II 

★(Star Print)

Calendar No. 20 

111TH CONGRESS 

1ST SESSION S. 350 

To provide for a portion of the economic recovery package relating to revenue 

measures, unemployment, and health. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 29, 2009 

Mr. BAUCUS, from the Committee on Finance, reported the following original 

bill; which was read twice and placed on the calendar 

A BILL 

To provide for a portion of the economic recovery package 

relating to revenue measures, unemployment, and health. 

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. 

4 This Act may be cited as the ‘‘American Recovery 

5 and Reinvestment Act of 2009’’. 

6 TITLE I—TAX PROVISIONS 

7 SEC. 1000. SHORT TITLE, ETC. 

8 (a) SHORT TITLE.—This title may be cited as the 

9 ‘‘American Recovery and Reinvestment Tax Act of 2009’’. 


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1 (b) REFERENCE.—Except as otherwise expressly pro2 vided, whenever in this title an amendment or repeal is 

3 expressed in terms of an amendment to, or repeal of, a 

4 section or other provision, the reference shall be consid5 ered to be made to a section or other provision of the In6 ternal Revenue Code of 1986. 

7 (c) TABLE OF CONTENTS.—The table of contents for 

8 this title is as follows: 

TITLE I—TAX PROVISIONS 

Sec. 1000. Short title, etc. 

Subtitle A—Tax Relief for Individuals and Families 

PART I—GENERAL TAX RELIEF

Sec. 1001. Making work pay credit. 

Sec. 1002. Temporary increase in earned income tax credit. 

Sec. 1003. Temporary increase of refundable portion of child credit. 

Sec. 1004. American opportunity tax credit. 

Sec. 1005. Computer technology and equipment allowed as a qualified higher 

education expense for section 529 accounts in 2009 and 2010. 

Sec. 1006. Extension of first-time homebuyer credit; waiver of requirement to 

repay. 

Sec. 1007. Suspension of tax on portion of unemployment compensation. 

PART II—ALTERNATIVE MINIMUM TAX RELIEF

Sec. 1011. Extension of alternative minimum tax relief for nonrefundable personal credits. 

Sec. 1012. Extension of increased alternative minimum tax exemption amount. 

Subtitle B—Energy Incentives 

PART I—RENEWABLE ENERGY INCENTIVES

Sec. 1101. Extension of credit for electricity produced from certain renewable 

resources. 

Sec. 1102. Election of investment credit in lieu of production credit. 

Sec. 1103. Repeal of certain limitations on credit for renewable energy property. 

PART II—INCREASED ALLOCATIONS OF NEW CLEAN RENEWABLE ENERGY

BONDS AND QUALIFIED ENERGY CONSERVATION BONDS

Sec. 1111. Increased limitation on issuance of new clean renewable energy 

bonds. 


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Sec. 1112. Increased limitation on issuance of qualified energy conservation 

bonds. 

PART III—ENERGY CONSERVATION INCENTIVES

Sec. 1121. Extension and modification of credit for nonbusiness energy property. 

Sec. 1122. Modification of credit for residential energy efficient property. 

Sec. 1123. Temporary increase in credit for alternative fuel vehicle refueling 

property. 

PART IV—ENERGY RESEARCH INCENTIVES

Sec. 1131. Increased research credit for energy research. 

PART V—GENERAL BUSINESS CREDIT

Sec. 1141. 5-year carryback of general business credits. 

Sec. 1142. Temporary provision allowing general business credits to offset 100 

percent of Federal income tax liability. 

PART VI—MODIFICATION OF CREDIT FOR CARBON DIOXIDE

SEQUESTRATION

Sec. 1151. Application of monitoring requirements to carbon dioxide used as a 

tertiary injectant. 

PART VII—PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES

Sec. 1161. Modification of credit for qualified plug-in electric motor vehicles. 

Subtitle C—Tax Incentives for Business 

PART I—TEMPORARY INVESTMENT INCENTIVES

Sec. 1201. Special allowance for certain property acquired during 2009. 

Sec. 1202. Temporary increase in limitations on expensing of certain depreciable business assets. 

PART II—5-YEAR CARRYBACK OF OPERATING LOSSES

Sec. 1211. 5-year carryback of operating losses. 

Sec. 1212. Exception for TARP recipients. 

PART III—INCENTIVES FOR NEW JOBS

Sec. 1221. Incentives to hire unemployed veterans and disconnected youth. 

PART IV—CANCELLATION OF INDEBTEDNESS

Sec. 1231. Deferral and ratable inclusion of income arising from indebtedness 

discharged by the repurchase of a debt instrument. 

PART V—QUALIFIED SMALL BUSINESS STOCK

Sec. 1241. Special rules applicable to qualified small business stock for 2009 

and 2010. 

PART VI—PARITY FOR TRANSPORTATION FRINGE BENEFITS


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Sec. 1251. Increased exclusion amount for commuter transit benefits and transit passes. 

PART VII—S CORPORATIONS

Sec. 1261. Temporary reduction in recognition period for built-in gains tax. 

PART VIII—BROADBAND INCENTIVES

Sec. 1271. Broadband Internet access tax credit. 

PART IX—CLARIFICATION OF REGULATIONS RELATED TO LIMITATIONS ON

CERTAIN BUILT-IN LOSSES FOLLOWING AN OWNERSHIP CHANGE

Sec. 1281. Clarification of regulations related to limitations on certain built-in 

losses following an ownership change. 

Subtitle D—Manufacturing Recovery Provisions 

Sec. 1301. Temporary expansion of availability of industrial development bonds 

to facilities manufacturing intangible property. 

Sec. 1302. Credit for investment in advanced energy facilities. 

Subtitle E—Economic Recovery Tools 

Sec. 1401. Recovery zone bonds. 

Sec. 1402. Tribal economic development bonds. 

Sec. 1403. Modifications to new markets tax credit. 

Subtitle F—Infrastructure Financing Tools 

PART I—IMPROVED MARKETABILITY FOR TAX-EXEMPT BONDS

Sec. 1501. De minimis safe harbor exception for tax-exempt interest expense of 

financial institutions. 

Sec. 1502. Modification of small issuer exception to tax-exempt interest expense 

allocation rules for financial institutions. 

Sec. 1503. Temporary modification of alternative minimum tax limitations on 

tax-exempt bonds. 

Sec. 1504. Modification to high speed intercity rail facility bonds. 

PART II—DELAY IN APPLICATION OF WITHHOLDING TAX ON GOVERNMENT

CONTRACTORS

Sec. 1511. Delay in application of withholding tax on government contractors. 

PART III—TAX CREDIT BONDS FOR SCHOOLS

Sec. 1521. Qualified school construction bonds. 

Sec. 1522. Extension and expansion of qualified zone academy bonds. 

PART IV—BUILD AMERICA BONDS

Sec. 1531. Build America bonds. 

Subtitle G—Economic Recovery Payments to Certain Individuals 

Sec. 1601. Economic recovery payment to recipients of Social Security, supplemental security income, railroad retirement benefits, and veterans disability compensation or pension benefits. 


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Subtitle H—Trade Adjustment Assistance 

Sec. 1701. Temporary extension of Trade Adjustment Assistance program. 

Subtitle I—Prohibition on Collection of Certain Payments Made Under the 

Continued Dumping and Subsidy Offset Act of 2000 

Sec. 1801. Prohibition on collection of certain payments made under the Continued Dumping and Subsidy Offset Act of 2000. 

Subtitle J—Other Provisions 

Sec. 1901. Application of certain labor standards to projects financed with certain tax-favored bonds. 

Sec. 1902. Increase in public debt limit. 

1 Subtitle A—Tax Relief for 

2 Individuals and Families 

3 PART I—GENERAL TAX RELIEF 

4 SEC. 1001. MAKING WORK PAY CREDIT. 

5 (a) IN GENERAL.—Subpart C of part IV of sub6 chapter A of chapter 1 is amended by inserting after sec7 tion 36 the following new section: 

8 ‘‘SEC. 36A. MAKING WORK PAY CREDIT. 

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli10 gible individual, there shall be allowed as a credit against 

11 the tax imposed by this subtitle for the taxable year an 

12 amount equal to the lesser of— 

13 ‘‘(1) 6.2 percent of earned income of the tax14 payer, or 

15 ‘‘(2) $500 ($1,000 in the case of a joint re16 turn). 

17 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

18 GROSS INCOME.— 


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1 ‘‘(1) IN GENERAL.—The amount allowable as a 

2 credit under subsection (a) (determined without re3 gard to this paragraph and subsection (c)) for the 

4 taxable year shall be reduced (but not below zero) by 

5 4 percent of so much of the taxpayer’s modified ad6 justed gross income as exceeds $75,000 ($150,000 

7 in the case of a joint return). 

8 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.— 

9 For purposes of subparagraph (A), the term ‘modi10 fied adjusted gross income’ means the adjusted 

11 gross income of the taxpayer for the taxable year in12 creased by any amount excluded from gross income 

13 under section 911, 931, or 933. 

14 ‘‘(c) REDUCTION FOR CERTAIN OTHER PAY15 MENTS.—The credit allowed under subsection (a) for any 

16 taxable year shall be reduced by the amount of any pay17 ments received by the taxpayer during such taxable year 

18 under section 1601 of the American Recovery and Rein19 vestment Tax Act of 2009. 

20 ‘‘(d) DEFINITIONS.—For purposes of this section— 

21 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

22 individual’ means any individual other than— 

23 ‘‘(A) any nonresident alien individual, 

24 ‘‘(B) any individual with respect to whom 

25 a deduction under section 151 is allowable to 


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1 another taxpayer for a taxable year beginning 

2 in the calendar year in which the individual’s 

3 taxable year begins, and 

4 ‘‘(C) an estate or trust. 

5 Such term shall not include any individual unless the 

6 requirements of section 32(c)(1)(E) are met with re7 spect to such individual. 

8 ‘‘(2) EARNED INCOME.—The term ‘earned in9 come’ has the meaning given such term by section 

10 32(c)(2), except that such term shall not include net 

11 earnings from self-employment which are not taken 

12 into account in computing taxable income. For pur13 poses of the preceding sentence, any amount ex14 cluded from gross income by reason of section 112 

15 shall be treated as earned income which is taken 

16 into account in computing taxable income for the 

17 taxable year. 

18 ‘‘(e) TERMINATION.—This section shall not apply to 

19 taxable years beginning after December 31, 2010.’’. 

20 (b) TREATMENT OF POSSESSIONS.— 

21 (1) PAYMENTS TO POSSESSIONS.— 

22 (A) MIRROR CODE POSSESSION.—The Sec23 retary of the Treasury shall pay to each posses24 sion of the United States with a mirror code 

25 tax system amounts equal to the loss to that 


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1 possession by reason of the amendments made 

2 by this section with respect to taxable years be3 ginning in 2009 and 2010. Such amounts shall 

4 be determined by the Secretary of the Treasury 

5 based on information provided by the govern6 ment of the respective possession. 

7 (B) OTHER POSSESSIONS.—The Secretary 

8 of the Treasury shall pay to each possession of 

9 the United States which does not have a mirror 

10 code tax system amounts estimated by the Sec11 retary of the Treasury as being equal to the ag12 gregate benefits that would have been provided 

13 to residents of such possession by reason of the 

14 amendments made by this section for taxable 

15 years beginning in 2009 and 2010 if a mirror 

16 code tax system had been in effect in such pos17 session. The preceding sentence shall not apply 

18 with respect to any possession of the United 

19 States unless such possession has a plan, which 

20 has been approved by the Secretary of the 

21 Treasury, under which such possession will 

22 promptly distribute such payments to the resi23 dents of such possession. 

24 (2) COORDINATION WITH CREDIT ALLOWED

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1 it shall be allowed against United States income 

2 taxes for any taxable year under section 36A of the 

3 Internal Revenue Code of 1986 (as added by this 

4 section) to any person— 

5 (A) to whom a credit is allowed against 

6 taxes imposed by the possession by reason of 

7 the amendments made by this section for such 

8 taxable year, or 

9 (B) who is eligible for a payment under a 

10 plan described in paragraph (1)(B) with respect 

11 to such taxable year. 

12 (3) DEFINITIONS AND SPECIAL RULES.— 

13 (A) POSSESSION OF THE UNITED

14 STATES.—For purposes of this subsection, the 

15 term ‘‘possession of the United States’’ includes 

16 the Commonwealth of Puerto Rico and the 

17 Commonwealth of the Northern Mariana Is18 lands. 

19 (B) MIRROR CODE TAX SYSTEM.—For pur20 poses of this subsection, the term ‘‘mirror code 

21 tax system’’ means, with respect to any posses22 sion of the United States, the income tax sys23 tem of such possession if the income tax liabil24 ity of the residents of such possession under 

25 such system is determined by reference to the 


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1 income tax laws of the United States as if such 

2 possession were the United States. 

3 (C) TREATMENT OF PAYMENTS.—For pur4 poses of section 1324(b)(2) of title 31, United 

5 States Code, the payments under this sub6 section shall be treated in the same manner as 

7 a refund due from the credit allowed under sec8 tion 36A of the Internal Revenue Code of 1986 

9 (as added by this section). 

10 (c) REFUNDS DISREGARDED IN THE ADMINISTRA11 TION OF FEDERAL PROGRAMS AND FEDERALLY AS12 SISTED PROGRAMS.—Any credit or refund allowed or 

13 made to any individual by reason of section 36A of the 

14 Internal Revenue Code of 1986 (as added by this section) 

15 or by reason of subsection (b) of this section shall not be 

16 taken into account as income and shall not be taken into 

17 account as resources for the month of receipt and the fol18 lowing 2 months, for purposes of determining the eligi19 bility of such individual or any other individual for benefits 

20 or assistance, or the amount or extent of benefits or assist21 ance, under any Federal program or under any State or 

22 local program financed in whole or in part with Federal 

23 funds. 

24 (d) AUTHORITY RELATING TO CLERICAL ERRORS.— 

25 Section 6213(g)(2) is amended by striking ‘‘and’’ at the 


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1 end of subparagraph (L)(ii), by striking the period at the 

2 end of subparagraph (M) and inserting ‘‘, and’’, and by 

3 adding at the end the following new subparagraph: 

4 ‘‘(N) an omission of the reduction required 

5 under section 36A(c) with respect to the credit 

6 allowed under section 36A or an omission of the 

7 correct TIN required under section 

8 36A(d)(1).’’. 

9 (e) CONFORMING AMENDMENTS.— 

10 (1) Section 6211(b)(4)(A) is amended by insert11 ing ‘‘36A,’’ after ‘‘36,’’. 

12 (2) Section 1324(b)(2) of title 31, United 

13 States Code, is amended by inserting ‘‘36A,’’ after 

14 ‘‘36,’’. 

15 (3) The table of sections for subpart C of part 

16 IV of subchapter A of chapter 1 is amended by in17 serting after the item relating to section 36 the fol18 lowing new item: 

‘‘Sec. 36A. Making work pay credit.’’. 

19 (f) EFFECTIVE DATE.—This section, and the amend20 ments made by this section, shall apply to taxable years 

21 beginning after December 31, 2008. 


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1 SEC. 1002. TEMPORARY INCREASE IN EARNED INCOME TAX 

2 CREDIT. 

3 (a) IN GENERAL.—Subsection (b) of section 32 is 

4 amended by adding at the end the following new para5 graph: 

6 ‘‘(3) SPECIAL RULES FOR 2009 AND 2010.—In 

7 the case of any taxable year beginning in 2009 or 

8 2010— 

9 ‘‘(A) INCREASED CREDIT PERCENTAGE

10 FOR 3 OR MORE QUALIFYING CHILDREN.—In 

11 the case of a taxpayer with 3 or more qualifying 

12 children, the credit percentage is 45 percent. 

13 ‘‘(B) REDUCTION OF MARRIAGE PEN14 ALTY.— 

15 ‘‘(i) IN GENERAL.—The dollar amount 

16 in effect under paragraph (2)(B) shall be 

17 $5,000. 

18 ‘‘(ii) INFLATION ADJUSTMENT.—In 

19 the case of any taxable year beginning in 

20 2010, the $5,000 amount in clause (i) 

21 shall be increased by an amount equal to— 

22 ‘‘(I) such dollar amount, multi23 plied by 

24 ‘‘(II) the cost of living adjust25 ment determined under section 1(f)(3) 

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1 able year begins determined by sub2 stituting ‘calendar year 2008’ for ‘cal3 endar year 1992’ in subparagraph (B) 

4 thereof. 

5 ‘‘(iii) ROUNDING.—Subparagraph (A) 

6 of subsection (j)(2) shall apply after taking 

7 into account any increase under clause 

8 (ii).’’. 

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2008. 

12 SEC. 1003. TEMPORARY INCREASE OF REFUNDABLE POR13 TION OF CHILD CREDIT. 

14 (a) IN GENERAL.—Paragraph (4) of section 24(d) is 

15 amended to read as follows: 

16 ‘‘(4) SPECIAL RULE FOR 2009 AND 2010.—Not17 withstanding paragraph (3), in the case of any tax18 able year beginning in 2009 or 2010, the dollar 

19 amount in effect for such taxable year under para20 graph (1)(B)(i) shall be $6,000.’’. 

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

22 this section shall apply to taxable years beginning after 

23 December 31, 2008. 


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1 SEC. 1004. AMERICAN OPPORTUNITY TAX CREDIT. 

2 (a) IN GENERAL.—Section 25A (relating to Hope 

3 scholarship credit) is amended by redesignating subsection 

4 (i) as subsection (j) and by inserting after subsection (h) 

5 the following new subsection: 

6 ‘‘(i) AMERICAN OPPORTUNITY TAX CREDIT.—In the 

7 case of any taxable year beginning in 2009 or 2010— 

8 ‘‘(1) INCREASE IN CREDIT.—The Hope Scholar9 ship Credit shall be an amount equal to the sum 

10 of— 

11 ‘‘(A) 100 percent of so much of the quali12 fied tuition and related expenses paid by the 

13 taxpayer during the taxable year (for education 

14 furnished to the eligible student during any 

15 academic period beginning in such taxable year) 

16 as does not exceed $2,000, plus 

17 ‘‘(B) 25 percent of such expenses so paid 

18 as exceeds $2,000 but does not exceed $4,000. 

19 ‘‘(2) CREDIT ALLOWED FOR FIRST 4 YEARS OF

20 POST-SECONDARY EDUCATION.—Subparagraphs (A) 

21 and (C) of subsection (b)(2) shall be applied by sub22 stituting ‘4’ for ‘2’. 

23 ‘‘(3) QUALIFIED TUITION AND RELATED EX24 PENSES TO INCLUDE REQUIRED COURSE MATE25 RIALS.—Subsection (f)(1)(A) shall be applied by 


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1 substituting ‘tuition, fees, and course materials’ for 

2 ‘tuition and fees’. 

3 ‘‘(4) INCREASE IN AGI LIMITS FOR HOPE

4 SCHOLARSHIP CREDIT.—In lieu of applying sub5 section (d) with respect to the Hope Scholarship 

6 Credit, such credit (determined without regard to 

7 this paragraph) shall be reduced (but not below 

8 zero) by the amount which bears the same ratio to 

9 such credit (as so determined) as— 

10 ‘‘(A) the excess of— 

11 ‘‘(i) the taxpayer’s modified adjusted 

12 gross income (as defined in subsection 

13 (d)(3)) for such taxable year, over 

14 ‘‘(ii) $80,000 ($160,000 in the case of 

15 a joint return), bears to 

16 ‘‘(B) $10,000 ($20,000 in the case of a 

17 joint return). 

18 ‘‘(5) CREDIT ALLOWED AGAINST ALTERNATIVE

19 MINIMUM TAX.—In the case of a taxable year to 

20 which section 26(a)(2) does not apply, so much of 

21 the credit allowed under subsection (a) as is attrib22 utable to the Hope Scholarship Credit shall not ex23 ceed the excess of— 


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1 ‘‘(A) the sum of the regular tax liability 

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over 

4 ‘‘(B) the sum of the credits allowable 

5 under this subpart (other than this subsection 

6 and sections 23, 25D, and 30D) and section 27 

7 for the taxable year. 

8 Any reference in this section or section 24, 25, 26, 

9 25B, 904, or 1400C to a credit allowable under this 

10 subsection shall be treated as a reference to so much 

11 of the credit allowable under subsection (a) as is at12 tributable to the Hope Scholarship Credit. 

13 ‘‘(6) PORTION OF CREDIT MADE REFUND14 ABLE.—30 percent of so much of the credit allowed 

15 under subsection (a) as is attributable to the Hope 

16 Scholarship Credit (determined after application of 

17 paragraph (4) and without regard to this paragraph 

18 and section 26(a)(2) or paragraph (5), as the case 

19 may be) shall be treated as a credit allowable under 

20 subpart C (and not allowed under subsection (a)). 

21 The preceding sentence shall not apply to any tax22 payer for any taxable year if such taxpayer is a child 

23 to whom subsection (g) of section 1 applies for such 

24 taxable year. 


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1 ‘‘(7) COORDINATION WITH MIDWESTERN DIS2 ASTER AREA BENEFITS.—In the case of a taxpayer 

3 with respect to whom section 702(a)(1)(B) of the 

4 Heartland Disaster Tax Relief Act of 2008 applies 

5 for any taxable year, such taxpayer may elect to 

6 waive the application of this subsection to such tax7 payer for such taxable year.’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) Section 24(b)(3)(B) is amended by inserting 

10 ‘‘25A(i),’’ after ‘‘23,’’. 

11 (2) Section 25(e)(1)(C)(ii) is amended by in12 serting ‘‘25A(i),’’ after ‘‘24,’’. 

13 (3) Section 26(a)(1) is amended by inserting 

14 ‘‘25A(i),’’ after ‘‘24,’’. 

15 (4) Section 25B(g)(2) is amended by inserting 

16 ‘‘25A(i),’’ after ‘‘23,’’. 

17 (5) Section 904(i) is amended by inserting 

18 ‘‘25A(i),’’ after ‘‘24,’’. 

19 (6) Section 1400C(d)(2) is amended by insert20 ing ‘‘25A(i),’’ after ‘‘24,’’. 

21 (7) Section 1324(b)(2) of title 31, United 

22 States Code, is amended by inserting ‘‘25A,’’ before 

23 ‘‘35’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

4 (d) APPLICATION OF EGTRRA SUNSET.—The 

5 amendment made by subsection (b)(1) shall be subject to 

6 title IX of the Economic Growth and Tax Relief Reconcili7 ation Act of 2001 in the same manner as the provision 

8 of such Act to which such amendment relates. 

9 (e) TREASURY STUDIES REGARDING EDUCATION IN10 CENTIVES.— 

11 (1) STUDY REGARDING COORDINATION WITH

12 NON-TAX EDUCATIONAL INCENTIVES.—The Sec13 retary of the Treasury, or the Secretary’s delegate, 

14 shall study how to coordinate the credit allowed 

15 under section 25A of the Internal Revenue Code of 

16 1986 with the Federal Pell Grant program under 

17 section 401 of the Higher Education Act of 1965. 

18 (2) STUDY REGARDING IMPOSITION OF COMMU19 NITY SERVICE REQUIREMENTS.—The Secretary of 

20 the Treasury, or the Secretary’s delegate, shall study 

21 the feasibility of requiring students to perform com22 munity service as a condition of taking their tuition 

23 and related expenses into account under section 25A 

24 of the Internal Revenue Code of 1986. 


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1 (3) REPORT.—Not later than 1 year after the 

2 date of the enactment of this Act, the Secretary of 

3 the Treasury, or the Secretary’s delegate, shall re4 port to Congress on the results of the studies con5 ducted under this paragraph. 

6 SEC. 1005. COMPUTER TECHNOLOGY AND EQUIPMENT AL7 LOWED AS A QUALIFIED HIGHER EDUCATION 

8 EXPENSE FOR SECTION 529 ACCOUNTS IN 

9 2009 AND 2010. 

