

2 ordered on the motion to its adoption without inter3 vening motion. A motion to reconsider the vote by 

4 which the motion is disposed of shall not be in order. 

5 (3) The spending compliance measure shall be 

6 considered as read. All points of order against an 

7 approval bill and against its consideration are 

8 waived. The previous question shall be considered as 

9 ordered on an approval bill to its passage without in10 tervening motion except five hours of debate equally 

11 divided and controlled by the proponent and an op12 ponent and one motion to limit debate on the bill. 

13 A motion to reconsider the vote on passage of the 

14 bill shall not be in order. 

15 (4) A spending compliance measure received 

16 from the Senate shall not be referred to committee. 

17 (c) VOTING.—The vote on final passage of a joint res18 olution or conference report thereon referred to in para19 graph (1) shall require approval of not less than three20 fifths of the Members of the House of Representatives. 

21 SEC. 815. ALTERNATE SPENDING REDUCTION LEGISLATION 

22 IN THE SENATE. 

23 (a) INTRODUCTION OF JOINT RESOLUTION.—At any 

24 time after OMB issues a final order for a fiscal year, but 

25 before the end of the session of Congress in session on 


rfrederick on DSKD9S0YB1PROD with BILLS
606 

•HR 4529 IH

1 the date of the issuance of such order, the majority leader 

2 of either House of Congress may introduce a joint resolu3 tion which contains provisions directing the President to 

4 modify the most recent final order provide an alternative 

5 to eliminate the spending excess for such fiscal year or 

6 years. After the introduction of the first such joint resolu7 tion in either House of Congress in any calendar year, 

8 then no other joint resolution introduced in such House 

9 in such calendar year shall be subject to the procedures 

10 set forth in this section. 

11 (b) PROCEDURES FOR CONSIDERATION OF JOINT

12 RESOLUTIONS.— 

13 (1) REFERRAL TO COMMITTEE.—A joint resolu14 tion introduced in the Senate under subsection (a) 

15 shall not be referred to a committee of the Senate 

16 and shall be placed on the calendar pending disposi17 tion of such joint resolution in accordance with this 

18 subsection. 

19 (2) CONSIDERATION IN THE SENATE.—On or 

20 after the third calendar day (excluding Saturdays, 

21 Sundays, and legal holidays) beginning after a joint 

22 resolution is introduced under subsection (a), not23 withstanding any rule or precedent of the Senate, in24 cluding rule XXII of the Standing Rules of the Sen25 ate, it is in order (even though a previous motion to 


rfrederick on DSKD9S0YB1PROD with BILLS
607 

•HR 4529 IH

1 the same effect has been disagreed to) for any Mem2 ber of the Senate to move to proceed to the consider3 ation of the joint resolution. The motion is not in 

4 order after the eighth calendar day (excluding Sat5 urdays, Sundays, and legal holidays) beginning after 

6 a joint resolution (to which the motion applies) is in7 troduced. The joint resolution is privileged in the 

8 Senate. A motion to reconsider the vote by which the 

9 motion is agreed to or disagreed to shall not be in 

10 order. If a motion to proceed to the consideration of 

11 the joint resolution is agreed to, the Senate shall im12 mediately proceed to consideration of the joint reso13 lution without intervening motion, order, or other 

14 business, and the joint resolution shall remain the 

15 unfinished business of the Senate until disposed of. 

16 (3) DEBATE IN THE SENATE.— 

17 (A) In the Senate, debate on a joint resolu18 tion introduced under subsection (a), amend19 ments thereto, and all debatable motions and 

20 appeals in connection therewith shall be limited 

21 to not more than 10 hours, which shall be di22 vided equally between the majority leader and 

23 the minority leader (or their designees). 

24 (B) A motion to postpone, or a motion to 

25 proceed to the consideration of other business is 


rfrederick on DSKD9S0YB1PROD with BILLS
608 

•HR 4529 IH

1 not in order. A motion to reconsider the vote by 

2 which the joint resolution is agreed to or dis3 agreed to is not in order, and a motion to re4 commit the joint resolution is not in order. 