10 (a) IN GENERAL.—Section 529(e)(3)(A) is amended 

11 by striking ‘‘and’’ at the end of clause (i), by striking the 

12 period at the end of clause (ii), and by adding at the end 

13 the following: 

14 ‘‘(iii) expenses paid or incurred in 

15 2009 or 2010 for the purchase of any com16 puter technology or equipment (as defined 

17 in section 170(e)(6)(F)(i)) or Internet ac18 cess and related services, if such tech19 nology, equipment, or services are to be 

20 used by the beneficiary and the bene21 ficiary’s family during any of the years the 

22 beneficiary is enrolled at an eligible edu23 cational institution. 

24 Clause (iii) shall not include expenses for com25 puter software designed for sports, games, or 


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1 hobbies unless the software is predominantly 

2 educational in nature.’’. 

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

4 this section shall apply to expenses paid or incurred after 

5 December 31, 2008. 

6 SEC. 1006. EXTENSION OF FIRST-TIME HOMEBUYER CRED7 IT; WAIVER OF REQUIREMENT TO REPAY. 

8 (a) EXTENSION.— 

9 (1) IN GENERAL.—Section 36(h) is amended by 

10 striking ‘‘July 1, 2009’’ and inserting ‘‘September 1, 

11 2009’’. 

12 (2) CONFORMING AMENDMENT.—Section 36(g) 

13 is amended by striking ‘‘July 1, 2009’’ and inserting 

14 ‘‘September 1, 2009’’. 

15 (b) WAIVER OF RECAPTURE.— 

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

17 36(f) is amended by adding at the end the following 

18 new subparagraph: 

19 ‘‘(D) WAIVER OF RECAPTURE FOR PUR20 CHASES IN 2009.—In the case of any credit al21 lowed with respect to the purchase of a prin22 cipal residence after December 31, 2008, and 

23 before September 1, 2009— 

24 ‘‘(i) paragraph (1) shall not apply, 

25 and 


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1 ‘‘(ii) paragraph (2) shall apply only if 

2 the disposition or cessation described in 

3 paragraph (2) with respect to such resi4 dence occurs during the 36-month period 

5 beginning on the date of the purchase of 

6 such residence by the taxpayer.’’. 

7 (2) CONFORMING AMENDMENT.—Subsection (g) 

8 of section 36 is amended by striking ‘‘subsection 

9 (c)’’ and inserting ‘‘subsections (c) and (f)(4)(D)’’. 

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

11 this section shall apply to residences purchased after De12 cember 31, 2008. 

13 SEC. 1007. SUSPENSION OF TAX ON PORTION OF UNEM14 PLOYMENT COMPENSATION. 

15 (a) IN GENERAL.—Section 85 of the Internal Rev16 enue Code of 1986 (relating to unemployment compensa17 tion) is amended by adding at the end the following new 

18 subsection: 

19 ‘‘(c) SPECIAL RULE FOR 2009.—In the case of any 

20 taxable year beginning in 2009, gross income shall not in21 clude so much of the unemployment compensation received 

22 by an individual as does not exceed $2,400.’’. 

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

24 this section shall apply to taxable years beginning after 

25 December 31, 2008. 


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1 PART II—ALTERNATIVE MINIMUM TAX RELIEF 

2 SEC. 1011. EXTENSION OF ALTERNATIVE MINIMUM TAX RE3 LIEF FOR NONREFUNDABLE PERSONAL 

4 CREDITS. 

5 (a) IN GENERAL.—Paragraph (2) of section 26(a) 

6 (relating to special rule for taxable years 2000 through 

7 2008) is amended— 

8 (1) by striking ‘‘or 2008’’ and inserting ‘‘2008, 

9 or 2009’’, and 

10 (2) by striking ‘‘2008’’ in the heading thereof 

11 and inserting ‘‘2009’’. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2008. 

15 SEC. 1012. EXTENSION OF INCREASED ALTERNATIVE MIN16 IMUM TAX EXEMPTION AMOUNT. 

17 (a) IN GENERAL.—Paragraph (1) of section 55(d) 

18 (relating to exemption amount) is amended— 

19 (1) by striking ‘‘($69,950 in the case of taxable 

20 years beginning in 2008)’’ in subparagraph (A) and 

21 inserting ‘‘($70,950 in the case of taxable years be22 ginning in 2009)’’, and 

23 (2) by striking ‘‘($46,200 in the case of taxable 

24 years beginning in 2008)’’ in subparagraph (B) and 

25 inserting ‘‘($46,700 in the case of taxable years be26 ginning in 2009)’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

4 Subtitle B—Energy Incentives 

5 PART I—RENEWABLE ENERGY INCENTIVES 

6 SEC. 1101. EXTENSION OF CREDIT FOR ELECTRICITY PRO7 DUCED FROM CERTAIN RENEWABLE RE8 SOURCES. 

9 (a) IN GENERAL.—Subsection (d) of section 45 is 

10 amended— 

11 (1) by striking ‘‘2010’’ in paragraph (1) and in12 serting ‘‘2013’’, 

13 (2) by striking ‘‘2011’’ each place it appears in 

14 paragraphs (2), (3), (4), (6), (7) and (9) and insert15 ing ‘‘2014’’, and 

16 (3) by striking ‘‘2012’’ in paragraph (11)(B) 

17 and inserting ‘‘2014’’. 

18 (b) TECHNICAL AMENDMENT.—Paragraph (5) of 

19 section 45(d) is amended by striking ‘‘and before’’ and 

20 all that follows and inserting ‘‘ and before October 3, 

21 2008.’’. 

22 (c) EFFECTIVE DATE.— 

23 (1) IN GENERAL.—The amendments made by 

24 subsection (a) shall apply to property placed in serv25 ice after the date of the enactment of this Act. 


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1 (2) TECHNICAL AMENDMENT.—The amendment 

2 made by subsection (b) shall take effect as if in3 cluded in section 102 of the Energy Improvement 

4 and Extension Act of 2008. 

5 SEC. 1102. ELECTION OF INVESTMENT CREDIT IN LIEU OF 

6 PRODUCTION CREDIT. 

7 (a) IN GENERAL.—Subsection (a) of section 48 is 

8 amended by adding at the end the following new para9 graph: 

10 ‘‘(5) ELECTION TO TREAT QUALIFIED FACILI11 TIES AS ENERGY PROPERTY.— 

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

13 qualified investment credit facility— 

14 ‘‘(i) such facility shall be treated as 

15 energy property for purposes of this sec16 tion, and 

17 ‘‘(ii) the energy percentage with re18 spect to such property shall be 30 percent. 

19 ‘‘(B) DENIAL OF PRODUCTION CREDIT.— 

20 No credit shall be allowed under section 45 for 

21 any taxable year with respect to any qualified 

22 investment credit facility. 

23 ‘‘(C) QUALIFIED INVESTMENT CREDIT FA24 CILITY.—For purposes of this paragraph, the 

25 term ‘qualified investment credit facility’ means 


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1 any of the following facilities if no credit has 

2 been allowed under section 45 with respect to 

3 such facility and the taxpayer makes an irrev4 ocable election to have this paragraph apply to 

5 such facility: 

6 ‘‘(i) WIND FACILITIES.—Any facility 

7 described in paragraph (1) of section 45(d) 

8 if such facility is placed in service in 2009, 

9 2010, 2011, or 2012. 

10 ‘‘(ii) OTHER FACILITIES.—Any facility 

11 described in paragraph (2), (3), (4), (6), 

12 (7), (9), or (11) of section 45(d) if such fa13 cility is placed in service in 2009, 2010, 

14 2011, 2012, or 2013.’’. 

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

16 this section shall apply to facilities placed in service after 

17 December 31, 2008. 

18 SEC. 1103. REPEAL OF CERTAIN LIMITATIONS ON CREDIT 

19 FOR RENEWABLE ENERGY PROPERTY. 

20 (a) REPEAL OF LIMITATION ON CREDIT FOR QUALI21 FIED SMALL WIND ENERGY PROPERTY.—Paragraph (4) 

22 of section 48(c) is amended by striking subparagraph (B) 

23 and by redesignating subparagraphs (C) and (D) as sub24 paragraphs (B) and (C). 


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1 (b) REPEAL OF LIMITATION ON PROPERTY FI2 NANCED BY SUBSIDIZED ENERGY FINANCING.— 

3 (1) IN GENERAL.—Section 48(a)(4) is amended 

4 by adding at the end the following new subpara5 graph: 

6 ‘‘(D) TERMINATION.—This paragraph 

7 shall not apply to periods after December 31, 

8 2008, under rules similar to the rules of section 

9 48(m) (as in effect on the day before the date 

10 of the enactment of the Revenue Reconciliation 

11 Act of 1990).’’. 

12 (2) CONFORMING AMENDMENTS.— 

13 (A) Section 25C(e)(1) is amended by strik14 ing ‘‘(8), and (9)’’ and inserting ‘‘and (8)’’. 

15 (B) Section 25D(e) is amended by striking 

16 paragraph (9). 

17 (C) Section 48A(b)(2) is amended by in18 serting ‘‘(without regard to subparagraph (D) 

19 thereof)’’ after ‘‘section 48(a)(4)’’. 

20 (D) Section 48B(b)(2) is amended by in21 serting ‘‘(without regard to subparagraph (D) 

22 thereof)’’ after ‘‘section 48(a)(4)’’. 

23 (c) EFFECTIVE DATE.— 

24 (1) IN GENERAL.—Except as provided in para25 graph (2), the amendment made by this section shall 


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1 apply to periods after December 31, 2008, under 

2 rules similar to the rules of section 48(m) of the In3 ternal Revenue Code of 1986 (as in effect on the day 

4 before the date of the enactment of the Revenue 

5 Reconciliation Act of 1990). 

6 (2) CONFORMING AMENDMENTS.—The amend7 ments made by subsection (b)(2) shall apply to tax8 able years beginning after December 31, 2008. 

9 PART II—INCREASED ALLOCATIONS OF NEW 

10 CLEAN RENEWABLE ENERGY BONDS AND 

11 QUALIFIED ENERGY CONSERVATION BONDS 

12 SEC. 1111. INCREASED LIMITATION ON ISSUANCE OF NEW 

13 CLEAN RENEWABLE ENERGY BONDS. 

14 Subsection (c) of section 54C is amended by adding 

15 at the end the following new paragraph: 

16 ‘‘(4) ADDITIONAL LIMITATION.—The national 

17 new clean renewable energy bond limitation shall be 

18 increased by $1,600,000,000. Such increase shall be 

19 allocated by the Secretary consistent with the rules 

20 of paragraphs (2) and (3).’’. 

21 SEC. 1112. INCREASED LIMITATION ON ISSUANCE OF 

22 QUALIFIED ENERGY CONSERVATION BONDS. 

23 Section 54D(d) is amended by striking 

24 ‘‘800,000,000’’ and inserting ‘‘$3,200,000,000’’. 


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1 PART III—ENERGY CONSERVATION INCENTIVES 

2 SEC. 1121. EXTENSION AND MODIFICATION OF CREDIT FOR 

3 NONBUSINESS ENERGY PROPERTY. 

4 (a) IN GENERAL.—Section 25C is amended by strik5 ing subsections (a) and (b) and inserting the following new 

6 subsections: 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in8 dividual, there shall be allowed as a credit against the tax 

9 imposed by this chapter for the taxable year an amount 

10 equal to 30 percent of the sum of— 

11 ‘‘(1) the amount paid or incurred by the tax12 payer during such taxable year for qualified energy 

13 efficiency improvements, and 

14 ‘‘(2) the amount of the residential energy prop15 erty expenditures paid or incurred by the taxpayer 

16 during such taxable year. 

17 ‘‘(b) LIMITATION.—The aggregate amount of the 

18 credits allowed under this section for taxable years begin19 ning in 2009 and 2010 with respect to any taxpayer shall 

20 not exceed $1,500.’’. 

21 (b) EXTENSION.—Section 25C(g)(2) is amended by 

22 striking ‘‘December 31, 2009’’ and inserting ‘‘December 

23 31, 2010’’. 

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

25 this section shall apply to taxable years beginning after 

26 December 31, 2008. 


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1 SEC. 1122. MODIFICATION OF CREDIT FOR RESIDENTIAL 

2 ENERGY EFFICIENT PROPERTY. 

3 (a) REMOVAL OF CREDIT LIMITATION FOR PROP4 ERTY PLACED IN SERVICE.— 

5 (1) IN GENERAL.—Paragraph (1) of section 

6 25D(b) is amended to read as follows: 

7 ‘‘(1) MAXIMUM CREDIT FOR FUEL CELLS.—In 

8 the case of any qualified fuel cell property expendi9 ture, the credit allowed under subsection (a) (deter10 mined without regard to subsection (c)) for any tax11 able year shall not exceed $500 with respect to each 

12 half kilowatt of capacity of the qualified fuel cell 

13 property (as defined in section 48(c)(1)) to which 

14 such expenditure relates.’’. 

15 (2) CONFORMING AMENDMENT.—Paragraph (4) 

16 of section 25D(e) is amended— 

17 (A) by striking all that precedes subpara18 graph (B) and inserting the following: 

19 ‘‘(4) FUEL CELL EXPENDITURE LIMITATIONS

20 IN CASE OF JOINT OCCUPANCY.—In the case of any 

21 dwelling unit with respect to which qualified fuel cell 

22 property expenditures are made and which is jointly 

23 occupied and used during any calendar year as a 

24 residence by two or more individuals the following 

25 rules shall apply: 


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1 ‘‘(A) MAXIMUM EXPENDITURES FOR FUEL

2 CELLS.—The maximum amount of such ex3 penditures which may be taken into account 

4 under subsection (a) by all such individuals 

5 with respect to such dwelling unit during such 

6 calendar year shall be $1,667 in the case of 

7 each half kilowatt of capacity of qualified fuel 

8 cell property (as defined in section 48(c)(1)) 

9 with respect to which such expenditures re10 late.’’, and 

11 (B) by striking subparagraph (C). 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2008. 

15 SEC. 1123. TEMPORARY INCREASE IN CREDIT FOR ALTER16 NATIVE FUEL VEHICLE REFUELING PROP17 ERTY. 

18 (a) IN GENERAL.—Section 30C(e) is amended by 

19 adding at the end the following new paragraph: 

20 ‘‘(6) SPECIAL RULE FOR PROPERTY PLACED IN

21 SERVICE DURING 2009 AND 2010.—In the case of 

22 property placed in service in taxable years beginning 

23 after December 31, 2008, and before January 1, 

24 2011— 


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1 ‘‘(A) in the case of any such property 

2 which does not relate to hydrogen— 

3 ‘‘(i) subsection (a) shall be applied by 

4 substituting ‘50 percent’ for ‘30 percent’, 

5 ‘‘(ii) subsection (b)(1) shall be applied 

6 by substituting ‘$50,000’ for ‘$30,000’, 

7 and 

8 ‘‘(iii) subsection (b)(2) shall be ap9 plied by substituting ‘$2,000’ for ‘$1,000’, 

10 and 

11 ‘‘(B) in the case of any such property 

12 which relates to hydrogen, subsection (b)(1) 

13 shall be applied by substituting ‘$200,000’ for 

14 ‘$30,000’.’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2008. 

18 PART IV—ENERGY RESEARCH INCENTIVES 

19 SEC. 1131. INCREASED RESEARCH CREDIT FOR ENERGY RE20 SEARCH. 

21 (a) IN GENERAL.—Section 41 is amended by redesig22 nating subsection (h) as subsection (i) and by inserting 

23 after subsection (g) the following new subsection: 

24 ‘‘(h) ENERGY RESEARCH CREDIT.—In the case of 

25 any taxable year beginning in 2009 or 2010— 


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1 ‘‘(1) IN GENERAL.—The credit determined 

2 under subsection (a)(1) shall be increased by 20 per3 cent of the qualified energy research expenses for 

4 the taxable year. 

5 ‘‘(2) QUALIFIED ENERGY RESEARCH EX6 PENSES.—For purposes of this subsection— 

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

8 energy research expenses’ means so much of the 

9 taxpayer’s qualified research expenses as are re10 lated to the fields of fuel cells and battery tech11 nology, renewable energy and renewable fuels, 

12 energy conservation technology, efficient trans13 mission and distribution of electricity, and car14 bon capture and sequestration. 

15 ‘‘(B) COORDINATION WITH QUALIFYING

16 ADVANCED ENERGY PROJECT CREDIT.—Such 

17 term shall not include expenditures taken into 

18 account in determining the amount of the credit 

19 under section 48 or 48C. 

20 ‘‘(3) COORDINATION WITH OTHER RESEARCH

21 CREDITS.— 

22 ‘‘(A) IN GENERAL.—The amount of quali23 fied energy research expenses taken into ac24 count under subsection (a)(1)(A) shall not ex25 ceed the base amount. 


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1 ‘‘(B) ALTERNATIVE SIMPLIFIED CREDIT.— 

2 For purposes of subsection (c)(5), the amount 

3 of qualified energy research expenses taken into 

4 account for the taxable year for which the cred5 it is being determined shall not exceed— 

6 ‘‘(i) in the case of subsection 

7 (c)(5)(A), 50 percent of the average quali8 fied research expenses for the 3 taxable 

9 years preceding the taxable year for which 

10 the credit is being determined, and 

11 ‘‘(ii) in the case of subsection 

12 (c)(5)(B)(ii), zero. 

13 ‘‘(C) BASIC RESEARCH AND ENERGY RE14 SEARCH CONSORTIUM PAYMENTS.—Any amount 

15 taken into account under paragraph (1) shall 

16 not be taken into account under paragraph (2) 

17 or (3) of subsection (a).’’. 

18 (b) CONFORMING AMENDMENT.—Subparagraph (B) 

19 of section 41(i)(1)(B), as redesignated by subsection (a), 

20 is amended by inserting ‘‘(in the case of the increase in 

21 the credit determined under subsection (h), December 31, 

22 2010)’’ after ‘‘December 31, 2009’’. 

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

24 this section shall apply to taxable years beginning after 

25 December 31, 2008. 


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1 PART V—GENERAL BUSINESS CREDIT 

2 SEC. 1141. 5-YEAR CARRYBACK OF GENERAL BUSINESS 

3 CREDITS. 

4 (a) IN GENERAL.—Subsection (a) of section 39 is 

5 amended by adding at the end the following new para6 graph: 

7 ‘‘(4) SPECIAL RULE FOR 2008 AND 2009 BUSI8 NESS CREDITS.—In the case of any current year 

9 business credit for a taxable year ending in 2008 or 

10 2009— 

11 ‘‘(A) paragraph (1)(A) shall be applied by 

12 substituting ‘each of the 5 taxable years’ for 

13 ‘the taxable year’ in subparagraph (A) thereof, 

14 and 

15 ‘‘(B) paragraph (2) shall be applied— 

16 ‘‘(i) by substituting ‘25 taxable years’ 

17 for ‘21 taxable years’, and 

18 ‘‘(ii) by substituting ‘24 taxable years’ 

19 for ‘20 taxable years’.’’. 

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

21 this subsection shall apply to taxable years ending after 

22 December 31, 2007, and to carrybacks of business credits 

23 from such taxable years. 


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1 SEC. 1142. TEMPORARY PROVISION ALLOWING GENERAL 

2 BUSINESS CREDITS TO OFFSET 100 PERCENT 

3 OF FEDERAL INCOME TAX LIABILITY. 

4 (a) IN GENERAL.—Subsection (c) of section 38 is 

5 amended by adding at the end the following new para6 graph: 

7 ‘‘(6) TEMPORARY PROVISION ALLOWING GEN8 ERAL BUSINESS CREDITS TO OFFSET 100 PERCENT

9 OF FEDERAL INCOME TAX LIABILITY.— 

10 ‘‘(A) IN GENERAL.—In the case of a tax11 able year ending in 2008 or 2009— 

12 ‘‘(i) the limitation under paragraph 

13 (1) shall be the net income tax (as defined 

14 in paragraph (1)) for purposes of deter15 mining the amount of the credit allowed 

16 under subsection (a) for such taxable year, 

17 and 

18 ‘‘(ii) the excess credit for such taxable 

19 year shall, solely for purposes of deter20 mining the amount of such excess credit 

21 which may be carried back to a preceding 

22 taxable year, be increased by the amount 

23 of business credit carryforwards which are 

24 carried to such taxable year and which are 

25 not allowed for such taxable year by reason 


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1 of the limitation under paragraph (1) (as 

2 modified by clause (i)). 

3 ‘‘(B) INCREASE IN LIMITATION FOR TAX4 ABLE YEARS TO WHICH EXCESS CREDITS FOR

5 2008 AND 2009 ARE CARRIED BACK.— 

6 ‘‘(i) IN GENERAL.—Solely for pur7 poses of determining the portion of any ex8 cess credit described in subparagraph 

9 (A)(ii) for which credit will be allowed 

10 under subsection (a)(3) for any preceding 

11 taxable year, the limitation under para12 graph (1) for such preceding taxable year 

13 shall be the net income tax (as defined in 

14 paragraph (1)). 

15 ‘‘(ii) ORDERING RULE.—If the excess 

16 credit described in subparagraph (A)(ii) in17 cludes business credit carryforwards from 

18 preceding taxable years, such excess credit 

19 shall be treated as allowed for any pre20 ceding taxable year on a first-in first-out 

21 basis.’’. 

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

23 this section shall apply to taxable years ending after De24 cember 31, 2007, and to carrybacks of credits from such 

25 taxable years. 


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1 PART VI—MODIFICATION OF CREDIT FOR 

2 CARBON DIOXIDE SEQUESTRATION 

3 SEC. 1151. APPLICATION OF MONITORING REQUIREMENTS 

4 TO CARBON DIOXIDE USED AS A TERTIARY 

5 INJECTANT. 

6 (a) IN GENERAL.—Section 45Q(a)(2) is amended by 

7 striking ‘‘and’’ at the end of subparagraph (A), by striking 

8 the period at the end of subparagraph (B) and inserting 

9 ‘‘, and’’, and by adding at the end the following new sub10 paragraph: 

11 ‘‘(C) disposed of by the taxpayer in secure 

12 geological storage.’’. 

13 (b) CONFORMING AMENDMENT.—Section 45Q(d)(2) 

14 is amended by striking ‘‘subsection (a)(1)(B)’’ and insert15 ing ‘‘paragraph (1)(B) or (2)(C) of subsection (a)’’. 

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

17 this section shall apply to carbon dioxide captured after 

18 the date of the enactment of this Act. 

19 PART VII—PLUG-IN ELECTRIC DRIVE MOTOR 

20 VEHICLES 

21 SEC. 1161. MODIFICATION OF CREDIT FOR QUALIFIED 

22 PLUG-IN ELECTRIC MOTOR VEHICLES. 

23 (a) INCREASE IN VEHICLES ELIGIBLE FOR CRED24 IT.—Section 30D(b)(2)(B) is amended by striking 

25 ‘‘250,000’’ and inserting ‘‘500,000’’. 


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1 (b) EXCLUSION OF NEIGHBORHOOD ELECTRIC VEHI2 CLES FROM EXISTING CREDIT.—Section 30D(e)(1) is 

3 amended to read as follows: 

4 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi5 cle’ means a motor vehicle (as defined in section 

6 30(c)(2)), which is treated as a motor vehicle for 

7 purposes of title II of the Clean Air Act.’’. 

8 (c) CREDIT FOR CERTAIN OTHER VEHICLES.—Sec9 tion 30D is amended— 

10 (1) by redesignating subsections (f) and (g) as 

11 subsections (g) and (h), respectively, and 

12 (2) by inserting after subsection (e) the fol13 lowing new subsection: 

14 ‘‘(f) CREDIT FOR CERTAIN OTHER VEHICLES.—For 

15 purposes of this section— 

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

17 vehicle, this section shall be applied with the fol18 lowing modifications: 

19 ‘‘(A) For purposes of subsection (a)(1), in 

20 lieu of the applicable amount determined under 

21 subsection (a)(2), the applicable amount shall 

22 be 10 percent of so much of the cost of the 

23 specified vehicle as does not exceed $40,000. 


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1 ‘‘(B) Subsection (b) shall not apply and no 

2 specified vehicle shall be taken into account 

3 under subsection (b)(2). 

4 ‘‘(C) Subsection (c)(3) shall not apply. 

5 ‘‘(2) SPECIFIED VEHICLE.—For purposes of 

6 this subsection— 

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

8 vehicle’ means— 

9 ‘‘(i) any 2- or 3-wheeled motor vehi10 cle, or 

11 ‘‘(ii) any low-speed motor vehicle, 

12 which is placed in service after December 31, 

13 2009, and before January 1, 2012. 