5 (C)(i) No amendment that is not germane 

6 to the provisions of the joint resolution shall be 

7 in order in the Senate. In the Senate, an 

8 amendment, any amendment to an amendment, 

9 or any debatable motion or appeal is debatable 

10 for not to exceed 30 minutes to be equally di11 vided between, and controlled by, the mover and 

12 the majority leader (or their designees), except 

13 that in the event that the majority leader favors 

14 the amendment, motion, or appeal, the minority 

15 leader (or the minority leader’s designee) shall 

16 control the time in opposition to the amend17 ment, motion, or appeal. 

18 (ii) In the Senate, an amendment that is 

19 otherwise in order shall be in order notwith20 standing the fact that it amends the joint reso21 lution in more than one place or amends lan22 guage previously amended. It shall not be in 

23 order in the Senate to vote on the question of 

24 agreeing to such a joint resolution or any 

25 amendment thereto unless the figures then conVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00608 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
609 

•HR 4529 IH

1 tained in such joint resolution or amendment 

2 are mathematically consistent. 

3 (4) VOTE ON FINAL PASSAGE.—Immediately 

4 following the conclusion of the debate on a joint res5 olution introduced under subsection (a), a single 

6 quorum call at the conclusion of the debate if re7 quested in accordance with the rules of the Senate, 

8 and the disposition of any pending amendments 

9 under paragraph (3), the vote on final passage of 

10 the joint resolution shall occur. 

11 (5) APPEALS.—Appeals from the decisions of 

12 the Chair shall be decided without debate. 

13 (6) CONFERENCE REPORTS.—In the Senate, 

14 points of order under titles III and IV of the Con15 gressional Budget Act of 1974 are applicable to a 

16 conference report on the joint resolution or any 

17 amendments in disagreement thereto. 

18 (7) RESOLUTION FROM OTHER HOUSE.—If, be19 fore the passage by the Senate of a joint resolution 

20 of the Senate introduced under subsection (a), the 

21 Senate receives from the House of Representatives a 

22 joint resolution introduced under subsection (a), 

23 then the following procedures shall apply: 


rfrederick on DSKD9S0YB1PROD with BILLS
610 

•HR 4529 IH

1 (A) The joint resolution of the House of 

2 Representatives shall not be referred to a com3 mittee and shall be placed on the calendar. 

4 (B) With respect to a joint resolution in5 troduced under subsection (a) in the Senate— 

6 (i) the procedure in the Senate shall 

7 be the same as if no joint resolution had 

8 been received from the House; but 

9 (ii)(I) the vote on final passage shall 

10 be on the joint resolution of the House if 

11 it is identical to the joint resolution then 

12 pending for passage in the Senate; or 

13 (II) if the joint resolution from the 

14 House is not identical to the joint resolu15 tion then pending for passage in the Sen16 ate and the Senate then passes the Senate 

17 joint resolution, the Senate shall be consid18 ered to have passed the House joint resolu19 tion as amended by the text of the Senate 

20 joint resolution. 

21 (C) Upon disposition of the joint resolution 

22 received from the House, it shall no longer be 

23 in order to consider the resolution originated in 

24 the Senate. 


rfrederick on DSKD9S0YB1PROD with BILLS
611 

•HR 4529 IH

1 (8) SENATE ACTION ON HOUSE RESOLUTION.— 

2 If the Senate receives from the House of Represent3 atives a joint resolution introduced pursuant to this 

4 section after the Senate has disposed of a Senate 

5 originated resolution which is identical to the House 

6 passed joint resolution, the action of the Senate with 

7 regard to the disposition of the Senate originated 

8 joint resolution shall be deemed to be the action of 

9 the Senate with regard to the House originated joint 

10 resolution. If it is not identical to the House passed 

11 joint resolution, then the Senate shall be considered 

12 to have passed the joint resolution of the House as 

13 amended by the text of the Senate joint resolution. 

14 (9) The vote on final passage of a joint resolu15 tion or conference report thereon referred to in para16 graph (1) shall require approval of not less than 

17 three-fifths of the Members of the Senate. 

18 Subtitle C—Long-Term Budgeting 

19 SEC. 821. CBO AND OMB PROJECTIONS. 

20 (a) CONGRESSIONAL BUDGET OFFICE.—At the end 

21 of section 308 of the Congressional Budget Act of 1974, 

22 add the following: 

23 ‘‘(d) LONG-TERM PROJECTIONS.—Not later than 

24 February 15 of each calendar year after the date of enact25 ment of this subsection, the Director of the Congressional 


rfrederick on DSKD9S0YB1PROD with BILLS
612 

•HR 4529 IH

1 Budget Office shall issue a report projecting total spend2 ing, revenue, deficits, and debt for 75 years beginning with 

3 such fiscal year as a percentage of gross domestic product 

4 annually based on current law levels as modified to main5 tain current policy. 

6 ‘‘(e) CBO SPENDING REVIEW REPORT ISSUANCE.— 

7 As a component of the report required by subsection (d), 

8 the Congressional Budget Office shall issue a Spending 

9 Review Report and transmit such report to the Commit10 tees on the Budget of the House of Representatives and 

11 the Senate. 

12 ‘‘(f) CONTENT OF SPENDING REVIEW REPORT.—The 

13 content of the Spending Review Report referred to in sub14 section (e) shall include analyses of the following: 

15 ‘‘(1) OASDI.—The solvency of the Old-Age, 

16 Survivors, and Disability Insurance Trust Fund. 

17 ‘‘(2) MEDICARE.—The long-range sustainability 

18 of the spending levels of Medicare. 

19 ‘‘(3) MEDICAID.—The long-range sustainability 

20 of the spending levels of Medicaid. 

21 ‘‘(4) OTHER DIRECT SPENDING.—The long22 range sustainability of spending levels of other direct 

23 spending. 


rfrederick on DSKD9S0YB1PROD with BILLS
613 

•HR 4529 IH

1 ‘‘(g) DEFINITIONS.—For purposes of the develop2 ment of the Spending Review Report referred to in sub3 section (b): 

4 ‘‘(1) SOLVENCY OF THE OASDI.—The term ‘sol5 vency’ as used in this section means the solvency of 

6 the Old-Age Security and Disability Insurance Trust 

7 Funds over a 75-year period beginning in the year 

8 the Spending Review Report is reported. 

9 ‘‘(2) SUSTAINABILITY.—The term ‘sustain10 ability’ means the following: 

11 ‘‘(A) MEDICARE.—The Medicare program 

12 is sustainable if it is projected to grow, begin13 ning in the tenth year following the date of the 

14 enactment of this Act from the fixed percentage 

15 of Gross Domestic Product in the year prior to 

16 the date of enactment of this subsection, ad17 justed by the adjustment formula as set forth 

18 in section 252A(e) of the Balanced Budget and 

19 Emergency Deficit Control Act of 1985. 

20 ‘‘(B) MEDICAID.—The Medicaid program 

21 is sustainable if its outlays, excluding those des22 ignated as emergencies, are projected to grow 

23 from the fixed percentage of Gross Domestic 

24 Product in the year prior to the date of the en25 actment of this Act, adjusted by a rate no highVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00613 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
614 

•HR 4529 IH

1 er than a blend of the Consumer Price Index 

2 and the Medical Economic Index, as adjusted 

3 after fiscal year 2018 using the same calcula4 tion, excluding benefits provided from the 

5 OASDI Trust funds, as that set forth in section 

6 252A(e) of the Balanced Budget and Emer7 gency Deficit Control Act of 1985 to reflect the 

8 increase in the the number of Medicare eligible 

9 retirees receiving benefiits in the program rel10 ative to fiscal year 2018. 