14 ‘‘(B) 2- OR 3-WHEELED MOTOR VEHI15 CLE.—The term ‘2- or 3-wheeled motor vehicle’ 

16 means any vehicle— 

17 ‘‘(i) which would be described in sec18 tion 30(c)(2) except that it has 2 or 3 

19 wheels, 

20 ‘‘(ii) with motive power having a seat 

21 or saddle for the use of the rider and de22 signed to travel on not more than 3 wheels 

23 in contact with the ground, 

24 ‘‘(iii) which has an electric motor that 

25 produces in excess of 5-brake horsepower, 


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1 ‘‘(iv) which draws propulsion from 1 

2 or more traction batteries, and 

3 ‘‘(v) which has been certified to the 

4 Department of Transportation pursuant to 

5 section 567 of title 49, Code of Federal 

6 Regulations, as conforming to all applica7 ble Federal motor vehicle safety standards 

8 in effect on the date of the manufacture of 

9 the vehicle. 

10 ‘‘(C) LOW-SPEED MOTOR VEHICLE.—The 

11 term ‘low-speed motor vehicle’ means a motor 

12 vehicle (as defined in section 30(c)(2)) which 

13 meets the requirements of section 571.500 of 

14 title 49, Code of Federal Regulations.’’. 

15 (d) EFFECTIVE DATES.— 

16 (1) INCREASE IN VEHICLES ELIGIBLE FOR

17 CREDIT.—The amendment made by subsection (a) 

18 shall take effect on the date of the enactment of this 

19 Act. 

20 (2) OTHER MODIFICATIONS.—The amendments 

21 made by subsections (b) and (c) shall apply to prop22 erty placed in service after December 31, 2009, in 

23 taxable years beginning after such date. 


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1 Subtitle C—Tax Incentives for 

2 Business 

3 PART I—TEMPORARY INVESTMENT INCENTIVES 

4 SEC. 1201. SPECIAL ALLOWANCE FOR CERTAIN PROPERTY 

5 ACQUIRED DURING 2009. 

6 (a) EXTENSION OF SPECIAL ALLOWANCE.— 

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

8 168(k) is amended— 

9 (A) by striking ‘‘January 1, 2010’’ and in10 serting ‘‘January 1, 2011’’, and 

11 (B) by striking ‘‘January 1, 2009’’ each 

12 place it appears and inserting ‘‘January 1, 

13 2010’’. 

14 (2) CONFORMING AMENDMENTS.— 

15 (A) The heading for subsection (k) of sec16 tion 168 is amended by striking ‘‘JANUARY 1, 

17 2009’’ and inserting ‘‘JANUARY 1, 2010’’. 

18 (B) The heading for clause (ii) of section 

19 168(k)(2)(B) is amended by striking ‘‘PRE-JAN20 UARY 1, 2009’’ and inserting ‘‘PRE-JANUARY 1, 

21 2010’’. 

22 (C) Subparagraph (B) of section 168(l)(5) 

23 is amended by striking ‘‘January 1, 2009’’ and 

24 inserting ‘‘January 1, 2010’’. 


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1 (D) Subparagraph (C) of section 168(n)(2) 

2 is amended by striking ‘‘January 1, 2009’’ and 

3 inserting ‘‘January 1, 2010’’. 

4 (E) Subparagraph (B) of section 

5 1400N(d)(3) is amended by striking ‘‘January 

6 1, 2009’’ and inserting ‘‘January 1, 2010’’. 

7 (3) TECHNICAL AMENDMENT.—Subparagraph 

8 (D) of section 168(k)(4) is amended— 

9 (A) by striking ‘‘and’’ at the end of clause 

10 (i), 

11 (B) by redesignating clause (ii) as clause 

12 (iii), and 

13 (C) by inserting after clause (i) the fol14 lowing new clause: 

15 ‘‘(ii) ‘April 1, 2008’ shall be sub16 stituted for ‘January 1, 2008’ in subpara17 graph (A)(iii)(I) thereof, and’’. 

18 (b) EXTENSION OF ELECTION TO ACCELERATE THE

19 AMT AND RESEARCH CREDITS IN LIEU OF BONUS DE20 PRECIATION.—Section 168(k)(4) (relating to election to 

21 accelerate the AMT and research credits in lieu of bonus 

22 depreciation) is amended— 

23 (1) by striking ‘‘2009’’ and inserting ‘‘2010’’in 

24 subparagraph (D)(iii) (as redesignated by subsection 

25 (a)(3)), and 


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1 (2) by adding at the end the following new sub2 paragraph: 

3 ‘‘(H) SPECIAL RULES FOR EXTENSION

4 PROPERTY.— 

5 ‘‘(i) TAXPAYERS PREVIOUSLY ELECT6 ING ACCELERATION.—In the case of a tax7 payer who made the election under sub8 paragraph (A) for its first taxable year 

9 ending after March 31, 2008— 

10 ‘‘(I) the taxpayer may elect not 

11 to have this paragraph apply to exten12 sion property, but 

13 ‘‘(II) if the taxpayer does not 

14 make the election under subclause (I), 

15 in applying this paragraph to the tax16 payer a separate bonus depreciation 

17 amount, maximum amount, and max18 imum increase amount shall be com19 puted and applied to eligible qualified 

20 property which is extension property 

21 and to eligible qualified property 

22 which is not extension property. 

23 ‘‘(ii) TAXPAYERS NOT PREVIOUSLY

24 ELECTING ACCELERATION.—In the case of 

25 a taxpayer who did not make the election 


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1 under subparagraph (A) for its first tax2 able year ending after March 31, 2008— 

3 ‘‘(I) the taxpayer may elect to 

4 have this paragraph apply to its first 

5 taxable year ending after December 

6 31, 2008, and each subsequent tax7 able year, and 

8 ‘‘(II) if the taxpayer makes the 

9 election under subclause (I), this 

10 paragraph shall only apply to eligible 

11 qualified property which is extension 

12 property. 

13 ‘‘(iii) EXTENSION PROPERTY.—For 

14 purposes of this subparagraph, the term 

15 ‘extension property’ means property which 

16 is eligible qualified property solely by rea17 son of the extension of the application of 

18 the special allowance under paragraph (1) 

19 pursuant to the amendments made by sec20 tion 1201(a) of the American Recovery and 

21 Reinvestment Tax Act of 2009 (and the 

22 application of such extension to this para23 graph pursuant to the amendment made 

24 by section 1201(b)(1) of such Act).’’. 


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1 (c) INCLUSION OF FILMS OR VIDEOTAPE AS QUALI2 FIED PROPERTY.— 

3 (1) IN GENERAL.—Section 168(k)(2) is amend4 ed by adding at the end the following new subpara5 graph: 

6 ‘‘(H) CERTAIN FILMS.—The term ‘quali7 fied property’ includes property— 

8 ‘‘(i) which is a motion picture film or 

9 video tape (within the meaning of sub10 section (f)(3)) for which a deduction is al11 lowable under section 167(a) without re12 gard to this section, 

13 ‘‘(ii) the original use of which com14 mences with the taxpayer after December 

15 31, 2008, 

16 ‘‘(iii) which is— 

17 ‘‘(I) acquired by the taxpayer 

18 after December 31, 2008, and before 

19 January 1, 2010, but only if no writ20 ten binding contract for the acquisi21 tion was in effect before January 1, 

22 2009, or 

23 ‘‘(II) acquired by the taxpayer 

24 pursuant to a written binding contract 

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1 ber 31, 2008, and before January 1, 

2 2010, 

3 ‘‘(iv) which is placed in service by the 

4 taxpayer before January 1, 2010, or, in 

5 the case of property described in subpara6 graph (B), before January 1, 2011, and 

7 ‘‘(v) the production of which is a 

8 qualified film or television production (as 

9 defined in section 181(d) (determined with10 out regard to paragraph (2)(B)(ii) there11 of)) with respect to which an election is 

12 not in effect under section 181.’’. 

13 (2) CONFORMING AMENDMENTS.— 

14 (A) Subclause (I) of section 

15 168(k)(2)(B)(i) is amended by inserting ‘‘sub16 paragraph (H) or’’ after ‘‘requirements of’’. 

17 (B) Subclause (II) of section 

18 168(k)(2)(B)(i) is amended by striking ‘‘or is 

19 transportation property’’ and inserting ‘‘, is 

20 transportation property, or is property de21 scribed in subparagraph (H)’’. 

22 (C) Clause (iii) of section 168(k)(2)(D) is 

23 amended by adding at the end the following 

24 new sentence: ‘‘For purposes of the preceding 

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1 graph (H) shall be treated as one class of prop2 erty.’’. 

3 (D) Subparagraph (E) of section 168(k)(2) 

4 is amended by adding at the end the following 

5 new clause: 

6 ‘‘(v) APPLICATION TO FILM AND VID7 EOTAPE PROPERTY.—In the case of prop8 erty described in subparagraph (H), 

9 clauses (i), (ii), (iii), and (iv) of this sub10 paragraph shall be applied— 

11 ‘‘(I) by substituting ‘December 

12 31, 2008’ for ‘December 31, 2007’ 

13 each place it appears, and 

14 ‘‘(II) by treating any reference to 

15 a clause of subparagraph (A) as a ref16 erence to the corresponding clause of 

17 subparagraph (H).’’. 

18 (d) EFFECTIVE DATES.— 

19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section 

21 shall apply to property placed in service after De22 cember 31, 2008, in taxable years ending after such 

23 date. 


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1 (2) TECHNICAL AMENDMENT.—The amend2 ments made by subsection (a)(3) shall apply to tax3 able years ending after March 31, 2008. 

4 SEC. 1202. TEMPORARY INCREASE IN LIMITATIONS ON EX5 PENSING OF CERTAIN DEPRECIABLE BUSI6 NESS ASSETS. 

7 (a) IN GENERAL.—Paragraph (7) of section 179(b) 

8 is amended— 

9 (1) by striking ‘‘2008’’ and inserting ‘‘2008, or 

10 2009’’, and 

11 (2) by striking ‘‘2008’’ in the heading thereof 

12 and inserting ‘‘2008, AND 2009’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2008. 

16 PART II—5-YEAR CARRYBACK OF OPERATING 

17 LOSSES 

18 SEC. 1211. 5-YEAR CARRYBACK OF OPERATING LOSSES. 

19 (a) IN GENERAL.—Subparagraph (H) of section 

20 172(b)(1) is amended to read as follows: 

21 ‘‘(H) CARRYBACK FOR 2008 AND 2009 NET

22 OPERATING LOSSES.— 

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

24 applicable 2008 or 2009 net operating loss 

25 with respect to which the taxpayer has 


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1 elected the application of this subpara2 graph— 

3 ‘‘(I) subparagraph (A)(i) shall be 

4 applied by substituting any whole 

5 number elected by the taxpayer which 

6 is more than 2 and less than 6 for ‘2’, 

7 ‘‘(II) subparagraph (E)(ii) shall 

8 be applied by substituting the whole 

9 number which is one less than the 

10 whole number substituted under sub11 clause (II) for ‘2’, and 

12 ‘‘(III) subparagraph (F) shall not 

13 apply. 

14 ‘‘(ii) APPLICABLE 2008 OR 2009 NET

15 OPERATING LOSS.—For purposes of this 

16 subparagraph, the term ‘applicable 2008 

17 or 2009 net operating loss’ means— 

18 ‘‘(I) the taxpayer’s net operating 

19 loss for any taxable year ending in 

20 2008 or 2009, or 

21 ‘‘(II) if the taxpayer elects to 

22 have this subclause apply in lieu of 

23 subclause (I), the taxpayer’s net oper24 ating loss for any taxable year begin25 ning in 2008 or 2009. 


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1 ‘‘(iii) ELECTION.—Any election under 

2 this subparagraph shall be made in such 

3 manner as may be prescribed by the Sec4 retary, and shall be made by the due date 

5 (including extension of time) for filing the 

6 taxpayer’s return for the taxable year of 

7 the net operating loss. Any such election, 

8 once made, shall be irrevocable. 

9 ‘‘(iv) COORDINATION WITH ALTER10 NATIVE TAX NET OPERATING LOSS DEDUC11 TION.—In the case of a taxpayer who 

12 elects to have clause (ii)(II) apply, section 

13 56(d)(1)(A)(ii) shall be applied by sub14 stituting ‘ending during 2001 or 2002 or 

15 beginning during 2008 or 2009’ for ‘end16 ing during 2001, 2002, 2008, or 2009’.’’. 

17 (b) ALTERNATIVE TAX NET OPERATING LOSS DE18 DUCTION.—Subclause (I) of section 56(d)(1)(A)(ii) is 

19 amended to read as follows: 

20 ‘‘(I) the amount of such deduc21 tion attributable to the sum of 

22 carrybacks of net operating losses 

23 from taxable years ending during 

24 2001, 2002, 2008, or 2009 and 


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1 carryovers of net operating losses to 

2 such taxable years, or’’. 

3 (c) LOSS FROM OPERATIONS OF LIFE INSURANCE

4 COMPANIES.—Subsection (b) of section 810 is amended 

5 by adding at the end the following new paragraph: 

6 ‘‘(4) CARRYBACK FOR 2008 AND 2009 LOSSES.— 

7 ‘‘(A) IN GENERAL.—In the case of an ap8 plicable 2008 or 2009 loss from operations with 

9 respect to which the taxpayer has elected the 

10 application of this paragraph, paragraph (1)(A) 

11 shall be applied, at the election of the taxpayer, 

12 by substituting ‘5’ or ‘4’ for ‘3’. 

13 ‘‘(B) APPLICABLE 2008 OR 2009 LOSS FROM

14 OPERATIONS.—For purposes of this paragraph, 

15 the term ‘applicable 2008 or 2009 loss from op16 erations’ means— 

17 ‘‘(i) the taxpayer’s loss from oper18 ations for any taxable year ending in 2008 

19 or 2009, or 

20 ‘‘(ii) if the taxpayer elects to have this 

21 clause apply in lieu of clause (i), the tax22 payer’s loss from operations for any tax23 able year beginning in 2008 or 2009. 

24 ‘‘(C) ELECTION.—Any election under this 

25 paragraph shall be made in such manner as 


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1 may be prescribed by the Secretary, and shall 

2 be made by the due date (including extension of 

3 time) for filing the taxpayer’s return for the 

4 taxable year of the loss from operations. Any 

5 such election, once made, shall be irrevocable. 

6 ‘‘(D) COORDINATION WITH ALTERNATIVE

7 TAX NET OPERATING LOSS DEDUCTION.—In the 

8 case of a taxpayer who elects to have subpara9 graph (B)(ii) apply, section 56(d)(1)(A)(ii) shall 

10 be applied by substituting ‘ending during 2001 

11 or 2002 or beginning during 2008 or 2009’ for 

12 ‘ending during 2001, 2002, 2008, or 2009’.’’. 

13 (d) CONFORMING AMENDMENT.—Section 172 is 

14 amended by striking subsection (k) and by redesignating 

15 subsection (l) as subsection (k). 

16 (e) EFFECTIVE DATE.— 

17 (1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the amendments made by 

19 this section shall apply to net operating losses aris20 ing in taxable years ending after December 31, 

21 2007. 

22 (2) ALTERNATIVE TAX NET OPERATING LOSS

23 DEDUCTION.—The amendment made by subsection 

24 (b) shall apply to taxable years ending after 1997. 


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1 (3) LOSS FROM OPERATIONS OF LIFE INSUR2 ANCE COMPANIES.—The amendment made by sub3 section (d) shall apply to losses from operations aris4 ing in taxable years ending after December 31, 

5 2007. 

6 (4) TRANSITIONAL RULE.—In the case of a net 

7 operating loss (or, in the case of a life insurance 

8 company, a loss from operations) for a taxable year 

9 ending before the date of the enactment of this 

10 Act— 

11 (A) any election made under section 

12 172(b)(3) or 810(b)(3) of the Internal Revenue 

13 Code of 1986 with respect to such loss may 

14 (notwithstanding such section) be revoked be15 fore the applicable date, 

16 (B) any election made under section 

17 172(k) or 810(b)(4) of such Code with respect 

18 to such loss shall (notwithstanding such sec19 tion) be treated as timely made if made before 

20 the applicable date, and 

21 (C) any application under section 6411(a) 

22 of such Code with respect to such loss shall be 

23 treated as timely filed if filed before the appli24 cable date. 


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1 For purposes of this paragraph, the term ‘‘applica2 ble date’’ means the date which is 60 days after the 

3 date of the enactment of this Act. 

4 SEC. 1212. EXCEPTION FOR TARP RECIPIENTS. 

5 The amendments made by this part shall not apply 

6 to— 

7 (1) any taxpayer if— 

8 (A) the Federal Government acquires, at 

9 any time, an equity interest in the taxpayer 

10 pursuant to the Emergency Economic Stabiliza11 tion Act of 2008, or 

12 (B) the Federal Government acquires, at 

13 any time, any warrant (or other right) to ac14 quire any equity interest with respect to the 

15 taxpayer pursuant to such Act, 

16 (2) the Federal National Mortgage Association 

17 and the Federal Home Loan Mortgage Corporation, 

18 and 

19 (3) any taxpayer which at any time in 2008 or 

20 2009 is a member of the same affiliated group (as 

21 defined in section 1504 of the Internal Revenue 

22 Code of 1986, determined without regard to sub23 section (b) thereof) as a taxpayer described in para24 graph (1) or (2). 


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1 PART III—INCENTIVES FOR NEW JOBS 

2 SEC. 1221. INCENTIVES TO HIRE UNEMPLOYED VETERANS 

3 AND DISCONNECTED YOUTH. 

4 (a) IN GENERAL.—Subsection (d) of section 51 is 

5 amended by adding at the end the following new para6 graph: 

7 ‘‘(14) CREDIT ALLOWED FOR UNEMPLOYED

8 VETERANS AND DISCONNECTED YOUTH HIRED IN

9 2009 OR 2010.— 

10 ‘‘(A) IN GENERAL.—Any unemployed vet11 eran or disconnected youth who begins work for 

12 the employer during 2009 or 2010 shall be 

13 treated as a member of a targeted group for 

14 purposes of this subpart. 

15 ‘‘(B) DEFINITIONS.—For purposes of this 

16 paragraph— 

17 ‘‘(i) UNEMPLOYED VETERAN.—The 

18 term ‘unemployed veteran’ means any vet19 eran (as defined in paragraph (3)(B), de20 termined without regard to clause (ii) 

21 thereof) who is certified by the designated 

22 local agency as— 

23 ‘‘(I) having been discharged or 

24 released from active duty in the 

25 Armed Forces during 2008, 2009, or 

26 2010, and 


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1 ‘‘(II) being in receipt of unem2 ployment compensation under State or 

3 Federal law for not less than 4 weeks 

4 during the 1-year period ending on 

5 the hiring date. 

6 ‘‘(ii) DISCONNECTED YOUTH.—The 

7 term ‘disconnected youth’ means any indi8 vidual who is certified by the designated 

9 local agency— 

10 ‘‘(I) as having attained age 16 

11 but not age 25 on the hiring date, 

12 ‘‘(II) as not regularly attending 

13 any secondary, technical, or post-sec14 ondary school during the 6-month pe15 riod preceding the hiring date, 

16 ‘‘(III) as not regularly employed 

17 during such 6-month period, and 

18 ‘‘(IV) as not readily employable 

19 by reason of lacking a sufficient num20 ber of basic skills.’’. 

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

22 this section shall apply to individuals who begin work for 

23 the employer after December 31, 2008. 


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1 PART IV—CANCELLATION OF INDEBTEDNESS 

2 SEC. 1231. DEFERRAL AND RATABLE INCLUSION OF IN3 COME ARISING FROM INDEBTEDNESS DIS4 CHARGED BY THE REPURCHASE OF A DEBT 

5 INSTRUMENT. 

6 (a) IN GENERAL.—Section 108 (relating to income 

7 from discharge of indebtedness) is amended by adding at 

8 the end the following new subsection: 

9 ‘‘(i) DEFERRAL AND RATABLE INCLUSION OF IN10 COME ARISING FROM INDEBTEDNESS DISCHARGED BY

11 THE REPURCHASE OF A DEBT INSTRUMENT.— 

12 ‘‘(1) IN GENERAL.—Notwithstanding section 

13 61, income from the discharge of indebtedness in 

14 connection with the repurchase of a debt instrument 

15 after December 31, 2008, and before January 1, 

16 2011, shall be includible in gross income ratably 

17 over the 8-taxable-year period beginning with— 

18 ‘‘(A) in the case of a repurchase occurring 

19 in 2009, the second taxable year following the 

20 taxable year in which the repurchase occurs, 

21 and 

22 ‘‘(B) in the case of a repurchase occurring 

23 in 2010, the taxable year following the taxable 

24 year in which the repurchase occurs. 

25 ‘‘(2) DEBT INSTRUMENT.—For purposes of this 

26 subsection, the term ‘debt instrument’ means a 


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1 bond, debenture, note, certificate, or any other in2 strument or contractual arrangement constituting 

3 indebtedness (within the meaning of section 

4 1275(a)(1)). 

5 ‘‘(3) REPURCHASE.—For purposes of this sub6 section, the term ‘repurchase’ means, with respect to 

7 any debt instrument, a cash purchase of the debt in8 strument by— 

9 ‘‘(A) the debtor which issued the debt in10 strument, or 

11 ‘‘(B) any person related to such debtor. 

12 For purposes of subparagraph (B), the determina13 tion of whether a person is related to another person 

14 shall be made in the same manner as under sub15 section (e)(4). 

16 ‘‘(4) AUTHORITY TO PRESCRIBE REGULA17 TIONS.—The Secretary may prescribe such regula18 tions as may be necessary or appropriate for pur19 poses of applying this subsection.’’. 

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

21 this section shall apply to discharges in taxable years end22 ing after December 31, 2008. 


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1 PART V—QUALIFIED SMALL BUSINESS STOCK 

2 SEC. 1241. SPECIAL RULES APPLICABLE TO QUALIFIED 

3 SMALL BUSINESS STOCK FOR 2009 AND 2010. 

4 (a) IN GENERAL.—Section 1202(a) is amended by 

5 adding at the end the following new paragraph: 

6 ‘‘(3) SPECIAL RULES FOR 2009 AND 2010.—In 

7 the case of qualified small business stock acquired 

8 after the date of the enactment of this paragraph 

9 and before January 1, 2011— 

10 ‘‘(A) paragraph (1) shall be applied by 

11 substituting ‘75 percent’ for ‘50 percent’, and 

12 ‘‘(B) paragraph (2) shall not apply.’’. 

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

14 this section shall apply to stock acquired after the date 

15 of the enactment of this Act. 

16 PART VI—PARITY FOR TRANSPORTATION 

17 FRINGE BENEFITS 

18 SEC. 1251. INCREASED EXCLUSION AMOUNT FOR COM19 MUTER TRANSIT BENEFITS AND TRANSIT 

20 PASSES. 

21 (a) IN GENERAL.—Paragraph (2) of section 132(f) 

22 is amended by adding at the end the following flush sen23 tence: 

24 ‘‘In the case of any month beginning on or after the 

25 date of the enactment of this sentence and before 

26 January 1, 2011, subparagraph (A) shall be applied 


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1 as if the dollar amount therein were the same as the 

2 dollar amount under subparagraph (B) (as in effect 

3 for such month).’’. 

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

5 this section shall apply to months beginning on or after 

6 the date of the enactment of this section. 

7 PART VII—S CORPORATIONS 

8 SEC. 1261. TEMPORARY REDUCTION IN RECOGNITION PE9 RIOD FOR BUILT-IN GAINS TAX. 

10 (a) IN GENERAL.—Paragraph (7) of section 1374(d) 

11 (relating to definitions and special rules) is amended to 

12 read as follows: 

13 ‘‘(7) RECOGNITION PERIOD.— 

14 ‘‘(A) IN GENERAL.—The term ‘recognition 

15 period’ means the 10-year period beginning 

16 with the 1st day of the 1st taxable year for 

17 which the corporation was an S corporation. 