11 ‘‘(C) OTHER DIRECT SPENDING.—Other 

12 direct spending is direct spending other than 

13 OASDI, the Medicare and Medicaid program 

14 and is sustainable if it grows from a fixed per15 centage of gross domestic product in fiscal year 

16 2008.’’. 

17 (b) OFFICE OF MANAGEMENT AND BUDGET.—Sec18 tion 1105(a) of title 31, United States Code, (as amended 

19 by section 142(e)) is further amended by adding at the 

20 end the following: 

21 ‘‘(38) long-term projections of total spending 

22 over 75 years as a percentage of gross domestic 

23 product annually and the impact of proposed policies 

24 over that period.’’. 


rfrederick on DSKD9S0YB1PROD with BILLS
615 

•HR 4529 IH

1 SEC. 822. GAO AND OMB STATEMENTS OF THE FEDERAL 

2 GOVERNMENT’S FINANCIAL CONDITION. 

3 (a) GOVERNMENT ACCOUNTABILITY OFFICE.—On or 

4 before April 15 of each fiscal year, the Government Ac5 countability Office shall submit a report on the federal 

6 government’s financial condition, including the long-term 

7 unfunded obligations. 

8 (b) DEFINITION OF LONG-TERM UNFUNDED OBLI9 GATIONS.—Section 3 of the Congressional Budget Act of 

10 1974 is further amended by adding at the end the fol11 lowing new paragraph, and redesignate the paragraph ac12 cordingly: 

13 ‘‘(11) UNFUNDED OBLIGATIONS.—The term 

14 ‘Unfunded Obligations’ means the dollar sum of the 

15 Total Net Position as displayed in the United States 

16 Government Balance Sheets contained within the 

17 most recently published Financial Report of the 

18 United States Government; plus the 75-year actu19 arial balances, using the intermediate open-group as20 sumption, of Medicare’s Hospital Insurance, Supple21 mentary Medical Insurance, and Prescription Drug 

22 programs contained within the most recently pub23 lished Annual Report of the Boards of Trustees of 

24 the Federal Hospital Insurance and Federal Supple25 mentary Medical Insurance Trust Funds; plus the 

26 75-year actuarial balance, using the intermediate 


rfrederick on DSKD9S0YB1PROD with BILLS
616 

•HR 4529 IH

1 open group assumption, of the Old-Age Survivors 

2 and Disability Insurance program contained within 

3 the most recently published Annual Report of the 

4 Board of Trustees of the Federal Old-Age and Sur5 vivors Insurance and Federal Disability Insurance 

6 Trust Funds.’’. 

7 (c) OFFICE OF MANAGEMENT AND BUDGET.—Sec8 tion 1105(a) of title 31, United States Code, (as amended 

9 by section 301(b)) is further amended by adding at the 

10 end the following: 

11 ‘‘(39) a report on the Federal Government’s fi12 nancial condition, the including the long-term un13 funded obligations.’’. 

14 SEC. 823. FIVE-YEAR FISCAL SUSTAINABILITY REVIEW. 

15 Title III of the Congressional Budget Act of 1974 

16 (as amended by section 126(a)) is further amended by 

17 adding at the end the following new section: 

18 ‘‘FIVE-YEAR FISCAL SUSTAINABILITY REVIEW

19 ‘‘SEC. 318. (a) CONGRESSIONAL SPENDING REVIEW

20 REPORT.—Not later than 15 calendar days after the date 

21 of the transmittal of the report referred to in subsection 

22 308(e), the Committees on the Budget of the House of 

23 Representatives and the Senate shall issue, and have 

24 printed in the Congressional Record, an assessment of 

25 such report. 


rfrederick on DSKD9S0YB1PROD with BILLS
617 

•HR 4529 IH

1 ‘‘(b) COMMITTEE RECOMMENDATIONS.—Not later 

2 than 15 calendar days after the date of the report of the 

3 review referred to in subsection (c), the committees of the 

4 House of Representatives and the Senate shall consider 

5 and vote to submit to the Committees on the Budget of 

6 the House of Representatives and Senate, as applicable, 

7 recommendations, if any, such committees deem appro8 priate in response to the Spending Review Report issued 

9 pursuant to subsection (c). 