18 ‘‘(B) SPECIAL RULE FOR 2009 AND 2010.— 

19 In the case of any taxable year beginning in 

20 2009 or 2010, no tax shall be imposed on the 

21 net unrecognized built-in gain of an S corpora22 tion if the 7th taxable year in the recognition 

23 period preceded such taxable year. The pre24 ceding sentence shall be applied separately with 


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1 respect to any asset to which paragraph (8) ap2 plies. 

3 ‘‘(C) SPECIAL RULE FOR DISTRIBUTIONS

4 TO SHAREHOLDERS.—For purposes of applying 

5 this section to any amount includible in income 

6 by reason of distributions to shareholders pur7 suant to section 593(e)— 

8 ‘‘(i) subparagraph (A) shall be applied 

9 without regard to the phrase ‘10-year’, and 

10 ‘‘(ii) subparagraph (B) shall not 

11 apply.’’. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2008. 

15 PART VIII—BROADBAND INCENTIVES 

16 SEC. 1271. BROADBAND INTERNET ACCESS TAX CREDIT. 

17 (a) IN GENERAL.—Subpart E of part IV of chapter 

18 1 of the Internal Revenue Code of 1986 (relating to rules 

19 for computing investment credit), as amended by this Act, 

20 is amended by inserting after section 48C the following 

21 new section: 

22 ‘‘SEC. 48D. BROADBAND INTERNET ACCESS CREDIT. 

23 ‘‘(a) GENERAL RULE.—For purposes of section 46, 

24 the broadband credit for any taxable year is the sum of— 


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1 ‘‘(1) the current generation broadband credit, 

2 plus 

3 ‘‘(2) the next generation broadband credit. 

4 ‘‘(b) CURRENT GENERATION BROADBAND CREDIT; 

5 NEXT GENERATION BROADBAND CREDIT.—For purposes 

6 of this section— 

7 ‘‘(1) CURRENT GENERATION BROADBAND

8 CREDIT.—The current generation broadband credit 

9 for any taxable year is equal to 10 percent (20 per10 cent in the case of qualified subscribers which are 

11 unserved subscribers) of the qualified broadband ex12 penditures incurred with respect to qualified equip13 ment providing current generation broadband serv14 ices to qualified subscribers and taken into account 

15 with respect to such taxable year. 

16 ‘‘(2) NEXT GENERATION BROADBAND CRED17 IT.—The next generation broadband credit for any 

18 taxable year is equal to 20 percent of the qualified 

19 broadband expenditures incurred with respect to 

20 qualified equipment providing next generation 

21 broadband services to qualified subscribers and 

22 taken into account with respect to such taxable year. 

23 ‘‘(c) WHEN EXPENDITURES TAKEN INTO AC24 COUNT.—For purposes of this section— 


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1 ‘‘(1) IN GENERAL.—Qualified broadband ex2 penditures with respect to qualified equipment shall 

3 be taken into account with respect to the first tax4 able year in which— 

5 ‘‘(A) current generation broadband services 

6 are provided through such equipment to quali7 fied subscribers, or 

8 ‘‘(B) next generation broadband services 

9 are provided through such equipment to quali10 fied subscribers. 

11 ‘‘(2) LIMITATION.— 

12 ‘‘(A) IN GENERAL.—Qualified broadband 

13 expenditures shall be taken into account under 

14 paragraph (1) only with respect to qualified 

15 equipment— 

16 ‘‘(i) the original use of which com17 mences with the taxpayer, and 

18 ‘‘(ii) which is placed in service, after 

19 December 31, 2008, and before January 1, 

20 2011. 

21 ‘‘(B) SALE-LEASEBACKS.—For purposes of 

22 subparagraph (A), if property— 

23 ‘‘(i) is originally placed in service 

24 after December 31, 2008, by any person, 

25 and 


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1 ‘‘(ii) sold and leased back by such per2 son within 3 months after the date such 

3 property was originally placed in service, 

4 such property shall be treated as originally 

5 placed in service not earlier than the date on 

6 which such property is used under the leaseback 

7 referred to in clause (ii). 

8 ‘‘(d) SPECIAL ALLOCATION RULES FOR CURRENT

9 GENERATION BROADBAND SERVICES.—For purposes of 

10 determining the current generation broadband credit 

11 under subsection (a)(1) with respect to qualified equip12 ment through which current generation broadband serv13 ices are provided, if the qualified equipment is capable of 

14 serving both qualified subscribers and other subscribers, 

15 the qualified broadband expenditures shall be multiplied 

16 by a fraction— 

17 ‘‘(1) the numerator of which is the sum of the 

18 number of potential qualified subscribers within the 

19 rural areas and the underserved areas and the 

20 unserved areas which the equipment is capable of 

21 serving with current generation broadband services, 

22 and 

23 ‘‘(2) the denominator of which is the total po24 tential subscriber population of the area which the 


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1 equipment is capable of serving with current genera2 tion broadband services. 

3 ‘‘(e) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) ANTENNA.—The term ‘antenna’ means 

5 any device used to transmit or receive signals 

6 through the electromagnetic spectrum, including sat7 ellite equipment. 

8 ‘‘(2) CABLE OPERATOR.—The term ‘cable oper9 ator’ has the meaning given such term by section 

10 602(5) of the Communications Act of 1934 (47 

11 U.S.C. 522(5)). 

12 ‘‘(3) COMMERCIAL MOBILE SERVICE CAR13 RIER.—The term ‘commercial mobile service carrier’ 

14 means any person authorized to provide commercial 

15 mobile radio service as defined in section 20.3 of 

16 title 47, Code of Federal Regulations. 

17 ‘‘(4) CURRENT GENERATION BROADBAND SERV18 ICE.—The term ‘current generation broadband serv19 ice’ means the transmission of signals at a rate of 

20 at least 5,000,000 bits per second to the subscriber 

21 and at least 1,000,000 bits per second from the sub22 scriber (at least 3,000,000 bits per second to the 

23 subscriber and at least 768,000 bits per second from 

24 the subscriber in the case of service through radio 

25 transmission of energy). 


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1 ‘‘(5) MULTIPLEXING OR DEMULTIPLEXING.— 

2 The term ‘multiplexing’ means the transmission of 2 

3 or more signals over a single channel, and the term 

4 ‘demultiplexing’ means the separation of 2 or more 

5 signals previously combined by compatible multi6 plexing equipment. 

7 ‘‘(6) NEXT GENERATION BROADBAND SERV8 ICE.—The term ‘next generation broadband service’ 

9 means the transmission of signals at a rate of at 

10 least 100,000,000 bits per second to the subscriber 

11 (or its equivalent when the data rate is measured be12 fore being compressed for transmission) and at least 

13 20,000,000 bits per second from the subscriber (or 

14 its equivalent as so measured). 

15 ‘‘(7) NONRESIDENTIAL SUBSCRIBER.—The 

16 term ‘nonresidential subscriber’ means any person 

17 who purchases broadband services which are deliv18 ered to the permanent place of business of such per19 son. 

20 ‘‘(8) OPEN VIDEO SYSTEM OPERATOR.—The 

21 term ‘open video system operator’ means any person 

22 authorized to provide service under section 653 of 

23 the Communications Act of 1934 (47 U.S.C. 573). 

24 ‘‘(9) OTHER WIRELESS CARRIER.—The term 

25 ‘other wireless carrier’ means any person (other than 


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1 a telecommunications carrier, commercial mobile 

2 service carrier, cable operator, open video system op3 erator, or satellite carrier) providing current genera4 tion broadband services or next generation 

5 broadband service to subscribers through the radio 

6 transmission of energy. 

7 ‘‘(10) PACKET SWITCHING.—The term ‘packet 

8 switching’ means controlling or routing the path of 

9 a digitized transmission signal which is assembled 

10 into packets or cells. 

11 ‘‘(11) PROVIDER.—The term ‘provider’ means, 

12 with respect to any qualified equipment any— 

13 ‘‘(A) cable operator, 

14 ‘‘(B) commercial mobile service carrier, 

15 ‘‘(C) open video system operator, 

16 ‘‘(D) satellite carrier, 

17 ‘‘(E) telecommunications carrier, or 

18 ‘‘(F) other wireless carrier, 

19 providing current generation broadband services or 

20 next generation broadband services to subscribers 

21 through such qualified equipment. 

22 ‘‘(12) PROVISION OF SERVICES.—A provider 

23 shall be treated as providing services to 1 or more 

24 subscribers if— 


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1 ‘‘(A) such a subscriber has been passed by 

2 the provider’s equipment and can be connected 

3 to such equipment for a standard connection 

4 fee, 

5 ‘‘(B) the provider is physically able to de6 liver current generation broadband services or 

7 next generation broadband services, as applica8 ble, to such a subscriber without making more 

9 than an insignificant investment with respect to 

10 such subscriber, 

11 ‘‘(C) the provider has made reasonable ef12 forts to make such subscribers aware of the 

13 availability of such services, 

14 ‘‘(D) such services have been purchased by 

15 1 or more such subscribers, and 

16 ‘‘(E) such services are made available to 

17 such subscribers at average prices comparable 

18 to those at which the provider makes available 

19 similar services in any areas in which the pro20 vider makes available such services. 

21 ‘‘(13) QUALIFIED EQUIPMENT.— 

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

23 equipment’ means property with respect to 

24 which depreciation (or amortization in lieu of 

25 depreciation) is allowable and which provides 


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1 current generation broadband services or next 

2 generation broadband services— 

3 ‘‘(i) at least a majority of the time 

4 during periods of maximum demand to 

5 each subscriber who is utilizing such serv6 ices, and 

7 ‘‘(ii) in a manner substantially the 

8 same as such services are provided by the 

9 provider to subscribers through equipment 

10 with respect to which no credit is allowed 

11 under subsection (a)(1). 

12 ‘‘(B) ONLY CERTAIN INVESTMENT TAKEN

13 INTO ACCOUNT.—Except as provided in sub14 paragraph (C) or (D), equipment shall be taken 

15 into account under subparagraph (A) only to 

16 the extent it— 

17 ‘‘(i) extends from the last point of 

18 switching to the outside of the unit, build19 ing, dwelling, or office owned or leased by 

20 a subscriber in the case of a telecommuni21 cations carrier or broadband-over-powerline 

22 operator, 

23 ‘‘(ii) extends from the customer side 

24 of the mobile telephone switching office to 

25 a transmission/receive antenna (including 


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1 such antenna) owned or leased by a sub2 scriber in the case of a commercial mobile 

3 service carrier, 

4 ‘‘(iii) extends from the customer side 

5 of the headend to the outside of the unit, 

6 building, dwelling, or office owned or 

7 leased by a subscriber in the case of a 

8 cable operator or open video system oper9 ator, or 

10 ‘‘(iv) extends from a transmission/re11 ceive antenna (including such antenna) 

12 which transmits and receives signals to or 

13 from multiple subscribers, to a trans14 mission/receive antenna (including such 

15 antenna) on the outside of the unit, build16 ing, dwelling, or office owned or leased by 

17 a subscriber in the case of a satellite car18 rier or other wireless carrier, unless such 

19 other wireless carrier is also a tele20 communications carrier. 

21 ‘‘(C) PACKET SWITCHING EQUIPMENT.— 

22 Packet switching equipment, regardless of loca23 tion, shall be taken into account under subpara24 graph (A) only if it is deployed in connection 

25 with equipment described in subparagraph (B) 


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1 and is uniquely designed to perform the func2 tion of packet switching for current generation 

3 broadband services or next generation 

4 broadband services, but only if such packet 

5 switching is the last in a series of such func6 tions performed in the transmission of a signal 

7 to a subscriber or the first in a series of such 

8 functions performed in the transmission of a 

9 signal from a subscriber. 

10 ‘‘(D) MULTIPLEXING AND

11 DEMULTIPLEXING EQUIPMENT.—Multiplexing 

12 and demultiplexing equipment shall be taken 

13 into account under subparagraph (A) only to 

14 the extent it is deployed in connection with 

15 equipment described in subparagraph (B) and 

16 is uniquely designed to perform the function of 

17 multiplexing and demultiplexing packets or cells 

18 of data and making associated application 

19 adaptions, but only if such multiplexing or 

20 demultiplexing equipment is located between 

21 packet switching equipment described in sub22 paragraph (C) and the subscriber’s premises. 

23 ‘‘(14) QUALIFIED BROADBAND EXPENDI24 TURE.— 


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

2 broadband expenditure’ means any amount— 

3 ‘‘(i) chargeable to capital account with 

4 respect to the purchase and installation of 

5 qualified equipment (including any up6 grades thereto) for which depreciation is 

7 allowable under section 168, and 

8 ‘‘(ii) incurred after December 31, 

9 2008, and before January 1, 2011. 

10 ‘‘(B) CERTAIN SATELLITE EXPENDITURES

11 EXCLUDED.—Such term shall not include any 

12 expenditure with respect to the launching of 

13 any satellite equipment. 

14 ‘‘(C) LEASED EQUIPMENT.—Such term 

15 shall include so much of the purchase price paid 

16 by the lessor of equipment subject to a lease de17 scribed in subsection (c)(2)(B) as is attrib18 utable to expenditures incurred by the lessee 

19 which would otherwise be described in subpara20 graph (A). 

21 ‘‘(15) QUALIFIED SUBSCRIBER.—The term 

22 ‘qualified subscriber’ means— 

23 ‘‘(A) with respect to the provision of cur24 rent generation broadband services— 


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1 ‘‘(i) any nonresidential subscriber 

2 maintaining a permanent place of business 

3 in a rural area, an underserved area, or an 

4 unserved area, or 

5 ‘‘(ii) any residential subscriber resid6 ing in a dwelling located in a rural area, 

7 an underserved area, or an unserved area 

8 which is not a saturated market, and 

9 ‘‘(B) with respect to the provision of next 

10 generation broadband services— 

11 ‘‘(i) any nonresidential subscriber 

12 maintaining a permanent place of business 

13 in a rural area, an underserved area, or an 

14 unserved area , or 

15 ‘‘(ii) any residential subscriber. 

16 ‘‘(16) RESIDENTIAL SUBSCRIBER.—The term 

17 ‘residential subscriber’ means any individual who 

18 purchases broadband services which are delivered to 

19 such individual’s dwelling. 

20 ‘‘(17) RURAL AREA.—The term ‘rural area’ 

21 means any census tract which— 

22 ‘‘(A) is not within 10 miles of any incor23 porated or census designated place containing 

24 more than 25,000 people, and 


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1 ‘‘(B) is not within a county or county 

2 equivalent which has an overall population den3 sity of more than 500 people per square mile of 

4 land. 

5 ‘‘(18) RURAL SUBSCRIBER.—The term ‘rural 

6 subscriber’ means any residential subscriber residing 

7 in a dwelling located in a rural area or nonresiden8 tial subscriber maintaining a permanent place of 

9 business located in a rural area. 

10 ‘‘(19) SATELLITE CARRIER.—The term ‘sat11 ellite carrier’ means any person using the facilities 

12 of a satellite or satellite service licensed by the Fed13 eral Communications Commission and operating in 

14 the Fixed-Satellite Service under part 25 of title 47 

15 of the Code of Federal Regulations or the Direct 

16 Broadcast Satellite Service under part 100 of title 

17 47 of such Code to establish and operate a channel 

18 of communications for distribution of signals, and 

19 owning or leasing a capacity or service on a satellite 

20 in order to provide such point-to-multipoint distribu21 tion. 

22 ‘‘(20) SATURATED MARKET.—The term ‘satu23 rated market’ means any census tract in which, as 

24 of the date of the enactment of this section— 


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1 ‘‘(A) current generation broadband services 

2 have been provided by a single provider to 85 

3 percent or more of the total number of potential 

4 residential subscribers residing in dwellings lo5 cated within such census tract, and 

6 ‘‘(B) such services can be utilized— 

7 ‘‘(i) at least a majority of the time 

8 during periods of maximum demand by 

9 each such subscriber who is utilizing such 

10 services, and 

11 ‘‘(ii) in a manner substantially the 

12 same as such services are provided by the 

13 provider to subscribers through equipment 

14 with respect to which no credit is allowed 

15 under subsection (a)(1). 

16 ‘‘(21) SUBSCRIBER.—The term ‘subscriber’ 

17 means any person who purchases current generation 

18 broadband services or next generation broadband 

19 services. 

20 ‘‘(22) TELECOMMUNICATIONS CARRIER.—The 

21 term ‘telecommunications carrier’ has the meaning 

22 given such term by section 3(44) of the Communica23 tions Act of 1934 (47 U.S.C. 153(44)), but— 


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1 ‘‘(A) includes all members of an affiliated 

2 group of which a telecommunications carrier is 

3 a member, and 

4 ‘‘(B) does not include any commercial mo5 bile service carrier. 

6 ‘‘(23) TOTAL POTENTIAL SUBSCRIBER POPU7 LATION.—The term ‘total potential subscriber popu8 lation’ means, with respect to any area and based on 

9 the most recent census data, the total number of po10 tential residential subscribers residing in dwellings 

11 located in such area and potential nonresidential 

12 subscribers maintaining permanent places of busi13 ness located in such area. 

14 ‘‘(24) UNDERSERVED AREA.—The term ‘under15 served area’ means any census tract which is located 

16 in— 

17 ‘‘(A) an empowerment zone or enterprise 

18 community designated under section 1391, 

19 ‘‘(B) the District of Columbia Enterprise 

20 Zone established under section 1400, 

21 ‘‘(C) a renewal community designated 

22 under section 1400E, or 

23 ‘‘(D) a low-income community designated 

24 under section 45D. 


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1 ‘‘(25) UNDERSERVED SUBSCRIBER.—The term 

2 ‘underserved subscriber’ means any residential sub3 scriber residing in a dwelling located in an under4 served area or nonresidential subscriber maintaining 

5 a permanent place of business located in an under6 served area. 

7 ‘‘(26) UNSERVED AREA.—The term ‘unserved 

8 area’ means any census tract in which no current 

9 generation broadband services are provided, as cer10 tified by the State in which such tract is located not 

11 later than September 30, 2009. 

12 ‘‘(27) UNSERVED SUBSCRIBER.—The term 

13 ‘unserved subscriber’ means any residential sub14 scriber residing in a dwelling located in an unserved 

15 area or nonresidential subscriber maintaining a per16 manent place of business located in an unserved 

17 area.’’. 

18 (b) CREDIT TO BE PART OF INVESTMENT CREDIT.— 

19 Section 46 (relating to the amount of investment credit), 

20 as amended by this Act, is amended by striking ‘‘and’’ 

21 at the end of paragraph (4), by striking the period at the 

22 end of paragraph (5) and inserting ‘‘, and’’, and by adding 

23 at the end the following: 

24 ‘‘(6) the broadband Internet access credit.’’ 


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1 (c) SPECIAL RULE FOR MUTUAL OR COOPERATIVE

2 TELEPHONE COMPANIES.—Section 501(c)(12)(B) (relat3 ing to list of exempt organizations) is amended by striking 

4 ‘‘or’’ at the end of clause (iii), by striking the period at 

5 the end of clause (iv) and inserting ‘‘, or’’, and by adding 

6 at the end the following new clause: 

7 ‘‘(v) from the sale of property subject 

8 to a lease described in section 

9 48D(c)(2)(B), but only to the extent such 

10 income does not in any year exceed an 

11 amount equal to the credit for qualified 

12 broadband expenditures which would be 

13 determined under section 48D for such 

14 year if the mutual or cooperative telephone 

15 company was not exempt from taxation 

16 and was treated as the owner of the prop17 erty subject to such lease.’’. 

18 (d) CONFORMING AMENDMENTS.— 

19 (1) Section 49(a)(1)(C), as amended by this 

20 Act, is amended by striking ‘‘and’’ at the end of 

21 clause (iv), by striking the period at the end of 

22 clause (v) and inserting ‘‘, and’’, and by adding after 

23 clause (v) the following new clause: 

24 ‘‘(vi) the portion of the basis of any 

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1 fied broadband expenditures under section 

2 48D.’’. 

3 (2) The table of sections for subpart E of part 

4 IV of subchapter A of chapter 1, as amended by this 

5 Act, is amended by inserting after the item relating 

6 to section 48C the following: 

‘‘Sec. 48D. Broadband internet access credit.’’. 

7 (e) DESIGNATION OF CENSUS TRACTS.— 

8 (1) IN GENERAL.—The Secretary of the Treas9 ury shall, not later than 90 days after the date of 

10 the enactment of this Act, designate and publish 

11 those census tracts meeting the criteria described in 

12 paragraphs (17), (23), (24), and (26) of section 

13 48D(e) of the Internal Revenue Code of 1986 (as 

14 added by this section). In making such designations, 

15 the Secretary of the Treasury shall consult with 

16 such other departments and agencies as the Sec17 retary determines appropriate. 

18 (2) SATURATED MARKET.— 

19 (A) IN GENERAL.—For purposes of desig20 nating and publishing those census tracts meet21 ing the criteria described in subsection (e)(20) 

22 of such section 48D— 

23 (i) the Secretary of the Treasury shall 

24 prescribe not later than 30 days after the 

25 date of the enactment of this Act the form 


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1 upon which any provider which takes the 

2 position that it meets such criteria with re3 spect to any census tract shall submit a 

4 list of such census tracts (and any other 

5 information required by the Secretary) not 

6 later than 60 days after the date of the 

7 publication of such form, and 

8 (ii) the Secretary of the Treasury 

9 shall publish an aggregate list of such cen10 sus tracts submitted and the applicable 

11 providers not later than 30 days after the 

12 last date such submissions are allowed 

13 under clause (i). 

14 (B) NO SUBSEQUENT LISTS REQUIRED.— 

15 The Secretary of the Treasury shall not be re16 quired to publish any list of census tracts meet17 ing such criteria subsequent to the list de18 scribed in subparagraph (A)(ii). 

19 (C) AUTHORITY TO DISREGARD FALSE

20 SUBMISSIONS.—In addition to imposing any 

21 other applicable penalties, the Secretary of the 

22 Treasury shall have the discretion to disregard 

23 any form described in subparagraph (A)(i) on 

24 which a provider knowingly submitted false in25 formation. 


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1 (f) OTHER REGULATORY MATTERS.— 

2 (1) PROHIBITION.—No Federal or State agency 

3 or instrumentality shall adopt regulations or rate4 making procedures that would have the effect of 

5 eliminating or reducing any credit or portion thereof 

6 allowed under section 48D of the Internal Revenue 

7 Code of 1986 (as added by this section) or otherwise 

8 subverting the purpose of this section. 

9 (2) TREASURY REGULATORY AUTHORITY.—It is 

10 the intent of Congress in providing the broadband 

11 Internet access credit under section 48D of the In12 ternal Revenue Code of 1986 (as added by this sec13 tion) to provide incentives for the purchase, installa14 tion, and connection of equipment and facilities of15 fering expanded broadband access to the Internet for 

16 users in certain low income and rural areas of the 

17 United States, as well as to residential users nation18 wide, in a manner that maintains competitive neu19 trality among the various classes of providers of 

20 broadband services. Accordingly, the Secretary of 

21 the Treasury shall prescribe such regulations as may 

22 be necessary or appropriate to carry out the pur23 poses of section 48D of such Code, including— 

24 (A) regulations to determine how and when 

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1 penditures satisfies the requirements of section 

2 48D of such Code to provide broadband serv3 ices, and 

4 (B) regulations describing the information, 

5 records, and data taxpayers are required to pro6 vide the Secretary to substantiate compliance 

7 with the requirements of section 48D of such 

8 Code. 

9 (g) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to expenditures incurred after De11 cember 31, 2008. 

12 PART IX—CLARIFICATION OF REGULATIONS RE13 LATED TO LIMITATIONS ON CERTAIN BUILT14 IN LOSSES FOLLOWING AN OWNERSHIP 

15 CHANGE 

16 SEC. 1281. CLARIFICATION OF REGULATIONS RELATED TO 

17 LIMITATIONS ON CERTAIN BUILT-IN LOSSES 

18 FOLLOWING AN OWNERSHIP CHANGE. 

19 (a) FINDINGS.—Congress finds as follows: 

20 (1) The delegation of authority to the Secretary 

21 of the Treasury under section 382(m) of the Inter22 nal Revenue Code of 1986 does not authorize the 

23 Secretary to provide exemptions or special rules that 

24 are restricted to particular industries or classes of 

25 taxpayers. 