10 ‘‘(c) EXPEDITED CONSIDERATION OF SPENDING RE11 VIEW LEGISLATION.— 

12 ‘‘(1) CONSIDERATION IN THE HOUSE OF REP13 RESENTATIVES.— 

14 ‘‘(A) INTRODUCTION OF SPENDING RE15 VIEW LEGISLATION.— 

16 ‘‘(i) If the report referred to in section 

17 308 indicates that the OASDI Trust 

18 Funds are not solvent, or that Medicare, 

19 Medicaid or other direct spending pro20 grams are not sustainable, or total spend21 ing exceeds the limits set forth in section 

22 252A for any year within the 75-year pe23 riod referred to in such report, then not 

24 later than 30 calendar days after the 

25 transmittal of the report referred to in 


rfrederick on DSKD9S0YB1PROD with BILLS
618 

•HR 4529 IH

1 subsection (a), if any, the majority leader 

2 and minority leader of the House of Rep3 resentatives shall each introduce legislation 

4 implementing to the extent practicable the 

5 recommendations referred to in subsection 

6 (d), or if necessary additional spending re7 duction sufficient to achieve the spending 

8 levels referred to in subsection (b). 

9 ‘‘(ii) If Spending Review Legislation 

10 is not introduced pursuant to this subpara11 graph by the majority leader or minority 

12 leader, then not later than 45 calendar 

13 days after the transmittal of the report re14 ferred to in subsection (a), the chairman or 

15 ranking member of the Committee on the 

16 Budget shall introduce Spending Review 

17 Legislation sufficient to achieve the same 

18 spending levels. 

19 ‘‘(iii) Spending review legislation shall 

20 be referred solely to the Committee on the 

21 Budget of the House of Representatives 

22 which shall have sole jurisdiction of such 

23 legislation. 

24 ‘‘(iv) Spending review legislation in25 troduced pursuant to this section shall 


rfrederick on DSKD9S0YB1PROD with BILLS
619 

•HR 4529 IH

1 cause total spending to be reduced by an 

2 amount equal or greater than the amount 

3 of the breach of the limits set forth in sec4 tion 252A, and shall cause the OASDI 

5 Trust Funds to achieve solvency, and shall 

6 cause Medicare, Medicaid, and other direct 

7 spending programs to achieve sustain8 ability. 

9 ‘‘(B) REFERRAL AND REPORTING.—The 

10 Committee on the Budget of the House of Rep11 resentatives shall report Spending Review Leg12 islation to the House of Representatives not 

13 later than the seventh legislative day after the 

14 date of introduction of the legislation referred 

15 to in subparagraph (A). If such committee fails 

16 to report the Spending Review Legislation with17 in that period or the House of Representatives 

18 has adopted a concurrent resolution providing 

19 for adjournment sine die at the end of a Con20 gress, such committee shall be automatically 

21 discharged from further consideration of the 

22 Spending Review Legislation and it shall be 

23 placed on the appropriate calendar. 

24 ‘‘(C) PROCEEDING TO CONSIDERATION.— 

25 After Spending Review Legislation is reported 


rfrederick on DSKD9S0YB1PROD with BILLS
620 

•HR 4529 IH

1 by or discharged from the Committee on the 

2 Budget or the House of Representatives has 

3 adopted a concurrent resolution providing for 

4 adjournment sine die at the end of a Congress, 

5 it shall be in order to move to proceed to con6 sider the Spending Review Legislation in the 

7 House of Representatives. Such a motion shall 

8 be in order in the legislative schedule within 

9 two legislative days after the day on which the 

10 proponent announces his intention to offer the 

11 motion. Such a motion shall not be in order 

12 after the House of Representatives has disposed 

13 of a motion to proceed with respect to that spe14 cial message. The previous question shall be 

15 considered as ordered on the motion to its 

16 adoption without intervening motion. A motion 

17 to reconsider the vote by which the motion is 

18 disposed of shall not be in order. 

19 ‘‘(D) CONSIDERATION.—The Spending Re20 view Legislation shall be considered as read. All 

21 points of order against Spending Review Legis22 lation and against its consideration are waived. 

23 The previous question shall be considered as or24 dered on an Spending Review Legislation to its 

25 passage without intervening motion except five 


rfrederick on DSKD9S0YB1PROD with BILLS
621 

•HR 4529 IH

1 hours of debate equally divided and controlled 

2 by the proponent and an opponent and one mo3 tion to limit debate on the Spending Review 

4 Legislation. A motion to reconsider the vote on 

5 passage of the Spending Review Legislation 

6 shall not be in order. 

7 ‘‘(E) SENATE SPENDING REVIEW LEGISLA8 TION.—Spending Review Legislation received 

9 from the Senate shall not be referred to com10 mittee. 

11 ‘‘(2) CONSIDERATION IN THE SENATE.— 

12 ‘‘(A) MOTION TO PROCEED TO CONSIDER13 ATION.—A motion to proceed to the consider14 ation of Spending Review Legislation under this 

15 subsection in the Senate shall not be debatable. 

16 It shall not be in order to move to reconsider 

17 the vote by which the motion to proceed is 

18 agreed to or disagreed to. 

19 ‘‘(B) LIMITS ON DEBATE.—Debate in the 

20 Senate on Spending Review Legislation under 

21 this subsection, and all debatable motions and 

22 appeals in connection therewith (including de23 bate pursuant to subparagraph (D)), shall not 

24 exceed 10 hours, equally divided and controlled 

25 in the usual form. 


rfrederick on DSKD9S0YB1PROD with BILLS
622 

•HR 4529 IH

1 ‘‘(C) APPEALS.—Debate in the Senate on 

2 any debatable motion or appeal in connection 

3 with Spending Review Legislation under this 

4 subsection shall be limited to not more than 1 

5 hour, to be equally divided and controlled in the 

6 usual form. 

7 ‘‘(D) MOTION TO LIMIT DEBATE.—A mo8 tion in the Senate to further limit debate on 

9 Spending Review Legislation under this sub10 section is not debatable. 

11 ‘‘(E) MOTION TO RECOMMIT.—A motion to 

12 recommit Spending Review Legislation under 

13 this subsection is not in order. 

14 ‘‘(F) CONSIDERATION OF THE HOUSE OF

15 REPRESENTATIVES SPENDING REVIEW LEGISLA16 TION.— 

17 ‘‘(i) IN GENERAL.—If the Senate has 

18 received the House of Representatives com19 panion resolution to the Spending Review 

20 Legislation introduced in the Senate prior 

21 to the vote required under paragraph 

22 (1)(C), then the Senate may consider, and 

23 the vote under paragraph (1)(C) may 

24 occur on, the House of Representatives 

25 companion resolution. 


rfrederick on DSKD9S0YB1PROD with BILLS
623 

•HR 4529 IH

1 ‘‘(ii) PROCEDURE AFTER VOTE ON

2 SENATE SPENDING REVIEW LEGISLA3 TION.—If the Senate votes, pursuant to 

4 paragraph (1)(C), on the Spending Review 

5 Legislation introduced in the Senate, then 

6 immediately following that vote, or upon 

7 receipt of the House of Representatives 

8 companion resolution, the House of Rep9 resentatives Spending Review Legislation 

10 shall be deemed to be considered, read the 

11 third time, and the vote on passage of the 

12 Senate resolution shall be considered to be 

13 the vote on the Spending Review Legisla14 tion received from the House of Represent15 atives. 

16 ‘‘(3) JURISDICTION.—The Committees on the 

17 Budget of the House of Representatives and Senate 

18 shall have exclusive jurisdiction over any Spending 

19 Review Legislation and all the provisions therein for 

20 all purposes of the rules of either House.’’. 