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1 (2) Internal Revenue Service Notice 2008–83 is 

2 inconsistent with the congressional intent in enact3 ing such section 382(m). 

4 (3) The legal authority to prescribe Internal 

5 Revenue Service Notice 2008–83 is doubtful. 

6 (4) However, as taxpayers should generally be 

7 able to rely on guidance issued by the Secretary of 

8 the Treasury legislation is necessary to clarify the 

9 force and effect of Internal Revenue Service Notice 

10 2008–83 and restore the proper application under 

11 the Internal Revenue Code of 1986 of the limitation 

12 on built-in losses following an ownership change of 

13 a bank. 

14 (b) DETERMINATION OF FORCE AND EFFECT OF IN15 TERNAL REVENUE SERVICE NOTICE 2008–83 EXEMPT16 ING BANKS FROM LIMITATION ON CERTAIN BUILT–IN

17 LOSSES FOLLOWING OWNERSHIP CHANGE.— 

18 (1) IN GENERAL.—Internal Revenue Service 

19 Notice 2008–83— 

20 (A) shall be deemed to have the force and 

21 effect of law with respect to any ownership 

22 change (as defined in section 382(g) of the In23 ternal Revenue Code of 1986) occurring on or 

24 before January 16, 2009, and 


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1 (B) shall have no force or effect with re2 spect to any ownership change after such date. 

3 (2) BINDING CONTRACTS.—Notwithstanding 

4 paragraph (1), Internal Revenue Service Notice 

5 2008–83 shall have the force and effect of law with 

6 respect to any ownership change (as so defined) 

7 which occurs after January 16, 2009, if such 

8 change— 

9 (A) is pursuant to a written binding con10 tract entered into on or before such date, or 

11 (B) is pursuant to a written agreement en12 tered into on or before such date and such 

13 agreement was described on or before such date 

14 in a public announcement or in a filing with the 

15 Securities and Exchange Commission required 

16 by reason of such ownership change. 

17 Subtitle D—Manufacturing 

18 Recovery Provisions 

19 SEC. 1301. TEMPORARY EXPANSION OF AVAILABILITY OF 

20 INDUSTRIAL DEVELOPMENT BONDS TO FA21 CILITIES MANUFACTURING INTANGIBLE 

22 PROPERTY. 

23 (a) IN GENERAL.—Subparagraph (C) of section 

24 144(a)(12) is amended— 


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1 (1) by striking ‘‘For purposes of this para2 graph, the term’’ and inserting ‘‘For purposes of 

3 this paragraph— 

4 ‘‘(i) IN GENERAL.—The term’’, and 

5 (2) by striking the last sentence and inserting 

6 the following new clauses: 

7 ‘‘(ii) CERTAIN FACILITIES IN8 CLUDED.—Such term includes facilities 

9 which are directly related and ancillary to 

10 a manufacturing facility (determined with11 out regard to this clause) if— 

12 ‘‘(I) such facilities are located on 

13 the same site as the manufacturing 

14 facility, and 

15 ‘‘(II) not more than 25 percent 

16 of the net proceeds of the issue are 

17 used to provide such facilities. 

18 ‘‘(iii) SPECIAL RULES FOR BONDS

19 ISSUED IN 2009 AND 2010.—In the case of 

20 any issue made after the date of enactment 

21 of this clause and before January 1, 2011, 

22 clause (ii) shall not apply and the net pro23 ceeds from a bond shall be considered to 

24 be used to provide a manufacturing facility 

25 if such proceeds are used to provide— 


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1 ‘‘(I) a facility which is used in 

2 the creation or production of intan3 gible property which is described in 

4 section 197(d)(1)(C)(iii), or 

5 ‘‘(II) a facility which is function6 ally related and subordinate to a man7 ufacturing facility (determined with8 out regard to this subclause) if such 

9 facility is located on the same site as 

10 the manufacturing facility.’’. 

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

12 this section shall apply to bonds issued after the date of 

13 the enactment of this Act. 

14 SEC. 1302. CREDIT FOR INVESTMENT IN ADVANCED EN15 ERGY FACILITIES. 

16 (a) IN GENERAL.—Section 46 (relating to amount of 

17 credit) is amended by striking ‘‘and’’ at the end of para18 graph (3), by striking the period at the end of paragraph 

19 (4), and by adding at the end the following new para20 graph: 

21 ‘‘(5) the qualifying advanced energy project 

22 credit.’’. 

23 (b) AMOUNT OF CREDIT.—Subpart E of part IV of 

24 subchapter A of chapter 1 (relating to rules for computing 


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1 investment credit) is amended by inserting after section 

2 48B the following new section: 

3 ‘‘SEC. 48C. QUALIFYING ADVANCED ENERGY PROJECT 

4 CREDIT. 

5 ‘‘(a) IN GENERAL.—For purposes of section 46, the 

6 qualifying advanced energy project credit for any taxable 

7 year is an amount equal to 30 percent of the qualified 

8 investment for such taxable year with respect to any quali9 fying advanced energy project of the taxpayer. 

10 ‘‘(b) QUALIFIED INVESTMENT.— 

11 ‘‘(1) IN GENERAL.—For purposes of subsection 

12 (a), the qualified investment for any taxable year is 

13 the basis of eligible property placed in service by the 

14 taxpayer during such taxable year which is part of 

15 a qualifying advanced energy project— 

16 ‘‘(A)(i) the construction, reconstruction, or 

17 erection of which is completed by the taxpayer 

18 after October 31, 2008, or 

19 ‘‘(ii) which is acquired by the taxpayer if 

20 the original use of such eligible property com21 mences with the taxpayer after October 31, 

22 2008, and 

23 ‘‘(B) with respect to which depreciation (or 

24 amortization in lieu of depreciation) is allow25 able. 


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1 ‘‘(2) SPECIAL RULE FOR CERTAIN SUBSIDIZED

2 PROPERTY.—Rules similar to section 48(a)(4) (with3 out regard to subparagraph (D) thereof) shall apply 

4 for purposes of this section. 

5 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI6 TURES RULES MADE APPLICABLE.—Rules similar to 

7 the rules of subsections (c)(4) and (d) of section 46 

8 (as in effect on the day before the enactment of the 

9 Revenue Reconciliation Act of 1990) shall apply for 

10 purposes of this section. 

11 ‘‘(4) LIMITATION.—The amount which is treat12 ed for all taxable years with respect to any quali13 fying advanced energy project shall not exceed the 

14 amount designated by the Secretary as eligible for 

15 the credit under this section. 

16 ‘‘(c) DEFINITIONS.— 

17 ‘‘(1) QUALIFYING ADVANCED ENERGY

18 PROJECT.— 

19 ‘‘(A) IN GENERAL.—The term ‘qualifying 

20 advanced energy project’ means a project— 

21 ‘‘(i) which re-equips, expands, or es22 tablishes a manufacturing facility for the 

23 production of property which is— 

24 ‘‘(I) designed to be used to 

25 produce energy from the sun, wind, 


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1 geothermal deposits (within the mean2 ing of section 613(e)(2)), or other re3 newable resources, 

4 ‘‘(II) designed to manufacture 

5 fuel cells, microturbines, or an energy 

6 storage system for use with electric or 

7 hybrid-electric motor vehicles, 

8 ‘‘(III) designed to manufacture 

9 electric grids to support the trans10 mission of intermittent sources of re11 newable energy, 

12 ‘‘(IV) designed to capture and se13 quester carbon dioxide emissions, or 

14 ‘‘(V) designed to refine or blend 

15 renewable fuels or to produce energy 

16 conservation technologies (including 

17 energy-conserving lighting tech18 nologies and smart grid technologies), 

19 and 

20 ‘‘(ii) any portion of the qualified in21 vestment of which is certified by the Sec22 retary under subsection (d) as eligible for 

23 a credit under this section. 

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1 tion of any property which is used in the refin2 ing or blending of any transportation fuel 

3 (other than renewable fuels). 

4 ‘‘(2) ELIGIBLE PROPERTY.—The term ‘eligible 

5 property’ means any property which is part of a 

6 qualifying advanced energy project and is necessary 

7 for the production of property described in para8 graph (1)(A)(i). 

9 ‘‘(d) QUALIFYING ADVANCED ENERGY PROJECT

10 PROGRAM.— 

11 ‘‘(1) ESTABLISHMENT.— 

12 ‘‘(A) IN GENERAL.—Not later than 180 

13 days after the date of enactment of this section, 

14 the Secretary, in consultation with the Sec15 retary of Energy, shall establish a qualifying 

16 advanced energy project program to consider 

17 and award certifications for qualified invest18 ments eligible for credits under this section to 

19 qualifying advanced energy project sponsors. 

20 ‘‘(B) LIMITATION.—The total amount of 

21 credits that may be allocated under the pro22 gram shall not exceed $2,000,000,000. 

23 ‘‘(2) CERTIFICATION.— 

24 ‘‘(A) APPLICATION PERIOD.—Each appli25 cant for certification under this paragraph shall 


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1 submit an application containing such informa2 tion as the Secretary may require during the 3- 

3 year period beginning on the date the Secretary 

4 establishes the program under paragraph (1). 

5 ‘‘(B) TIME TO MEET CRITERIA FOR CER6 TIFICATION.—Each applicant for certification 

7 shall have 2 years from the date of acceptance 

8 by the Secretary of the application during 

9 which to provide to the Secretary evidence that 

10 the requirements of the certification have been 

11 met. 

12 ‘‘(C) PERIOD OF ISSUANCE.—An applicant 

13 which receives a certification shall have 5 years 

14 from the date of issuance of the certification in 

15 order to place the project in service and if such 

16 project is not placed in service by that time pe17 riod then the certification shall no longer be 

18 valid. 

19 ‘‘(3) SELECTION CRITERIA.—In determining 

20 which qualifying advanced energy projects to certify 

21 under this section, the Secretary shall take into con22 sideration only those projects where there is a rea23 sonable expectation of commercial viability. 

24 ‘‘(4) REVIEW AND REDISTRIBUTION.— 


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1 ‘‘(A) REVIEW.—Not later than 6 years 

2 after the date of enactment of this section, the 

3 Secretary shall review the credits allocated 

4 under this section as of the date which is 6 

5 years after the date of enactment of this sec6 tion. 

7 ‘‘(B) REDISTRIBUTION.—The Secretary 

8 may reallocate credits awarded under this sec9 tion if the Secretary determines that— 

10 ‘‘(i) there is an insufficient quantity 

11 of qualifying applications for certification 

12 pending at the time of the review, or 

13 ‘‘(ii) any certification made pursuant 

14 to paragraph (2) has been revoked pursu15 ant to paragraph (2)(B) because the 

16 project subject to the certification has been 

17 delayed as a result of third party opposi18 tion or litigation to the proposed project. 

19 ‘‘(C) REALLOCATION.—If the Secretary de20 termines that credits under this section are 

21 available for reallocation pursuant to the re22 quirements set forth in paragraph (2), the Sec23 retary is authorized to conduct an additional 

24 program for applications for certification. 


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1 ‘‘(5) DISCLOSURE OF ALLOCATIONS.—The Sec2 retary shall, upon making a certification under this 

3 subsection, publicly disclose the identity of the appli4 cant and the amount of the credit with respect to 

5 such applicant. 

6 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—A credit shall 

7 not be allowed under this section for any qualified invest8 ment for which a credit is allowed under section 48, 48A, 

9 or 48B.’’. 

10 (c) CONFORMING AMENDMENTS.— 

11 (1) Section 49(a)(1)(C) is amended by striking 

12 ‘‘and’’ at the end of clause (iii), by striking the pe13 riod at the end of clause (iv) and inserting ‘‘, and’’, 

14 and by adding after clause (iv) the following new 

15 clause: 

16 ‘‘(v) the basis of any property which 

17 is part of a qualifying advanced energy 

18 project under section 48C.’’. 

19 (2) The table of sections for subpart E of part 

20 IV of subchapter A of chapter 1 is amended by in21 serting after the item relating to section 48B the fol22 lowing new item: 

‘‘48C. Qualifying advanced energy project credit.’’. 

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

24 this section shall apply to periods after the date of the 

25 enactment of this Act, under rules similar to the rules of 


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1 section 48(m) of the Internal Revenue Code of 1986 (as 

2 in effect on the day before the date of the enactment of 

3 the Revenue Reconciliation Act of 1990). 

4 Subtitle E—Economic Recovery 

5 Tools 

6 SEC. 1401. RECOVERY ZONE BONDS. 

7 (a) IN GENERAL.—Subchapter Y of chapter 1 is 

8 amended by adding at the end the following new part: 

9 ‘‘PART III—RECOVERY ZONE BONDS 

‘‘Sec. 1400U–1. Allocation of recovery zone bonds. 

‘‘Sec. 1400U–2. Recovery zone economic development bonds. 

‘‘Sec. 1400U–3. Recovery zone facility bonds. 

10 ‘‘SEC. 1400U–1. ALLOCATION OF RECOVERY ZONE BONDS. 

11 ‘‘(a) ALLOCATIONS.— 

12 ‘‘(1) IN GENERAL.—The Secretary shall allo13 cate the national recovery zone economic develop14 ment bond limitation and the national recovery zone 

15 facility bond limitation among the States— 

16 ‘‘(A) by allocating 1 percent of each such 

17 limitation to each State, and 

18 ‘‘(B) by allocating the remainder of each 

19 such limitation among the States in the propor20 tion that each State’s 2008 State employment 

21 decline bears to the aggregate of the 2008 

22 State employment declines for all of the States. 

23 ‘‘(2) 2008 STATE EMPLOYMENT DECLINE.—For 

24 purposes of this subsection, the term ‘2008 State 


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1 employment decline’ means, with respect to any 

2 State, the excess (if any) of— 

3 ‘‘(A) the number of individuals employed 

4 in such State determined for December 2007, 

5 over 

6 ‘‘(B) the number of individuals employed 

7 in such State determined for December 2008. 

8 ‘‘(3) ALLOCATIONS BY STATES.— 

9 ‘‘(A) IN GENERAL.—Each State with re10 spect to which an allocation is made under 

11 paragraph (1) shall reallocate such allocation 

12 among the counties and large municipalities in 

13 such State in the proportion the each such 

14 county’s or municipality’s 2008 employment de15 cline bears to the aggregate of the 2008 em16 ployment declines for all the counties and mu17 nicipalities in such State. 

18 ‘‘(B) LARGE MUNICIPALITIES.—For pur19 poses of subparagraph (A), the term ‘large mu20 nicipality’ means a municipality with a popu21 lation of more than 100,000. 

22 ‘‘(C) DETERMINATION OF LOCAL EMPLOY23 MENT DECLINES.—For purposes of this para24 graph, the employment decline of any munici25 pality or county shall be determined in the 


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1 same manner as determining the State employ2 ment decline under paragraph (2), except that 

3 in the case of a municipality any portion of 

4 which is in a county, such portion shall be 

5 treated as part of such municipality and not 

6 part of such county. 

7 ‘‘(4) NATIONAL LIMITATIONS.— 

8 ‘‘(A) RECOVERY ZONE ECONOMIC DEVEL9 OPMENT BONDS.—There is a national recovery 

10 zone economic development bond limitation of 

11 $10,000,000,000. 

12 ‘‘(B) RECOVERY ZONE FACILITY BONDS.— 

13 There is a national recovery zone facility bond 

14 limitation of $15,000,000,000. 

15 ‘‘(b) RECOVERY ZONE.—For purposes of this part, 

16 the term ‘recovery zone’ means— 

17 ‘‘(1) any area designated by the issuer as hav18 ing significant poverty, unemployment, rate of home 

19 foreclosures, or general distress, and 

20 ‘‘(2) any area for which a designation as an em21 powerment zone or renewal community is in effect. 

22 ‘‘SEC. 1400U–2. RECOVERY ZONE ECONOMIC DEVELOPMENT 

23 BONDS. 

24 ‘‘(a) IN GENERAL.—In the case of a recovery zone 

25 economic development bond— 


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1 ‘‘(1) such bond shall be treated as a qualified 

2 bond for purposes of section 6431, and 

3 ‘‘(2) subsection (b) of such section shall be ap4 plied by substituting ‘40 percent’ for ‘35 percent’. 

5 ‘‘(b) RECOVERY ZONE ECONOMIC DEVELOPMENT

6 BOND.— 

7 ‘‘(1) IN GENERAL.—For purposes of this sec8 tion, the term ‘recovery zone economic development 

9 bond’ means any build America bond (as defined in 

10 section 54AA(d)) issued before January 1, 2011, as 

11 part of issue if— 

12 ‘‘(A) 100 percent of the available project 

13 proceeds (as defined in section 54A) of such 

14 issue are to be used for one or more qualified 

15 economic development purposes, and 

16 ‘‘(B) the issuer designates such bond for 

17 purposes of this section. 

18 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES19 IGNATED.—The maximum aggregate face amount of 

20 bonds which may be designated by any issuer under 

21 paragraph (1) shall not exceed the amount of the re22 covery zone economic development bond limitation 

23 allocated to such issuer under section 1400U–1. 

24 ‘‘(c) QUALIFIED ECONOMIC DEVELOPMENT PUR25 POSE.—For purposes of this section, the term ‘qualified 


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1 economic development purpose’ means expenditures for 

2 purposes of promoting development or other economic ac3 tivity in a recovery zone, including— 

4 ‘‘(1) capital expenditures paid or incurred with 

5 respect to property located in such zone, 

6 ‘‘(2) expenditures for public infrastructure and 

7 construction of public facilities, and 

8 ‘‘(3) expenditures for job training and edu9 cational programs. 

10 ‘‘SEC. 1400U–3. RECOVERY ZONE FACILITY BONDS. 

11 ‘‘(a) IN GENERAL.—For purposes of part IV of sub12 chapter B (relating to tax exemption requirements for 

13 State and local bonds), the term ‘exempt facility bond’ in14 cludes any recovery zone facility bond. 

15 ‘‘(b) RECOVERY ZONE FACILITY BOND.— 

16 ‘‘(1) IN GENERAL.—For purposes of this sec17 tion, the term ‘recovery zone facility bond’ means 

18 any bond issued as part of an issue if— 

19 ‘‘(A) 95 percent or more of the net pro20 ceeds (as defined in section 150(a)(3)) of such 

21 issue are to be used for recovery zone property, 

22 ‘‘(B) such bond is issued before January 1, 

23 2011, and 

24 ‘‘(C) the issuer designates such bond for 

25 purposes of this section. 


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1 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES2 IGNATED.—The maximum aggregate face amount of 

3 bonds which may be designated by any issuer under 

4 paragraph (1) shall not exceed the amount of recov5 ery zone facility bond limitation allocated to such 

6 issuer under section 1400U–1. 

7 ‘‘(c) RECOVERY ZONE PROPERTY.—For purposes of 

8 this section— 

9 ‘‘(1) IN GENERAL.—The term ‘recovery zone 

10 property’ means any property to which section 168 

11 applies (or would apply but for section 179) if— 

12 ‘‘(A) such property was acquired by the 

13 taxpayer by purchase (as defined in section 

14 179(d)(2)) after the date on which the designa15 tion of the recovery zone took effect, 

16 ‘‘(B) the original use of which in the recov17 ery zone commences with the taxpayer, and 

18 ‘‘(C) substantially all of the use of which 

19 is in the recovery zone and is in the active con20 duct of a qualified business by the taxpayer in 

21 such zone. 

22 ‘‘(2) QUALIFIED BUSINESS.—The term ‘quali23 fied business’ means any trade or business except 

24 that— 


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1 ‘‘(A) the rental to others of real property 

2 located in a recovery zone shall be treated as a 

3 qualified business only if the property is not 

4 residential rental property (as defined in section 

5 168(e)(2)), and 

6 ‘‘(B) such term shall not include any trade 

7 or business consisting of the operation of any 

8 facility described in section 144(c)(6)(B). 

9 ‘‘(3) SPECIAL RULES FOR SUBSTANTIAL REN10 OVATIONS AND SALE-LEASEBACK.—Rules similar to 

11 the rules of subsections (a)(2) and (b) of section 

12 1397D shall apply for purposes of this subsection. 

13 ‘‘(d) NONAPPLICATION OF CERTAIN RULES.—Sec14 tions 146 (relating to volume cap) and 147(d) (relating 

15 to acquisition of existing property not permitted) shall not 

16 apply to any recovery zone facility bond.’’. 

17 (b) CLERICAL AMENDMENT.—The table of parts for 

18 subchapter Y of chapter 1 of such Code is amended by 

19 adding at the end the following new item: 

‘‘PART III. RECOVERY ZONE BONDS.’’. 

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

21 this section shall apply to obligations issued after the date 

22 of the enactment of this Act. 

23 SEC. 1402. TRIBAL ECONOMIC DEVELOPMENT BONDS. 

24 (a) IN GENERAL.—Section 7871 is amended by add25 ing at the end the following new subsection: 


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1 ‘‘(f) TRIBAL ECONOMIC DEVELOPMENT BONDS.— 

2 ‘‘(1) ALLOCATION OF LIMITATION.— 

3 ‘‘(A) IN GENERAL.—The Secretary shall 

4 allocate the national tribal economic develop5 ment bond limitation among the Indian tribal 

6 governments in such manner as the Secretary, 

7 in consultation with the Secretary of the Inte8 rior, determines appropriate. 

9 ‘‘(B) NATIONAL LIMITATION.—There is a 

10 national tribal economic development bond limi11 tation of $2,000,000,000. 

12 ‘‘(2) BONDS TREATED AS EXEMPT FROM

13 TAX.—In the case of a tribal economic development 

14 bond— 

15 ‘‘(A) notwithstanding subsection (c), such 

16 bond shall be treated for purposes of this title 

17 in the same manner as if such bond were issued 

18 by a State, 

19 ‘‘(B) the Indian tribal government issuing 

20 such bond and any instrumentality of such In21 dian tribal government shall be treated as a 

22 State for purposes of section 141, and 

23 ‘‘(C) section 146 shall not apply. 

24 ‘‘(3) TRIBAL ECONOMIC DEVELOPMENT

25 BOND.— 


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

2 section, the term ‘tribal economic development 

3 bond’ means any bond issued by an Indian trib4 al government— 

5 ‘‘(i) the interest on which would be ex6 empt from tax under section 103 if issued 

7 by a State or local government, and 

8 ‘‘(ii) which is designated by the In9 dian tribal government as a tribal eco10 nomic development bond for purposes of 

11 this subsection. 

12 ‘‘(B) EXCEPTIONS.—The term tribal eco13 nomic development bond shall not include any 

14 bond issued as part of an issue if any portion 

15 of the proceeds of such issue are used to fi16 nance— 

17 ‘‘(i) any portion of a building in which 

18 class II or class III gaming (as defined in 

19 section 4 of the Indian Gaming Regulatory 

20 Act) is conducted or housed or any other 

21 property actually used in the conduct of 

22 such gaming, or 

23 ‘‘(ii) any facility located outside the 

24 Indian reservation (as defined in section 

25 168(j)(6)). 


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1 ‘‘(C) LIMITATION ON AMOUNT OF BONDS

2 DESIGNATED.—The maximum aggregate face 

3 amount of bonds which may be designated by 

4 any Indian tribal government under subpara5 graph (A) shall not exceed the amount of na6 tional tribal economic development bond limita7 tion allocated to such government under para8 graph (1).’’. 

9 (b) STUDY.—The Secretary of the Treasury, or the 

10 Secretary’s delegate, shall conduct a study of the effects 

11 of the amendment made by subsection (a). Not later than 

12 1 year after the date of the enactment of this Act, the 

13 Secretary of the Treasury, or the Secretary’s delegate, 

14 shall report to Congress on the results of the study con15 ducted under this paragraph, including the Secretary’s 

16 recommendations regarding such amendment. 

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

18 subsection (a) shall apply to obligations issued after the 

19 date of the enactment of this Act. 

20 SEC. 1403. MODIFICATIONS TO NEW MARKETS TAX CREDIT. 

21 (a) INCREASE IN NATIONAL LIMITATION.— 

22 (1) IN GENERAL.—Section 45D(f)(1) is amend23 ed— 

24 (A) by striking ‘‘and’’ at the end of sub25 paragraph (C), 


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1 (B) by striking ‘‘, 2007, 2008, and 2009.’’ 