21 SEC. 824. LONG-TERM RECONCILIATION. 

22 (a) LONG-TERM RECONCILIATION.—Section 310 of 

23 the Congressional Budget Act of 1974 is amended as fol24 lows: 

25 ‘‘(h) LONG-TERM RECONCILIATION DIRECTIVES.— 


rfrederick on DSKD9S0YB1PROD with BILLS
624 

•HR 4529 IH

1 ‘‘(1) LONG-TERM RECONCILIATION DIREC2 TIVES.—In addition to a reconciliation measure as 

3 set forth in subsection (a), a concurrent resolution 

4 on the budget for any fiscal year, to the extent nec5 essary to effectuate the spending levels as set forth 

6 for such categories in section 301(a) (providing for 

7 long-term spending levels as a percentage of gross 

8 domestic product) of such resolution, shall— 

9 ‘‘(A) specify the total amount by which 

10 Medicare, Medicaid, the OASDI Trust Funds, 

11 and other direct spending outlays are to be re12 duced within the jurisdiction of a committee as 

13 a percentage of gross domestic product of such 

14 fiscal year; and 

15 ‘‘(B) direct that committee to determine 

16 and recommend changes to accomplish a reduc17 tion of such total amount for such categories as 

18 a percentage of gross domestic product. 

19 ‘‘(2) LIMITATION ON AMENDMENTS TO LONG20 TERM RECONCILIATION LEGISLATION.— 

21 ‘‘(A) It shall not be in order in the House 

22 of Representatives to consider any amendment 

23 to a reconciliation bill or reconciliation resolu24 tion if such amendment decreases outlay reduc25 tions below the level of such outlay reductions 


rfrederick on DSKD9S0YB1PROD with BILLS
625 

•HR 4529 IH

1 provided (for the fiscal years covered) in the 

2 reconciliation instructions which relate to such 

3 long-term reconciliation bill. 

4 ‘‘(B) It shall not be in order in the Senate 

5 to consider any amendment to a reconciliation 

6 bill or reconciliation resolution if such amend7 ment decreases outlay reductions below the level 

8 of such outlay reductions provided (for the fis9 cal years covered) in the reconciliation instruc10 tions which relate to such long-term reconcili11 ation bill. 

12 ‘‘(C) Subparagraphs (A) and (B) shall not 

13 apply if a declaration of war by the Congress is 

14 in effect. 

15 ‘‘(D) For purposes of this section, the lev16 els of outlays as a percentage of a gross domes17 tic product for a fiscal year shall be determined 

18 on the basis of estimates made by the Com19 mittee on the Budget of the House of Rep20 resentatives or of the Senate. 

21 ‘‘(E) The Committee on Rules of the 

22 House of Representatives may make in order 

23 amendments to achieve outlay reductions speci24 fied by reconciliation directives contained in a 

25 concurrent resolution on the budget if a comVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00625 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
626 

•HR 4529 IH

1 mittee or committees of the House of Rep2 resentatives fail to submit recommended reduc3 tions in outlays as a percentage or gross domes4 tic product to its Committee on the Budget 

5 pursuant to its instruction. 

6 ‘‘(F) In the Senate, a motion to strike a 

7 provision shall always be in order. 

8 ‘‘(3) SUBJECT MATTER.—Subject matter in9 cluded in a long-term reconciliation bill may be any 

10 of the following: 

11 ‘‘(A) Any part of the Medicare program. 

12 ‘‘(B) Medicaid. 

13 ‘‘(C) The Old-Age, Survivors, and Dis14 ability Insurance Trust Fund. 

15 ‘‘(D) Other direct spending. 

16 ‘‘(4) APPLICATION.—Subsections (c), (d), and 

17 (g) shall not apply to long-term reconciliation meas18 ures reported under this subsection.’’. 

19 (b) CONFORMING AMENDMENT.—In section 310(b) 

20 of the Congressional Budget Act of 1974, strike ‘‘sub21 section (a)’’ and insert ‘‘subsections (a) and (h)’’. 