2 in subparagraph (D), and inserting ‘‘and 

3 2007,’’, and 

4 (C) by adding at the end the following new 

5 subparagraphs: 

6 ‘‘(E) $5,000,000,000 for 2008, and 

7 ‘‘(F) $5,000,000,000 for 2009.’’. 

8 (2) SPECIAL RULE FOR ALLOCATION OF IN9 CREASED 2008 LIMITATION.—The amount of the in10 crease in the new markets tax credit limitation for 

11 calendar year 2008 by reason of the amendments 

12 made by subsection (a) shall be allocated in accord13 ance with section 45D(f)(2) of the Internal Revenue 

14 Code of 1986 to qualified community development 

15 entities (as defined in section 45D(c) of such Code) 

16 which— 

17 (A) submitted an allocation application 

18 with respect to calendar year 2008, and 

19 (B)(i) did not receive an allocation for 

20 such calendar year, or 

21 (ii) received an allocation for such calendar 

22 year in an amount less than the amount re23 quested in the allocation application. 

24 (b) ALTERNATIVE MINIMUM TAX RELIEF.— 


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1 (1) IN GENERAL.—Section 38(c)(4)(B) is 

2 amended by redesignating clauses (v) through (viii) 

3 as clauses (vi) through (ix), respectively, and by in4 serting after clause (iv) the following new clause: 

5 ‘‘(v) the credit determined under sec6 tion 45D to the extent that such credit is 

7 attributable to a qualified equity invest8 ment which is designated as such under 

9 section 45D(b)(1)(C) pursuant to an allo10 cation of the new markets tax credit limi11 tation for calendar year 2009,’’. 

12 (2) EFFECTIVE DATE.—The amendments made 

13 by this subsection shall apply to credits determined 

14 under section 45D of the Internal Revenue Code of 

15 1986 in taxable years ending after the date of the 

16 enactment of this Act, and to carrybacks of such 

17 credits. 


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1 Subtitle F—Infrastructure 

2 Financing Tools 

3 PART I—IMPROVED MARKETABILITY FOR TAX4 EXEMPT BONDS 

5 SEC. 1501. DE MINIMIS SAFE HARBOR EXCEPTION FOR TAX6 EXEMPT INTEREST EXPENSE OF FINANCIAL 

7 INSTITUTIONS. 

8 (a) IN GENERAL.—Subsection (b) of section 265 is 

9 amended by adding at the end the following new para10 graph: 

11 ‘‘(7) DE MINIMIS EXCEPTION FOR BONDS

12 ISSUED DURING 2009 OR 2010.— 

13 ‘‘(A) IN GENERAL.—In applying paragraph 

14 (2)(A), there shall not be taken into account 

15 tax-exempt obligations issued during 2009 or 

16 2010. 

17 ‘‘(B) LIMITATION.—The amount of tax-ex18 empt obligations not taken into account by rea19 son of subparagraph (A) shall not exceed 2 per20 cent of the amount determined under para21 graph (2)(B). 

22 ‘‘(C) REFUNDINGS.—For purposes of this 

23 paragraph, a refunding bond (whether a current 

24 or advance refunding) shall be treated as issued 

25 on the date of the issuance of the refunded 


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1 bond (or in the case of a series of refundings, 

2 the original bond).’’. 

3 (b) TREATMENT AS FINANCIAL INSTITUTION PREF4 ERENCE ITEM.—Clause (iv) of section 291(e)(1)(B) is 

5 amended by adding at the end the following: ‘‘That por6 tion of any obligation not taken into account under para7 graph (2)(A) of section 265(b) by reason of paragraph (7) 

8 of such section shall be treated for purposes of this section 

9 as having been acquired on August 7, 1986.’’. 

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

11 this section shall apply to obligations issued after Decem12 ber 31, 2008. 

13 SEC. 1502. MODIFICATION OF SMALL ISSUER EXCEPTION 

14 TO TAX-EXEMPT INTEREST EXPENSE ALLOCA15 TION RULES FOR FINANCIAL INSTITUTIONS. 

16 (a) IN GENERAL.—Paragraph (3) of section 265(b) 

17 (relating to exception for certain tax-exempt obligations) 

18 is amended by adding at the end the following new sub19 paragraph: 

20 ‘‘(G) SPECIAL RULES FOR OBLIGATIONS

21 ISSUED DURING 2009 AND 2010.— 

22 ‘‘(i) INCREASE IN LIMITATION.—In 

23 the case of obligations issued during 2009 

24 or 2010, subparagraphs (C)(i), (D)(i), and 


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1 (D)(iii)(II) shall each be applied by sub2 stituting ‘$30,000,000’ for ‘$10,000,000’. 

3 ‘‘(ii) QUALIFIED 501(c)(3) BONDS

4 TREATED AS ISSUED BY EXEMPT ORGANI5 ZATION.—In the case of a qualified 

6 501(c)(3) bond (as defined in section 145) 

7 issued during 2009 or 2010, this para8 graph shall be applied by treating the 

9 501(c)(3) organization for whose benefit 

10 such bond was issued as the issuer. 

11 ‘‘(iii) SPECIAL RULE FOR QUALIFIED

12 FINANCINGS.—In the case of a qualified fi13 nancing issue issued during 2009 or 

14 2010— 

15 ‘‘(I) subparagraph (F) shall not 

16 apply, and 

17 ‘‘(II) any obligation issued as a 

18 part of such issue shall be treated as 

19 a qualified tax-exempt obligation if 

20 the requirements of this paragraph 

21 are met with respect to each qualified 

22 portion of the issue (determined by 

23 treating each qualified portion as a 

24 separate issue which is issued by the 


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1 qualified borrower with respect to 

2 which such portion relates). 

3 ‘‘(iv) QUALIFIED FINANCING ISSUE.— 

4 For purposes of this subparagraph, the 

5 term ‘qualified financing issue’ means any 

6 composite, pooled, or other conduit financ7 ing issue the proceeds of which are used 

8 directly or indirectly to make or finance 

9 loans to 1 or more ultimate borrowers each 

10 of whom is a qualified borrower. 

11 ‘‘(v) QUALIFIED PORTION.—For pur12 poses of this subparagraph, the term 

13 ‘qualified portion’ means that portion of 

14 the proceeds which are used with respect 

15 to each qualified borrower under the issue. 

16 ‘‘(vi) QUALIFIED BORROWER.—For 

17 purposes of this subparagraph, the term 

18 ‘qualified borrower’ means a borrower 

19 which is a State or political subdivision 

20 thereof or an organization described in sec21 tion 501(c)(3) and exempt from taxation 

22 under section 501(a).’’. 

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

24 this section shall apply to obligations issued after Decem25 ber 31, 2008. 


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1 SEC. 1503. TEMPORARY MODIFICATION OF ALTERNATIVE 

2 MINIMUM TAX LIMITATIONS ON TAX-EXEMPT 

3 BONDS. 

4 (a) INTEREST ON PRIVATE ACTIVITY BONDS ISSUED

5 DURING 2009 AND 2010 NOT TREATED AS TAX PREF6 ERENCE ITEM.—Subparagraph (C) of section 57(a)(5) is 

7 amended by adding at the end a new clause: 

8 ‘‘(vi) EXCEPTION FOR BONDS ISSUED

9 IN 2009 AND 2010.—For purposes of clause 

10 (i), the term ‘private activity bond’ shall 

11 not include any bond issued after Decem12 ber 31, 2008, and before January 1, 2011. 

13 For purposes of the preceding sentence, a 

14 refunding bond (whether a current or ad15 vance refunding) shall be treated as issued 

16 on the date of the issuance of the refunded 

17 bond (or in the case of a series of 

18 refundings, the original bond).’’. 

19 (b) NO ADJUSTMENT TO ADJUSTED CURRENT

20 EARNINGS FOR INTEREST ON TAX-EXEMPT BONDS

21 ISSUED DURING 2009 AND 2010.—Subparagraph (B) of 

22 section 56(g)(4) is amended by adding at the end the fol23 lowing new clause: 

24 ‘‘(iv) TAX EXEMPT INTEREST ON

25 BONDS ISSUED IN 2009 AND 2010.—Clause 

26 (i) shall not apply in the case of any interVerDate Nov 24 2008 21:32 Jan 30, 2009 Jkt 079200 PO 00000 Frm 00110 Fmt 6652 Sfmt 6201 E:\BILLS\S350.PCS S350

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1 est on a bond issued after December 31, 

2 2008, and before January 1, 2011. For 

3 purposes of the preceding sentence, a re4 funding bond (whether a current or ad5 vance refunding) shall be treated as issued 

6 on the date of the issuance of the refunded 

7 bond (or in the case of a series of 

8 refundings, the original bond).’’. 

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

10 this section shall apply to obligations issued after Decem11 ber 31, 2008. 

12 SEC. 1504. MODIFICATION TO HIGH SPEED INTERCITY RAIL 

13 FACILITY BONDS. 

14 (a) IN GENERAL.—Paragraph (1) of section 142(i) 

15 is amended by striking ‘‘operate at speeds in excess of’’ 

16 and inserting ‘‘be capable of attaining a maximum speed 

17 in excess of’’. 

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

19 this section shall apply to bonds issued after the date of 

20 the enactment of this Act. 


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1 PART II—DELAY IN APPLICATION OF WITH2 HOLDING TAX ON GOVERNMENT CONTRAC3 TORS 

4 SEC. 1511. DELAY IN APPLICATION OF WITHHOLDING TAX 

5 ON GOVERNMENT CONTRACTORS. 

6 Subsection (b) of section 511 of the Tax Increase 

7 Prevention and Reconciliation Act of 2005 is amended by 

8 striking ‘‘December 31, 2010’’ and inserting ‘‘December 

9 31, 2011’’. 

10 PART III—TAX CREDIT BONDS FOR SCHOOLS 

11 SEC. 1521. QUALIFIED SCHOOL CONSTRUCTION BONDS. 

12 (a) IN GENERAL.—Subpart I of part IV of sub13 chapter A of chapter 1 is amended by adding at the end 

14 the following new section: 

15 ‘‘SEC. 54F. QUALIFIED SCHOOL CONSTRUCTION BONDS. 

16 ‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.— 

17 For purposes of this subchapter, the term ‘qualified school 

18 construction bond’ means any bond issued as part of an 

19 issue if— 

20 ‘‘(1) 100 percent of the available project pro21 ceeds of such issue are to be used for the construc22 tion, rehabilitation, or repair of a public school facil23 ity or for the acquisition of land on which such a fa24 cility is to be constructed with part of the proceeds 

25 of such issue, 


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1 ‘‘(2) the bond is issued by a State or local gov2 ernment within the jurisdiction of which such school 

3 is located, and 

4 ‘‘(3) the issuer designates such bond for pur5 poses of this section. 

6 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES7 IGNATED.—The maximum aggregate face amount of 

8 bonds issued during any calendar year which may be des9 ignated under subsection (a) by any issuer shall not exceed 

10 the limitation amount allocated under subsection (d) for 

11 such calendar year to such issuer. 

12 ‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS

13 DESIGNATED.—There is a national qualified school con14 struction bond limitation for each calendar year. Such lim15 itation is— 

16 ‘‘(1) $5,000,000,000 for 2009, 

17 ‘‘(2) $5,000,000,000 for 2010, and 

18 ‘‘(3) except as provided in subsection (e), zero 

19 after 2010. 

20 ‘‘(d) LIMITATION ALLOCATED AMONG STATES.— 

21 ‘‘(1) IN GENERAL.—The limitation applicable 

22 under subsection (c) for any calendar year shall be 

23 allocated by the Secretary among the States in pro24 portion to the respective numbers of children in each 

25 State who have attained age 5 but not age 18 for 


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1 the most recent fiscal year ending before such cal2 endar year. The limitation amount allocated to a 

3 State under the preceding sentence shall be allocated 

4 by the State to issuers within such State. 

5 ‘‘(2) MINIMUM ALLOCATIONS TO STATES.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall 

7 adjust the allocations under this subsection for 

8 any calendar year for each State to the extent 

9 necessary to ensure that the amount allocated 

10 to such State under this subsection for such 

11 year is not less than an amount equal to such 

12 State’s adjusted minimum percentage of the 

13 amount to be allocated under paragraph (1) for 

14 the calendar year. 

15 ‘‘(B) MINIMUM PERCENTAGE.—A State’s 

16 minimum percentage for any calendar year is 

17 equal to the product of— 

18 ‘‘(i) the quotient of— 

19 ‘‘(I) the amount the State is eli20 gible to receive under section 1124(d) 

21 of the Elementary and Secondary 

22 Education Act of 1965 (20 U.S.C. 

23 6333(d)) for the most recent fiscal 

24 year ending before such calendar year, 

25 divided by 


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1 ‘‘(II) the amount all States are 

2 eligible to receive under section 1124 

3 of such Act (20 U.S.C. 6333) for such 

4 fiscal year, multiplied by 

5 ‘‘(ii) 100. 

6 ‘‘(3) ALLOCATIONS TO CERTAIN POSSES7 SIONS.—The amount to be allocated under para8 graph (1) to any possession of the United States 

9 other than Puerto Rico shall be the amount which 

10 would have been allocated if all allocations under 

11 paragraph (1) were made on the basis of respective 

12 populations of individuals below the poverty line (as 

13 defined by the Office of Management and Budget). 

14 In making other allocations, the amount to be allo15 cated under paragraph (1) shall be reduced by the 

16 aggregate amount allocated under this paragraph to 

17 possessions of the United States. 

18 ‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In 

19 addition to the amounts otherwise allocated under 

20 this subsection, $200,000,000 for calendar year 

21 2009, and $200,000,000 for calendar year 2010, 

22 shall be allocated by the Secretary of the Interior for 

23 purposes of the construction, rehabilitation, and re24 pair of schools funded by the Bureau of Indian Af25 fairs. In the case of amounts allocated under the 


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1 preceding sentence, Indian tribal governments (as 

2 defined in section 7701(a)(40)) shall be treated as 

3 qualified issuers for purposes of this subchapter. 

4 ‘‘(e) CARRYOVER OF UNUSED LIMITATION.—If for 

5 any calendar year— 

6 ‘‘(1) the amount allocated under subsection (d) 

7 to any State, exceeds 

8 ‘‘(2) the amount of bonds issued during such 

9 year which are designated under subsection (a) pur10 suant to such allocation, 

11 the limitation amount under such subsection for such 

12 State for the following calendar year shall be increased 

13 by the amount of such excess. A similar rule shall apply 

14 to the amounts allocated under subsection (d)(4).’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Paragraph (1) of section 54A(d) is amended 

17 by striking ‘‘or’’ at the end of subparagraph (C), by 

18 inserting ‘‘or’’ at the end of subparagraph (D), and 

19 by inserting after subparagraph (D) the following 

20 new subparagraph: 

21 ‘‘(E) a qualified school construction 

22 bond,’’. 

23 (2) Subparagraph (C) of section 54A(d)(2) is 

24 amended by striking ‘‘and’’ at the end of clause (iii), 

25 by striking the period at the end of clause (iv) and 


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1 inserting ‘‘, and’’, and by adding at the end the fol2 lowing new clause: 

3 ‘‘(v) in the case of a qualified school 

4 construction bond, a purpose specified in 

5 section 54F(a)(1).’’. 

6 (3) The table of sections for subpart I of part 

7 IV of subchapter A of chapter 1 is amended by add8 ing at the end the following new item: 

‘‘Sec. 54F. Qualified school construction bonds.’’. 

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

10 this section shall apply to obligations issued after the date 

11 of the enactment of this Act. 

12 SEC. 1522. EXTENSION AND EXPANSION OF QUALIFIED 

13 ZONE ACADEMY BONDS. 

14 (a) IN GENERAL.—Section 54E(c)(1) is amended by 

15 striking ‘‘and 2009’’ and inserting ‘‘and $1,400,000,000 

16 for 2009 and 2010’’. 

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

18 this section shall apply to obligations issued after Decem19 ber 31, 2008. 

20 PART IV—BUILD AMERICA BONDS 

21 SEC. 1531. BUILD AMERICA BONDS. 

22 (a) IN GENERAL.—Part IV of subchapter A of chap23 ter 1 is amended by adding at the end the following new 

24 subpart: 


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1 ‘‘Subpart J—Build America Bonds 

‘‘Sec. 54AA. Build America bonds. 

2 ‘‘SEC. 54AA. BUILD AMERICA BONDS. 

3 ‘‘(a) IN GENERAL.—If a taxpayer holds a build 

4 America bond on one or more interest payment dates of 

5 the bond during any taxable year, there shall be allowed 

6 as a credit against the tax imposed by this chapter for 

7 the taxable year an amount equal to the sum of the credits 

8 determined under subsection (b) with respect to such 

9 dates. 

10 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 

11 determined under this subsection with respect to any in12 terest payment date for a build America bond is 35 per13 cent of the amount of interest payable by the issuer with 

14 respect to such date. 

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

16 ‘‘(1) IN GENERAL.—The credit allowed under 

17 subsection (a) for any taxable year shall not exceed 

18 the excess of— 

19 ‘‘(A) the sum of the regular tax liability 

20 (as defined in section 26(b)) plus the tax im21 posed by section 55, over 

22 ‘‘(B) the sum of the credits allowable 

23 under this part (other than subpart C and this 

24 subpart). 


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1 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

2 credit allowable under subsection (a) exceeds the 

3 limitation imposed by paragraph (1) for such taxable 

4 year, such excess shall be carried to the succeeding 

5 taxable year and added to the credit allowable under 

6 subsection (a) for such taxable year (determined be7 fore the application of paragraph (1) for such suc8 ceeding taxable year). 

9 ‘‘(d) BUILD AMERICA BOND.— 

10 ‘‘(1) IN GENERAL.—For purposes of this sec11 tion, the term ‘build America bond’ means any obli12 gation (other than a private activity bond) if— 

13 ‘‘(A) the interest on such obligation would 

14 (but for this section) be excludable from gross 

15 income under section 103, 

16 ‘‘(B) such obligation is issued before Janu17 ary 1, 2012, and 

18 ‘‘(C) the issuer makes an irrevocable elec19 tion to have this section apply. 

20 ‘‘(2) APPLICABLE RULES.—For purposes of ap21 plying paragraph (1)— 

22 ‘‘(A) a build America bond shall not be 

23 treated as federally guaranteed by reason of the 

24 credit allowed under subsection (a) or section 

25 6431, 


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1 ‘‘(B) the yield on a build America bond 

2 shall be determined without regard to the credit 

3 allowed under subsection (a), and 

4 ‘‘(C) a bond shall not be treated as a build 

5 America bond if the issue price has more than 

6 a de minimis amount (determined under rules 

7 similar to the rules of section 1273(a)(3)) of 

8 premium over the stated principal amount of 

9 the bond. 

10 ‘‘(e) INTEREST PAYMENT DATE.—For purposes of 

11 this section, the term ‘interest payment date’ means any 

12 date on which the holder of record of the build America 

13 bond is entitled to a payment of interest under such bond. 

14 ‘‘(f) SPECIAL RULES.— 

15 ‘‘(1) INTEREST ON BUILD AMERICA BONDS IN16 CLUDIBLE IN GROSS INCOME FOR FEDERAL INCOME

17 TAX PURPOSES.—For purposes of this title, interest 

18 on any build America bond shall be includible in 

19 gross income. 

20 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 

21 similar to the rules of subsections (f), (g), (h), and 

22 (i) of section 54A shall apply for purposes of the 

23 credit allowed under subsection (a). 


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1 ‘‘(g) SPECIAL RULE FOR QUALIFIED BONDS ISSUED

2 BEFORE 2011.—In the case of a qualified bond issued be3 fore January 1, 2011— 

4 ‘‘(1) ISSUER ALLOWED REFUNDABLE CRED5 IT.—In lieu of any credit allowed under this section 

6 with respect to such bond, the issuer of such bond 

7 shall be allowed a credit as provided in section 6431. 

8 ‘‘(2) QUALIFIED BOND.—For purposes of this 

9 subsection, the term ‘qualified bond’ means any 

10 build America bond issued as part of an issue if— 

11 ‘‘(A) 100 percent of the available project 

12 proceeds (as defined in section 54A) of such 

13 issue are to be used for capital expenditures, 

14 and 

15 ‘‘(B) the issuer makes an irrevocable elec16 tion to have this subsection apply. 

17 ‘‘(h) REGULATIONS.—The Secretary may prescribe 

18 such regulations and other guidance as may be necessary 

19 or appropriate to carry out this section and section 

20 6431.’’. 

21 (b) CREDIT FOR QUALIFIED BONDS ISSUED BEFORE

22 2011.—Subchapter B of chapter 65 is amended by adding 

23 at the end the following new section: 


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1 ‘‘SEC. 6431. CREDIT FOR QUALIFIED BONDS ALLOWED TO 

2 ISSUER. 

3 ‘‘(a) IN GENERAL.—In the case of a qualified bond 

4 issued before January 1, 2011, the issuer of such bond 

5 shall be allowed a credit with respect to each interest pay6 ment under such bond which shall be payable by the Sec7 retary as provided in subsection (b). 

8 ‘‘(b) PAYMENT OF CREDIT.—The Secretary shall pay 

9 (contemporaneously with each interest payment date 

10 under such bond) to the issuer of such bond (or to any 

11 person who makes such interest payments on behalf of the 

12 issuer) 35 percent of the interest payable under such bond 

13 on such date. 

14 ‘‘(c) APPLICATION OF ARBITRAGE RULES.—For pur15 poses of section 148, the yield on a qualified bond shall 

16 be reduced by the credit allowed under this section. 

17 ‘‘(d) INTEREST PAYMENT DATE.—For purposes of 

18 this subsection, the term ‘interest payment date’ means 

19 each date on which interest is payable by the issuer under 

20 the terms of the bond. 

21 ‘‘(e) QUALIFIED BOND.—For purposes of this sub22 section, the term ‘qualified bond’ has the meaning given 

23 such term in section 54AA(g).’’. 

24 (c) CONFORMING AMENDMENTS.— 


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1 (1) Section 1324(b)(2) of title 31, United 

2 States Code, is amended by striking ‘‘or 6428’’ and 

3 inserting ‘‘6428, or 6431,’’. 

4 (2) Section 54A(c)(1)(B) is amended by strik5 ing ‘‘subpart C’’ and inserting ‘‘subparts C and J’’. 

6 (3) Sections 54(c)(2), 1397E(c)(2), and 

7 1400N(l)(3)(B) are each amended by striking ‘‘and 

8 I’’ and inserting ‘‘, I, and J’’. 

9 (4) Section 6401(b)(1) is amended by striking 

10 ‘‘and I’’ and inserting ‘‘I, and J’’. 

11 (5) The table of subparts for part IV of sub12 chapter A of chapter 1 is amended by adding at the 

13 end the following new item: 

‘‘Subpart J. Build America bonds.’’. 

14 (6) The table of section for subchapter B of 

15 chapter 65 is amended by adding at the end the fol16 lowing new item: 

‘‘Sec. 6431. Credit for qualified bonds allowed to issuer.’’. 

17 (d) TRANSITIONAL COORDINATION WITH STATE

18 LAW.—Except as otherwise provided by a State after the 

19 date of the enactment of this Act, the interest on any build 

20 America bond (as defined in section 54AA of the Internal 

21 Revenue Code of 1986, as added by this section) and the 

22 amount of any credit determined under such section with 

23 respect to such bond shall be treated for purposes of the 


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1 income tax laws of such State as being exempt from Fed2 eral income tax. 

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

4 this section shall apply to obligations issued after the date 

5 of the enactment of this Act. 

6 Subtitle G—Economic Recovery 

7 Payments to Certain Individuals 

8 SEC. 1601. ECONOMIC RECOVERY PAYMENT TO RECIPIENTS 

9 OF SOCIAL SECURITY, SUPPLEMENTAL SECU10 RITY INCOME, RAILROAD RETIREMENT BENE11 FITS, AND VETERANS DISABILITY COMPENSA12 TION OR PENSION BENEFITS. 