22 SEC. 825. LONG-TERM SPENDING INCREASE POINT OF 

23 ORDER. 

24 (a) IN GENERAL.—Title III of the Congressional 

25 Budget Act of 1974 (as amended by section 303) is furVerDate Nov 24 2008 00:47 Feb 02, 2010 Jkt 089200 PO 00000 Frm 00626 Fmt 6652 Sfmt 6201 E:\BILLS\H4529.IH H4529

rfrederick on DSKD9S0YB1PROD with BILLS
627 

•HR 4529 IH

1 ther amended by adding at the end the following new sec2 tion: 

3 ‘‘LONG-TERM SPENDING INCREASE POINT OF ORDER

4 ‘‘SEC. 317. (a) CONGRESSIONAL BUDGET OFFICE

5 ANALYSIS OF PROPOSALS.—The Director of the Congres6 sional Budget Office shall, to the extent practicable, pre7 pare for each bill and joint resolution reported from com8 mittee (except measures within the jurisdiction of the 

9 Committee on Appropriations), and amendments thereto 

10 and conference reports thereon, an estimate of whether 

11 the measure causes, relative to current law, a net increase 

12 in direct spending in excess of $5,000,000,000 in any of 

13 the four 10-year periods beginning in fiscal year 2019 

14 through fiscal year 2058. 

15 ‘‘(b) IN THE SENATE.— 

16 ‘‘(1) POINT OF ORDER.—It shall not be in 

17 order in the Senate to consider any bill, joint resolu18 tion, amendment, motion, or conference report that 

19 causes a net increase in deficits in excess of 

20 $5,000,000,000 in any of the four 10-year periods 

21 beginning in 2019 through 2058. 

22 ‘‘(2) SUPERMAJORITY WAIVER AND APPEAL.— 

23 ‘‘(A) This section may be waived or sus24 pended only by the affirmative vote of three25 fifths of the Members, duly chosen and sworn. 


rfrederick on DSKD9S0YB1PROD with BILLS
628 

•HR 4529 IH

1 ‘‘(B) An affirmative vote of three-fifths of 

2 the Members, duly chosen and sworn, shall be 

3 required to sustain an appeal of the ruling of 

4 the Chair on a point of order raised under this 

5 section. 

6 ‘‘(c) IN THE HOUSE OF REPRESENTATIVES.— 

7 ‘‘(1) POINT OF ORDER.—It shall not be in 

8 order in the House of Representatives to consider 

9 any bill, joint resolution, amendment, motion, or 

10 conference report that causes a net increase in defi11 cits in excess of $5,000,000,000 in any of the four 

12 10-year periods beginning in 2019 through 2058. 

13 ‘‘(2) SUPERMAJORITY WAIVER AND APPEAL.— 

14 ‘‘(A) This section may be waived or sus15 pended only by the affirmative vote of three16 fifths of the Members, duly chosen and sworn. 

17 ‘‘(B) An affirmative vote of two-thirds of 

18 the Members, duly chosen and sworn, shall be 

19 required to sustain an appeal of the ruling of 

20 the Chair on a point of order raised under this 

21 section. 

22 ‘‘(d) DETERMINATIONS OF BUDGET LEVELS.—For 

23 purposes of this section, the levels of net deficit increases 

24 shall be determined on the basis of estimates provided by 


rfrederick on DSKD9S0YB1PROD with BILLS
629 

•HR 4529 IH

1 the chairmen of the Senate and House Committees on the 

2 Budget, as applicable.’’. 

3 (b) CONFORMING AMENDMENT.—The table of con4 tents set forth in section 1(b) of the Congressional Budget 

5 and Impoundment Control Act of 1974 is amended by in6 serting after the item relating to section 316 the following 

7 new item: 

‘‘Sec. 317. Long-term spending increase point of order.’’. 

Æ 


rfrederick on DSKD9S0YB1PROD with BILLS