13 (a) AUTHORITY TO MAKE PAYMENTS.— 

14 (1) ELIGIBILITY.— 

15 (A) IN GENERAL.—Subject to paragraph 

16 (5)(B), the Secretary of the Treasury shall 

17 make a $300 payment to each individual who, 

18 for any month during the 3-month period end19 ing with the month which ends prior to the 

20 month that includes the date of the enactment 

21 of this Act, is entitled to a benefit payment de22 scribed in clause (i), (ii), or (iii) of subpara23 graph (B) or is eligible for a SSI cash benefit 

24 described in subparagraph (C). 


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1 (B) BENEFIT PAYMENT DESCRIBED.—For 

2 purposes of subparagraph (A): 

3 (i) TITLE II BENEFIT.—A benefit pay4 ment described in this clause is a monthly 

5 insurance benefit payable (without regard 

6 to sections 202(j)(1) and 223(b) of the So7 cial Security Act (42 U.S.C. 402(j)(1), 

8 423(b)) under— 

9 (I) section 202(a) of such Act 

10 (42 U.S.C. 402(a)); 

11 (II) section 202(b) of such Act 

12 (42 U.S.C. 402(b)); 

13 (III) section 202(c) of such Act 

14 (42 U.S.C. 402(c)); 

15 (IV) section 202(d)(1)(B)(ii) of 

16 such Act (42 U.S.C. 

17 402(d)(1)(B)(ii)); 

18 (V) section 202(e) of such Act 

19 (42 U.S.C. 402(e)); 

20 (VI) section 202(f) of such Act 

21 (42 U.S.C. 402(f)); 

22 (VII) section 202(g) of such Act 

23 (42 U.S.C. 402(g)); 

24 (VIII) section 202(h) of such Act 

25 (42 U.S.C. 402(h)); 


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1 (IX) section 223(a) of such Act 

2 (42 U.S.C. 423(a)); 

3 (X) section 227 of such Act (42 

4 U.S.C. 427); or 

5 (XI) section 228 of such Act (42 

6 U.S.C. 428). 

7 (ii) RAILROAD RETIREMENT BEN8 EFIT.—A benefit payment described in this 

9 clause is a monthly annuity or pension 

10 payment payable (without regard to section 

11 5(a)(ii) of the Railroad Retirement Act of 

12 1974 (45 U.S.C. 231d(a)(ii)) under— 

13 (I) section 2(a)(1) of such Act 

14 (45 U.S.C. 231a(a)(1)); 

15 (II) section 2(c) of such Act (45 

16 U.S.C. 231a(c)); 

17 (III) section 2(d)(1)(i) of such 

18 Act (45 U.S.C. 231a(d)(1)(i)); 

19 (IV) section 2(d)(1)(ii) of such 

20 Act (45 U.S.C. 231a(d)(1)(ii)); 

21 (V) section 2(d)(1)(iii)(C) of such 

22 Act to an adult disabled child (45 

23 U.S.C. 231a(d)(1)(iii)(C)); 

24 (VI) section 2(d)(1)(iv) of such 

25 Act (45 U.S.C. 231a(d)(1)(iv)); 


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1 (VII) section 2(d)(1)(v) of such 

2 Act (45 U.S.C. 231a(d)(1)(v)); or 

3 (VIII) section 7(b)(2) of such Act 

4 (45 U.S.C. 231f(b)(2)) with respect to 

5 any of the benefit payments described 

6 in clause (i) of this subparagraph. 

7 (iii) VETERANS BENEFIT.—A benefit 

8 payment described in this clause is a com9 pensation or pension payment payable 

10 under— 

11 (I) section 1110, 1117, 1121, 

12 1131, 1141, or 1151 of title 38, 

13 United States Code; 

14 (II) section 1310, 1312, 1313, 

15 1315, 1316, or 1318 of title 38, 

16 United States Code; 

17 (III) section 1513, 1521, 1533, 

18 1536, 1537, 1541, 1542, or 1562 of 

19 title 38, United States Code; or 

20 (IV) section 1805, 1815, or 1821 

21 of title 38, United States Code, 

22 to a veteran, surviving spouse, child, or 

23 parent as described in paragraph (2), (3), 

24 (4)(A)(ii), or (5) of section 101, title 38, 

25 United States Code, who received that benVerDate Nov 24 2008 21:32 Jan 30, 2009 Jkt 079200 PO 00000 Frm 00127 Fmt 6652 Sfmt 6201 E:\BILLS\S350.PCS S350

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1 efit during any month within the 3 month 

2 period ending with the month which ends 

3 prior to the month that includes the date 

4 of the enactment of this Act. 

5 (C) SSI CASH BENEFIT DESCRIBED.—A 

6 SSI cash benefit described in this subparagraph 

7 is a cash benefit payable under section 1611 

8 (other than under subsection (e)(1)(B) of such 

9 section) or 1619(a) of the Social Security Act 

10 (42 U.S.C. 1382, 1382h). 

11 (2) REQUIREMENT.—A payment shall be made 

12 under paragraph (1) only to individuals who reside 

13 in 1 of the 50 States, the District of Columbia, 

14 Puerto Rico, Guam, the United States Virgin Is15 lands, American Samoa, or the Northern Mariana 

16 Islands. For purposes of the preceding sentence, the 

17 determination of the individual’s residence shall be 

18 based on the current address of record under a pro19 gram specified in paragraph (1). 

20 (3) NO DOUBLE PAYMENTS.—An individual 

21 shall be paid only 1 payment under this section, re22 gardless of whether the individual is entitled to, or 

23 eligible for, more than 1 benefit or cash payment de24 scribed in paragraph (1). 


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1 (4) LIMITATION.—A payment under this section 

2 shall not be made— 

3 (A) in the case of an individual entitled to 

4 a benefit specified in paragraph (1)(B)(i) or 

5 paragraph (1)(B)(ii)(VIII) if, for the most re6 cent month of such individual’s entitlement in 

7 the 3-month period described in paragraph (1), 

8 such individual’s benefit under such paragraph 

9 was not payable by reason of subsection (x) or 

10 (y) of section 202 the Social Security Act (42 

11 U.S.C. 402) or section 1129A of such Act (42 

12 U.S.C. 1320a–8a); 

13 (B) in the case of an individual entitled to 

14 a benefit specified in paragraph (1)(B)(iii) if, 

15 for the most recent month of such individual’s 

16 entitlement in the 3-month period described in 

17 paragraph (1), such individual’s benefit under 

18 such paragraph was not payable, or was re19 duced, by reason of section 1505, 5313, or 

20 5313B of title 38, United States Code; 

21 (C) in the case of an individual entitled to 

22 a benefit specified in paragraph (1)(C) if, for 

23 such most recent month, such individual’s ben24 efit under such paragraph was not payable by 

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1 tion 1611 (42 U.S.C. 1382) or section 1129A 

2 of such Act (42 U.S.C. 1320a–8a); or 

3 (D) in the case of any individual whose 

4 date of death occurs before the date on which 

5 the individual is certified under subsection (b) 

6 to receive a payment under this section. 

7 (5) TIMING AND MANNER OF PAYMENTS.— 

8 (A) IN GENERAL.—The Secretary of the 

9 Treasury shall commence making payments 

10 under this section at the earliest practicable 

11 date but in no event later than 120 days after 

12 the date of enactment of this Act. The Sec13 retary of the Treasury may make any payment 

14 electronically to an individual in such manner 

15 as if such payment was a benefit payment or 

16 cash benefit to such individual under the appli17 cable program described in subparagraph (B) 

18 or (C) of paragraph (1). 

19 (B) DEADLINE.—No payments shall be 

20 made under this section after December 31, 

21 2010, regardless of any determinations of enti22 tlement to, or eligibility for, such payments 

23 made after such date. 

24 (b) IDENTIFICATION OF RECIPIENTS.—The Commis25 sioner of Social Security, the Railroad Retirement Board, 


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1 and the Secretary of Veterans Affairs shall certify the in2 dividuals entitled to receive payments under this section 

3 and provide the Secretary of the Treasury with the infor4 mation needed to disburse such payments. A certification 

5 of an individual shall be unaffected by any subsequent de6 termination or redetermination of the individual’s entitle7 ment to, or eligibility for, a benefit specified in subpara8 graph (B) or (C) of subsection (a)(1). 

9 (c) TREATMENT OF PAYMENTS.— 

10 (1) PAYMENT TO BE DISREGARDED FOR PUR11 POSES OF ALL FEDERAL AND FEDERALLY ASSISTED

12 PROGRAMS.—A payment under subsection (a) shall 

13 not be regarded as income and shall not be regarded 

14 as a resource for the month of receipt and the fol15 lowing 9 months, for purposes of determining the 

16 eligibility of the recipient (or the recipient’s spouse 

17 or family) for benefits or assistance, or the amount 

18 or extent of benefits or assistance, under any Fed19 eral program or under any State or local program fi20 nanced in whole or in part with Federal funds. 

21 (2) PAYMENT NOT CONSIDERED INCOME FOR

22 PURPOSES OF TAXATION.—A payment under sub23 section (a) shall not be considered as gross income 

24 for purposes of the Internal Revenue Code of 1986. 


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1 (3) PAYMENTS PROTECTED FROM ASSIGN2 MENT.—The provisions of sections 207 and 

3 1631(d)(1) of the Social Security Act (42 U.S.C. 

4 407, 1383(d)(1)), section 14(a) of the Railroad Re5 tirement Act of 1974 (45 U.S.C. 231m(a)), and sec6 tion 5301 of title 38, United States Code, shall 

7 apply to any payment made under subsection (a) as 

8 if such payment was a benefit payment or cash ben9 efit to such individual under the applicable program 

10 described in subparagraph (B) or (C) of subsection 

11 (a)(1). 

12 (4) PAYMENTS SUBJECT TO OFFSET.—Notwith13 standing paragraph (3), for purposes of section 

14 3716 of title 31, United States Code, any payment 

15 made under this section shall not be considered a 

16 benefit payment or cash benefit made under the ap17 plicable program described in subparagraph (B) or 

18 (C) of subsection (a)(1) and all amounts paid shall 

19 be subject to offset to collect delinquent debts. 

20 (d) PAYMENT TO REPRESENTATIVE PAYEES AND FI21 DUCIARIES.— 

22 (1) IN GENERAL.—In any case in which an in23 dividual who is entitled to a payment under sub24 section (a) and whose benefit payment or cash ben25 efit described in paragraph (1) of that subsection is 


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1 paid to a representative payee or fiduciary, the pay2 ment under subsection (a) shall be made to the indi3 vidual’s representative payee or fiduciary and the en4 tire payment shall be used only for the benefit of the 

5 individual who is entitled to the payment. 

6 (2) APPLICABILITY.— 

7 (A) PAYMENT ON THE BASIS OF A TITLE

8 II OR SSI BENEFIT.—Section 1129(a)(3) of the 

9 Social Security Act (42 U.S.C. 1320a–8(a)(3)) 

10 shall apply to any payment made on the basis 

11 of an entitlement to a benefit specified in para12 graph (1)(B)(i) or (1)(C) of subsection (a) in 

13 the same manner as such section applies to a 

14 payment under title II or XVI of such Act. 

15 (B) PAYMENT ON THE BASIS OF A RAIL16 ROAD RETIREMENT BENEFIT.—Section 13 of 

17 the Railroad Retirement Act (45 U.S.C. 231l) 

18 shall apply to any payment made on the basis 

19 of an entitlement to a benefit specified in para20 graph (1)(B)(ii) of subsection (a) in the same 

21 manner as such section applies to a payment 

22 under such Act. 

23 (C) PAYMENT ON THE BASIS OF A VET24 ERANS BENEFIT.—Sections 5502, 6106, and 

25 6108 of title 38, United States Code, shall 


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1 apply to any payment made on the basis of an 

2 entitlement to a benefit specified in paragraph 

3 (1)(B)(iii) of subsection (a) in the same manner 

4 as those sections apply to a payment under that 

5 title. 

6 (e) APPROPRIATION.—Out of any sums in the Treas7 ury of the United States not otherwise appropriated, the 

8 following sums are appropriated for the period of fiscal 

9 years 2009 and 2010 to carry out this section: 

10 (1) For the Secretary of the Treasury— 

11 (A) such sums as may be necessary to 

12 make payments under this section; and 

13 (B) $57,000,000 for administrative costs 

14 incurred in carrying out this section and section 

15 36A of the Internal Revenue Code of 1986 (as 

16 added by this Act). 

17 (2) For the Commissioner of Social Security, 

18 $90,000,000 for the Social Security Administration’s 

19 Limitation on Administrative Expenses for costs in20 curred in carrying out this section. 

21 (3) For the Railroad Retirement Board, 

22 $1,000,000 for administrative costs incurred in car23 rying out this section. 

24 (4) For the Secretary of Veterans Affairs, 

25 $100,000 for the Information Systems Technology 


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1 account and $7,100,000 for the General Operating 

2 Expenses account for administrative costs incurred 

3 in carrying out this section. 

4 Subtitle H—Trade Adjustment 

5 Assistance 

6 SEC. 1701. TEMPORARY EXTENSION OF TRADE ADJUST7 MENT ASSISTANCE PROGRAM. 

8 (a) ASSISTANCE FOR WORKERS.— 

9 (1) IN GENERAL.—Section 245(a) of the Trade 

10 Act of 1974 (19 U.S.C. 2317(a)) is amended by 

11 striking ‘‘December 31, 2007’’ and inserting ‘‘De12 cember 31, 2010’’. 

13 (2) ALTERNATIVE TRADE ADJUSTMENT ASSIST14 ANCE.—Section 246(b)(1) of the Trade Act of 1974 

15 (19 U.S.C. 2318(b)(1)) is amended by striking ‘‘5 

16 years’’ and inserting ‘‘7 years’’. 

17 (b) ASSISTANCE FOR FIRMS.—Section 256(b) of the 

18 Trade Act of 1974 (19 U.S.C. 2346(b)) is amended by 

19 striking ‘‘2007, and $4,000,000 for the 3-month period 

20 beginning on October 1, 2007,’’ and inserting ‘‘December 

21 31, 2010’’. 

22 (c) ASSISTANCE FOR FARMERS.—Section 298(a) of 

23 the Trade Act of 1974 (19 U.S.C. 2401g(a)) is amended 

24 by striking ‘‘through 2007’’ and all that follows through 


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1 the end period and inserting ‘‘through December 31, 2010 

2 to carry out the purposes of this chapter.’’. 

3 (d) EXTENSION OF TERMINATION DATES.—Section 

4 285 of the Trade Act of 1974 (19 U.S.C. 2271 note) is 

5 amended by striking ‘‘December 31, 2007’’ each place it 

6 appears and inserting ‘‘December 31, 2010’’. 

7 (e) SENSE OF THE SENATE REGARDING ADJUST8 MENT ASSISTANCE FOR COMMUNITIES.—It is the sense 

9 of the Senate that title II of the Trade Act of 1974 (19 

10 U.S.C. 2271 et seq.) should be amended to assist any com11 munity impacted by trade with economic adjustment 

12 through— 

13 (1) the coordination of efforts by State and 

14 local governments and economic organizations; 

15 (2) the coordination of Federal, State, and local 

16 resources; 

17 (3) the creation of community-based develop18 ment strategies; and 

19 (4) the development and provision of training 

20 programs. 

21 (f) EFFECTIVE DATE.—The amendments made by 

22 this section shall be effective as of January 1, 2008. 


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1 Subtitle I—Prohibition on Collec2 tion of Certain Payments Made 

3 Under the Continued Dumping 

4 and Subsidy Offset Act of 2000 

5 SEC. 1801. PROHIBITION ON COLLECTION OF CERTAIN PAY6 MENTS MADE UNDER THE CONTINUED DUMP7 ING AND SUBSIDY OFFSET ACT OF 2000. 

8 (a) IN GENERAL.—Notwithstanding any other provi9 sion of law, neither the Secretary of Homeland Security 

10 nor any other person may— 

11 (1) require repayment of, or attempt in any 

12 other way to recoup, any payments described in sub13 section (b); or 

14 (2) offset any past, current, or future distribu15 tions of antidumping or countervailing duties as16 sessed with respect to imports from countries that 

17 are not parties to the North American Free Trade 

18 Agreement in an attempt to recoup any payments 

19 described in subsection (b). 

20 (b) PAYMENTS DESCRIBED.—Payments described in 

21 this subsection are payments of antidumping or counter22 vailing duties made pursuant to the Continued Dumping 

23 and Subsidy Offset Act of 2000 (section 754 of the Tariff 

24 Act of 1930 (19 U.S.C. 1675c; repealed by subtitle F of 


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1 title VII of the Deficit Reduction Act of 2005 (Public Law 

2 109–171; 120 Stat. 154))) that were— 

3 (1) assessed and paid on imports of goods from 

4 countries that are parties to the North American 

5 Free Trade Agreement; and 

6 (2) distributed on or after January 1, 2001, 

7 and before January 1, 2006. 

8 (c) PAYMENT OF FUNDS COLLECTED OR WITH9 HELD.—Not later than the date that is 60 days after the 

10 date of the enactment of this Act, the Secretary of Home11 land Security shall— 

12 (1) refund any repayments, or any other 

13 recoupment, of payments described in subsection (b); 

14 and 

15 (2) fully distribute any antidumping or counter16 vailing duties that the U.S. Customs and Border 

17 Protection is withholding as an offset as described in 

18 subsection (a)(2). 

19 (d) LIMITATION.—Nothing in this section shall be 

20 construed to prevent the Secretary of Homeland Security, 

21 or any other person, from requiring repayment of, or at22 tempting to otherwise recoup, any payments described in 

23 subsection (b) as a result of— 

24 (1) a finding of false statements or other mis25 conduct by a recipient of such a payment; or 


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1 (2) the reliquidation of an entry with respect to 

2 which such a payment was made. 

3 Subtitle J—Other Provisions 

4 SEC. 1901. APPLICATION OF CERTAIN LABOR STANDARDS 

5 TO PROJECTS FINANCED WITH CERTAIN TAX6 FAVORED BONDS. 

7 Subchapter IV of chapter 31 of the title 40, United 

8 States Code, shall apply to projects financed with the pro9 ceeds of— 

10 (1) any new clean renewable energy bond (as 

11 defined in section 54C of the Internal Revenue Code 

12 of 1986) issued after the date of the enactment of 

13 this Act, 

14 (2) any qualified energy conservation bond (as 

15 defined in section 54D of the Internal Revenue Code 

16 of 1986) issued after the date of the enactment of 

17 this Act, 

18 (3) any qualified zone academy bond (as de19 fined in section 54E of the Internal Revenue Code 

20 of 1986) issued after the date of the enactment of 

21 this Act, 

22 (4) any qualified school construction bond (as 

23 defined in section 54F of the Internal Revenue Code 

24 of 1986), and 


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1 (5) any recovery zone economic development 

2 bond (as defined in section 1400U–2 of the Internal 

3 Revenue Code of 1986). 

4 SEC. 1902. INCREASE IN PUBLIC DEBT LIMIT. 

5 Subsection (b) of section 3101 of title 31, United 

6 States Code, is amended by striking out the dollar limita7 tion contained in such subsection and inserting 

8 ‘‘$12,140,000,000,000’’. 

9 TITLE II—ASSISTANCE FOR UN10 EMPLOYED WORKERS AND 

11 STRUGGLING FAMILIES 

12 SEC. 2000. SHORT TITLE; TABLE OF CONTENTS. 

13 (a) SHORT TITLE.—This title may be cited as the 

14 ‘‘Assistance for Unemployed Workers and Struggling 

15 Families Act’’. 

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

17 this title is as follows: 

TITLE II—ASSISTANCE FOR UNEMPLOYED WORKERS AND 

STRUGGLING FAMILIES 

Sec. 2000. Short title; table of contents. 

Subtitle A—Unemployment Insurance 

Sec. 2001. Extension of emergency unemployment compensation program. 

Sec. 2002. Increase in unemployment compensation benefits. 

Sec. 2003. Unemployment compensation modernization. 

Sec. 2004. Temporary assistance for States with advances. 

Subtitle B—Assistance for Vulnerable Individuals 

Sec. 2101. Emergency fund for TANF program. 

Sec. 2102. Extension of TANF supplemental grants. 

Sec. 2103. Clarification of authority of States to use TANF funds carried over 

from prior years to provide TANF benefits and services. 


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Sec. 2104. Temporary reinstatement of authority to provide Federal matching 

payments for State spending of child support incentive payments. 

1 Subtitle A—Unemployment 

2 Insurance 

3 SEC. 2001. EXTENSION OF EMERGENCY UNEMPLOYMENT 

4 COMPENSATION PROGRAM. 

5 (a) IN GENERAL.—Section 4007 of the Supplemental 

6 Appropriations Act, 2008 (Public Law 110–252; 26 

7 U.S.C. 3304 note), as amended by section 4 of the Unem8 ployment Compensation Extension Act of 2008 (Public 

9 Law 110–449; 122 Stat. 5015), is amended— 

10 (1) by striking ‘‘March 31, 2009’’ each place it 

11 appears and inserting ‘‘December 31, 2009’’; 

12 (2) in the heading for subsection (b)(2), by 

13 striking ‘‘MARCH 31, 2009’’ and inserting ‘‘DECEM14 BER 31, 2009’’; and 

15 (3) in subsection (b)(3), by striking ‘‘August 

16 27, 2009’’ and inserting ‘‘May 31, 2010’’. 

17 (b) FINANCING PROVISIONS.—Section 4004 of such 

18 Act is amended by adding at the end the following: 

19 ‘‘(e) TRANSFER OF FUNDS.—Notwithstanding any 

20 other provision of law, the Secretary of the Treasury shall 

21 transfer from the general fund of the Treasury (from 

22 funds not otherwise appropriated)— 

23 ‘‘(1) to the extended unemployment compensa24 tion account (as established by section 905 of the 


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1 Social Security Act) such sums as the Secretary of 

2 Labor estimates to be necessary to make payments 

3 to States under this title by reason of the amend4 ments made by section 2001(a) of the Assistance for 

5 Unemployed Workers and Struggling Families Act; 

6 and 

7 ‘‘(2) to the employment security administration 

8 account (as established by section 901 of the Social 

9 Security Act) such sums as the Secretary of Labor 

10 estimates to be necessary for purposes of assisting 

11 States in meeting administrative costs by reason of 

12 the amendments referred to in paragraph (1). 

13 There are appropriated from the general fund of the 

14 Treasury, without fiscal year limitation, the sums referred 

15 to in the preceding sentence and such sums shall not be 

16 required to be repaid.’’. 

17 SEC. 2002. INCREASE IN UNEMPLOYMENT COMPENSATION 

18 BENEFITS. 

19 (a) FEDERAL-STATE AGREEMENTS.—Any State 

20 which desires to do so may enter into and participate in 

21 an agreement under this section with the Secretary of 

22 Labor (hereinafter in this section referred to as the ‘‘Sec23 retary’’). Any State which is a party to an agreement 

24 under this section may, upon providing 30 days’ written 

25 notice to the Secretary, terminate such agreement. 


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1 (b) PROVISIONS OF AGREEMENT.— 

2 (1) ADDITIONAL COMPENSATION.—Any agree3 ment under this section shall provide that the State 

4 agency of the State will make payments of regular 

5 compensation to individuals in amounts and to the 

6 extent that they would be determined if the State 

7 law of the State were applied, with respect to any 

8 week for which the individual is (disregarding this 

9 section) otherwise entitled under the State law to re10 ceive regular compensation, as if such State law had 

11 been modified in a manner such that the amount of 

12 regular compensation (including dependents’ allow13 ances) payable for any week shall be equal to the 

14 amount determined under the State law (before the 

15 application of this paragraph) plus an additional 

16 $25. 

17 (2) ALLOWABLE METHODS OF PAYMENT.—Any 

18 additional compensation provided for in accordance 

19 with paragraph (1) shall be payable either— 

20 (A) as an amount which is paid at the 

21 same time and in the same manner as any reg22 ular compensation otherwise payable for the 

23 week involved; or 

24 (B) at the option of the State, by pay25 ments which are made separately from, but on 


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1 the same weekly basis as, any regular com2 pensation otherwise payable. 

3 (c) NONREDUCTION RULE.—An agreement under 

4 this section shall not apply (or shall cease to apply) with 

5 respect to a State upon a determination by the Secretary 

6 that the method governing the computation of regular 

7 compensation under the State law of that State has been 

8 modified in a manner such that— 

9 (1) the average weekly benefit amount of reg10 ular compensation which will be payable during the 

11 period of the agreement (determined disregarding 

12 any additional amounts attributable to the modifica13 tion described in subsection (b)(1)) will be less than 

14 (2) the average weekly benefit amount of reg15 ular compensation which would otherwise have been 

16 payable during such period under the State law, as 

17 in effect on December 31, 2008. 

18 (d) PAYMENTS TO STATES.— 

19 (1) IN GENERAL.— 

20 (A) FULL REIMBURSEMENT.—There shall 

21 be paid to each State which has entered into an 

22 agreement under this section an amount equal 

23 to 100 percent of— 

24 (i) the total amount of additional 

25 compensation (as described in subsection 


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1 (b)(1)) paid to individuals by the State 

2 pursuant to such agreement; and 

3 (ii) any additional administrative ex4 penses incurred by the State by reason of 

5 such agreement (as determined by the Sec6 retary). 

7 (B) TERMS OF PAYMENTS.—Sums payable 

8 to any State by reason of such State’s having 

9 an agreement under this section shall be pay10 able, either in advance or by way of reimburse11 ment (as determined by the Secretary), in such 

12 amounts as the Secretary estimates the State 

13 will be entitled to receive under this section for 

14 each calendar month, reduced or increased, as 

15 the case may be, by any amount by which the 

16 Secretary finds that his estimates for any prior 

17 calendar month were greater or less than the 

18 amounts which should have been paid to the 

19 State. Such estimates may be made on the 

20 basis of such statistical, sampling, or other 

21 method as may be agreed upon by the Secretary 

22 and the State agency of the State involved. 

23 (2) CERTIFICATIONS.—The Secretary shall 

24 from time to time certify to the Secretary of the 


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1 Treasury for payment to each State the sums pay2 able to such State under this section. 

3 (3) APPROPRIATION.—There are appropriated 

4 from the general fund of the Treasury, without fiscal 

5 year limitation, such sums as may be necessary for 

6 purposes of this subsection. 

7 (e) APPLICABILITY.— 

8 (1) IN GENERAL.—An agreement entered into 

9 under this section shall apply to weeks of unemploy10 ment— 

11 (A) beginning after the date on which such 

12 agreement is entered into; and 

13 (B) ending before January 1, 2010. 

14 (2) TRANSITION RULE FOR INDIVIDUALS RE15 MAINING ENTITLED TO REGULAR COMPENSATION AS

16 OF JANUARY 1, 2010.—In the case of any individual 

17 who, as of the date specified in paragraph (1)(B), 

18 has not yet exhausted all rights to regular com19 pensation under the State law of a State with re20 spect to a benefit year that began before such date, 

21 additional compensation (as described in subsection 

22 (b)(1)) shall continue to be payable to such indi23 vidual for any week beginning on or after such date 

24 for which the individual is otherwise eligible for reg25 ular compensation with respect to such benefit year. 


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1 (3) TERMINATION.—Notwithstanding any other 

2 provision of this subsection, no additional compensa3 tion (as described in subsection (b)(1)) shall be pay4 able for any week beginning after June 30, 2010. 

5 (f) FRAUD AND OVERPAYMENTS.—The provisions of 

6 section 4005 of the Supplemental Appropriations Act, 

7 2008 (Public Law 110–252; 122 Stat. 2356) shall apply 

8 with respect to additional compensation (as described in 

9 subsection (b)(1)) to the same extent and in the same 

10 manner as in the case of emergency unemployment com11 pensation. 

12 (g) APPLICATION TO OTHER UNEMPLOYMENT BENE13 FITS.— 

14 (1) IN GENERAL.—Each agreement under this 

15 section shall include provisions to provide that the 

16 purposes of the preceding provisions of this section 

17 shall be applied with respect to unemployment bene18 fits described in subsection (i)(3) to the same extent 

19 and in the same manner as if those benefits were 

20 regular compensation. 

21 (2) ELIGIBILITY AND TERMINATION RULES.— 

22 Additional compensation (as described in subsection 

23 (b)(1))— 

24 (A) shall not be payable, pursuant to this 

25 subsection, with respect to any unemployment 


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1 benefits described in subsection (i)(3) for any 

2 week beginning on or after the date specified in 

3 subsection (e)(1)(B), except in the case of an 

4 individual who was eligible to receive additional 

5 compensation (as so described) in connection 

6 with any regular compensation or any unem7 ployment benefits described in subsection (i)(3) 

8 for any period of unemployment ending before 

9 such date; and 

10 (B) shall in no event be payable for any 

11 week beginning after the date specified in sub12 section (e)(3). 

13 (h) DISREGARD OF ADDITIONAL COMPENSATION FOR

14 PURPOSES OF MEDICAID AND SCHIP.—A State that en15 ters into an agreement under this section shall disregard 

16 the monthly equivalent of $25 per week for any individual 

17 who receives additional compensation under subsection 

18 (b)(1) in considering the amount of income of the indi19 vidual for any purposes under the Medicaid program 

20 under title XIX of the Social Security Act and the State 

21 Children’s Health Insurance Program under title XXI of 

22 such Act. 

23 (i) DEFINITIONS.—For purposes of this section— 

24 (1) the terms ‘‘compensation’’, ‘‘regular com25 pensation’’, ‘‘benefit year’’, ‘‘State’’, ‘‘State agency’’, 


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1 ‘‘State law’’, and ‘‘week’’ have the respective mean2 ings given such terms under section 205 of the Fed3 eral-State Extended Unemployment Compensation 

4 Act of 1970 (26 U.S.C. 3304 note); 

5 (2) the term ‘‘emergency unemployment com6 pensation’’ means emergency unemployment com7 pensation under title IV of the Supplemental Appro8 priations Act, 2008 (Public Law 110–252; 122 Stat. 

9 2353); and 

10 (3) any reference to unemployment benefits de11 scribed in this paragraph shall be considered to refer 

12 to— 

13 (A) extended compensation (as defined by 

14 section 205 of the Federal-State Extended Un15 employment Compensation Act of 1970); and 

16 (B) unemployment compensation (as de17 fined by section 85(b) of the Internal Revenue 

18 Code of 1986) provided under any program ad19 ministered by a State under an agreement with 

20 the Secretary. 

21 SEC. 2003. UNEMPLOYMENT COMPENSATION MODERNIZA22 TION. 

23 (a) IN GENERAL.—Section 903 of the Social Security 

24 Act (42 U.S.C. 1103) is amended by adding at the end 

25 the following: 


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1 ‘‘Special Transfers for Modernization 

2 ‘‘(f)(1)(A) In addition to any other amounts, the Sec3 retary of Labor shall provide for the making of unemploy4 ment compensation modernization incentive payments 

5 (hereinafter ‘incentive payments’) to the accounts of the 

6 States in the Unemployment Trust Fund, by transfer from 

7 amounts reserved for that purpose in the Federal unem8 ployment account, in accordance with succeeding provi9 sions of this subsection. 

10 ‘‘(B) The maximum incentive payment allowable 

11 under this subsection with respect to any State shall, as 

12 determined by the Secretary of Labor, be equal to the 

13 amount obtained by multiplying $7,000,000,000 by the 

14 same ratio as would apply under subsection (a)(2)(B) for 

15 purposes of determining such State’s share of any excess 

16 amount (as described in subsection (a)(1)) that would 

17 have been subject to transfer to State accounts, as of Oc18 tober 1, 2008, under the provisions of subsection (a). 

19 ‘‘(C) Of the maximum incentive payment determined 

20 under subparagraph (B) with respect to a State— 

21 ‘‘(i) one-third shall be transferred to the ac22 count of such State upon a certification under para23 graph (4)(B) that the State law of such State meets 

24 the requirements of paragraph (2); and 


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1 ‘‘(ii) the remainder shall be transferred to the 

2 account of such State upon a certification under 

3 paragraph (4)(B) that the State law of such State 

4 meets the requirements of paragraph (3). 

5 ‘‘(2) The State law of a State meets the requirements 

6 of this paragraph if such State law— 

7 ‘‘(A) uses a base period that includes the most 

8 recently completed calendar quarter before the start 

9 of the benefit year for purposes of determining eligi10 bility for unemployment compensation; or 

11 ‘‘(B) provides that, in the case of an individual 

12 who would not otherwise be eligible for unemploy13 ment compensation under the State law because of 

14 the use of a base period that does not include the 

15 most recently completed calendar quarter before the 

16 start of the benefit year, eligibility shall be deter17 mined using a base period that includes such cal18 endar quarter. 

19 ‘‘(3) The State law of a State meets the requirements 

20 of this paragraph if such State law includes provisions to 

21 carry out at least 2 of the following subparagraphs: 

22 ‘‘(A) An individual shall not be denied regular 

23 unemployment compensation under any State law 

24 provisions relating to availability for work, active 

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1 cause such individual is seeking only part-time (and 

2 not full-time) work, except that the State law provi3 sions carrying out this subparagraph may exclude an 

4 individual if a majority of the weeks of work in such 

5 individual’s base period do not include part-time 

6 work. 

7 ‘‘(B) An individual shall not be disqualified 

8 from regular unemployment compensation for sepa9 rating from employment if that separation is for any 

10 compelling family reason. For purposes of this sub11 paragraph, the term ‘compelling family reason’ 

12 means the following: 

13 ‘‘(i) Domestic violence, verified by such 

14 reasonable and confidential documentation as 

15 the State law may require, which causes the in16 dividual reasonably to believe that such individ17 ual’s continued employment would jeopardize 

18 the safety of the individual or of any member 

19 of the individual’s immediate family (as defined 

20 by the Secretary of Labor). 

21 ‘‘(ii) The illness or disability of a member 

22 of the individual’s immediate family (as defined 

23 by the Secretary of Labor). 

24 ‘‘(iii) The need for the individual to accom25 pany such individual’s spouse— 


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1 ‘‘(I) to a place from which it is im2 practical for such individual to commute; 

3 and 

4 ‘‘(II) due to a change in location of 

5 the spouse’s employment. 

6 ‘‘(C) Weekly unemployment compensation is 

7 payable under this subparagraph to any individual 

8 who is unemployed (as determined under the State 

9 unemployment compensation law), has exhausted all 

10 rights to regular unemployment compensation under 

11 the State law, and is enrolled and making satisfac12 tory progress in a State-approved training program 

13 or in a job training program authorized under the 

14 Workforce Investment Act of 1998. Such programs 

15 shall prepare individuals who have been separated 

16 from a declining occupation, or who have been invol17 untarily and indefinitely separated from employment 

18 as a result of a permanent reduction of operations 

19 at the individual’s place of employment, for entry 

20 into a high-demand occupation. The amount of un21 employment compensation payable under this sub22 paragraph to an individual for a week of unemploy23 ment shall be equal to the individual’s average week24 ly benefit amount (including dependents’ allowances) 

25 for the most recent benefit year, and the total 


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1 amount of unemployment compensation payable 

2 under this subparagraph to any individual shall be 

3 equal to at least 26 times the individual’s average 

4 weekly benefit amount (including dependents’ allow5 ances) for the most recent benefit year. 

6 ‘‘(D) Dependents’ allowances are provided, in 

7 the case of any individual who is entitled to receive 

8 regular unemployment compensation and who has 

9 any dependents (as defined by State law), in an 

10 amount equal to at least $15 per dependent per 

11 week, subject to any aggregate limitation on such al12 lowances which the State law may establish (but 

13 which aggregate limitation on the total allowance for 

14 dependents paid to an individual may not be less 

15 than $50 for each week of unemployment or 50 per16 cent of the individual’s weekly benefit amount for 

17 the benefit year, whichever is less). 

18 ‘‘(4)(A) Any State seeking an incentive payment 

19 under this subsection shall submit an application therefor 

20 at such time, in such manner, and complete with such in21 formation as the Secretary of Labor may within 60 days 

22 after the date of the enactment of this subsection prescribe 

23 (whether by regulation or otherwise), including informa24 tion relating to compliance with the requirements of para25 graph (2) or (3), as well as how the State intends to use 


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1 the incentive payment to improve or strengthen the State’s 

2 unemployment compensation program. The Secretary of 

3 Labor shall, within 30 days after receiving a complete ap4 plication, notify the State agency of the State of the Sec5 retary’s findings with respect to the requirements of para6 graph (2) or (3) (or both). 

7 ‘‘(B)(i) If the Secretary of Labor finds that the State 

8 law provisions (disregarding any State law provisions 

9 which are not then currently in effect as permanent law 

10 or which are subject to discontinuation) meet the require11 ments of paragraph (2) or (3), as the case may be, the 

12 Secretary of Labor shall thereupon make a certification 

13 to that effect to the Secretary of the Treasury, together 

14 with a certification as to the amount of the incentive pay15 ment to be transferred to the State account pursuant to 

16 that finding. The Secretary of the Treasury shall make 

17 the appropriate transfer within 7 days after receiving such 

18 certification. 

19 ‘‘(ii) For purposes of clause (i), State law provisions 

20 which are to take effect within 12 months after the date 

21 of their certification under this subparagraph shall be con22 sidered to be in effect as of the date of such certification. 

23 ‘‘(C)(i) No certification of compliance with the re24 quirements of paragraph (2) or (3) may be made with re25 spect to any State whose State law is not otherwise eligible 


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1 for certification under section 303 or approvable under 

2 section 3304 of the Federal Unemployment Tax Act. 

3 ‘‘(ii) No certification of compliance with the require4 ments of paragraph (3) may be made with respect to any 

5 State whose State law is not in compliance with the re6 quirements of paragraph (2). 

7 ‘‘(iii) No application under subparagraph (A) may be 

8 considered if submitted before the date of the enactment 

9 of this subsection or after the latest date necessary (as 

10 specified by the Secretary of Labor) to ensure that all in11 centive payments under this subsection are made before 

12 October 1, 2010. In the case of a State in which the first 

13 day of the first regularly scheduled session of the State 

14 legislature beginning after the date of enactment of this 

15 subsection begins after December 31, 2010, the preceding 

16 sentence shall be applied by substituting ‘October 1, 2011’ 

17 for ‘October 1, 2010’ . 

18 ‘‘(5)(A) Except as provided in subparagraph (B), any 

19 amount transferred to the account of a State under this 

20 subsection may be used by such State only in the payment 

21 of cash benefits to individuals with respect to their unem22 ployment (including for dependents’ allowances and for 

23 unemployment compensation under paragraph (3)(C)), ex24 clusive of expenses of administration. 


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1 ‘‘(B) A State may, subject to the same conditions as 

2 set forth in subsection (c)(2) (excluding subparagraph (B) 

3 thereof, and deeming the reference to ‘subsections (a) and 

4 (b)’ in subparagraph (D) thereof to include this sub5 section), use any amount transferred to the account of 

6 such State under this subsection for the administration 

7 of its unemployment compensation law and public employ8 ment offices. 

9 ‘‘(6) Out of any money in the Federal unemployment 

10 account not otherwise appropriated, the Secretary of the 

11 Treasury shall reserve $7,000,000,000 for incentive pay12 ments under this subsection. Any amount so reserved shall 

13 not be taken into account for purposes of any determina14 tion under section 902, 910, or 1203 of the amount in 

15 the Federal unemployment account as of any given time. 

16 Any amount so reserved for which the Secretary of the 

17 Treasury has not received a certification under paragraph 

18 (4)(B) by the deadline described in paragraph (4)(C)(iii) 

19 shall, upon the close of fiscal year 2011, become unre20 stricted as to use as part of the Federal unemployment 

21 account. 

22 ‘‘(7) For purposes of this subsection, the terms ‘ben23 efit year’, ‘base period’, and ‘week’ have the respective 

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1 eral-State Extended Unemployment Compensation Act of 

2 1970 (26 U.S.C. 3304 note). 

3 ‘‘Special Transfer in Fiscal Year 2009 for Administration 

4 ‘‘(g)(1) In addition to any other amounts, the Sec5 retary of the Treasury shall transfer from the employment 

6 security administration account to the account of each 

7 State in the Unemployment Trust Fund, within 30 days 

8 after the date of the enactment of this subsection, the 

9 amount determined with respect to such State under para10 graph (2). 

11 ‘‘(2) The amount to be transferred under this sub12 section to a State account shall (as determined by the Sec13 retary of Labor and certified by such Secretary to the Sec14 retary of the Treasury) be equal to the amount obtained 

15 by multiplying $500,000,000 by the same ratio as deter16 mined under subsection (f)(1)(B) with respect to such 

17 State. 

18 ‘‘(3) Any amount transferred to the account of a 

19 State as a result of the enactment of this subsection may 

20 be used by the State agency of such State only in the pay21 ment of expenses incurred by it for— 

22 ‘‘(A) the administration of the provisions of its 

23 State law carrying out the purposes of subsection 

24 (f)(2) or any subparagraph of subsection (f)(3); 


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1 ‘‘(B) improved outreach to individuals who 

2 might be eligible for regular unemployment com3 pensation by virtue of any provisions of the State 

4 law which are described in subparagraph (A); 

5 ‘‘(C) the improvement of unemployment benefit 

6 and unemployment tax operations, including re7 sponding to increased demand for unemployment 

8 compensation; and 

9 ‘‘(D) staff-assisted reemployment services for 

10 unemployment compensation claimants.’’. 

11 (b) REGULATIONS.—The Secretary of Labor may 

12 prescribe any regulations, operating instructions, or other 

13 guidance necessary to carry out the amendment made by 

14 subsection (a). 

15 SEC. 2004. TEMPORARY ASSISTANCE FOR STATES WITH AD16 VANCES. 

17 Section 1202(b) of the Social Security Act (42 U.S.C. 

18 1322(b)) is amended by adding at the end the following 

19 new paragraph: 

20 ‘‘(10)(A) With respect to the period beginning on the 

21 date of enactment of this paragraph and ending on De22 cember 31, 2010— 

23 ‘‘(i) any interest payment otherwise due from a 

24 State under this subsection during such period shall 

25 be deemed to have been made by the State; and 


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1 ‘‘(ii) no interest shall accrue on any advance or 

2 advances made under section 1201 to a State during 

3 such period. 

4 ‘‘(B) The provisions of subparagraph (A) shall have 

5 no effect on the requirement for interest payments under 

6 this subsection after the period described in such subpara7 graph or on the accrual of interest under this subsection 

8 after such period.’’. 

9 Subtitle B—Assistance for 

10 Vulnerable Individuals 

11 SEC. 2101. EMERGENCY FUND FOR TANF PROGRAM. 

12 (a) TEMPORARY FUND.— 

13 (1) IN GENERAL.—Section 403 of the Social 

14 Security Act (42 U.S.C. 603) is amended by adding 

15 at the end the following: 

16 ‘‘(c) EMERGENCY FUND.— 

17 ‘‘(1) ESTABLISHMENT.—There is established in 

18 the Treasury of the United States a fund which 

19 shall be known as the ‘Emergency Contingency 

20 Fund for State Temporary Assistance for Needy 

21 Families Programs’ (in this subsection referred to as 

22 the ‘Emergency Fund’). 

23 ‘‘(2) DEPOSITS INTO FUND.— 

24 ‘‘(A) IN GENERAL.—Out of any money in 

25 the Treasury of the United States not otherwise 


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1 appropriated, there are appropriated for fiscal 

2 year 2009, $3,000,000,000 for payment to the 

3 Emergency Fund. 

4 ‘‘(B) AVAILABILITY AND USE OF FUNDS.— 

5 The amounts appropriated to the Emergency 

6 Fund under subparagraph (A) shall remain 

7 available through fiscal year 2010 and shall be 

8 used to make grants to States in each of fiscal 

9 years 2009 and 2010 in accordance with the re10 quirements of paragraph (3). 

11 ‘‘(C) LIMITATION.—In no case may the 

12 Secretary make a grant from the Emergency 

13 Fund for a fiscal year after fiscal year 2010. 

14 ‘‘(3) GRANTS.— 

15 ‘‘(A) GRANT RELATED TO CASELOAD IN16 CREASES.— 

17 ‘‘(i) IN GENERAL.—For each calendar 

18 quarter in fiscal year 2009 or 2010, the 

19 Secretary shall make a grant from the 

20 Emergency Fund to each State that— 

21 ‘‘(I) requests a grant under this 

22 subparagraph for the quarter; and 

23 ‘‘(II) meets the requirement of 

24 clause (ii) for the quarter. 


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1 ‘‘(ii) CASELOAD INCREASE REQUIRE2 MENT.—A State meets the requirement of 

3 this clause for a quarter if the average 

4 monthly assistance caseload of the State 

5 for the quarter exceeds the average month6 ly assistance caseload of the State for the 

7 corresponding quarter in the emergency 

8 fund base year of the State. 

9 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

10 paragraph (5), the amount of the grant to 

11 be made to a State under this subpara12 graph for a quarter shall be 80 percent of 

13 the amount (if any) by which the total ex14 penditures of the State for basic assistance 

15 (as defined by the Secretary) in the quar16 ter, whether under the State program 

17 funded under this part or as qualified 

18 State expenditures, exceeds the total ex19 penditures of the State for such assistance 

20 for the corresponding quarter in the emer21 gency fund base year of the State. 

22 ‘‘(B) GRANT RELATED TO INCREASED EX23 PENDITURES FOR NON-RECURRENT SHORT

24 TERM BENEFITS.— 


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1 ‘‘(i) IN GENERAL.—For each calendar 

2 quarter in fiscal year 2009 or 2010, the 

3 Secretary shall make a grant from the 

4 Emergency Fund to each State that— 

5 ‘‘(I) requests a grant under this 

6 subparagraph for the quarter; and 

7 ‘‘(II) meets the requirement of 

8 clause (ii) for the quarter. 

9 ‘‘(ii) NON-RECURRENT SHORT-TERM

10 EXPENDITURE REQUIREMENT.—A State 

11 meets the requirement of this clause for a 

12 quarter if the total expenditures of the 

13 State for non-recurrent short-term benefits 

14 in the quarter, whether under the State 

15 program funded under this part or as 

16 qualified State expenditures, exceeds the 

17 total such expenditures of the State for 

18 non-recurrent short-term benefits in the 

19 corresponding quarter in the emergency 

20 fund base year of the State. 

21 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

22 paragraph (5), the amount of the grant to 

23 be made to a State under this subpara24 graph for a quarter shall be an amount 


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1 equal to 80 percent of the excess described 

2 in clause (ii). 

3 ‘‘(C) GRANT RELATED TO INCREASED EX4 PENDITURES FOR SUBSIDIZED EMPLOYMENT.— 

5 ‘‘(i) IN GENERAL.—For each calendar 

6 quarter in fiscal year 2009 or 2010, the 

7 Secretary shall make a grant from the 

8 Emergency Fund to each State that— 

9 ‘‘(I) requests a grant under this 

10 subparagraph for the quarter; and 

11 ‘‘(II) meets the requirement of 

12 clause (ii) for the quarter. 

13 ‘‘(ii) SUBSIDIZED EMPLOYMENT EX14 PENDITURE REQUIREMENT.—A State 

15 meets the requirement of this clause for a 

16 quarter if the total expenditures of the 

17 State for subsidized employment in the 

18 quarter, whether under the State program 

19 funded under this part or as qualified 

20 State expenditures, exceeds the total of 

21 such expenditures of the State in the cor22 responding quarter in the emergency fund 

23 base year of the State. 

24 ‘‘(iii) AMOUNT OF GRANT.—Subject to 

25 paragraph (5), the amount of the grant to 


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1 be made to a State under this subpara2 graph for a quarter shall be an amount 

3 equal to 80 percent of the excess described 

4 in clause (ii). 

5 ‘‘(4) AUTHORITY TO MAKE NECESSARY ADJUST6 MENTS TO DATA AND COLLECT NEEDED DATA.—In 

7 determining the size of the caseload of a State and 

8 the expenditures of a State for basic assistance, non9 recurrent short-term benefits, and subsidized em10 ployment, during any period for which the State re11 quests funds under this subsection, and during the 

12 emergency fund base year of the State, the Sec13 retary may make appropriate adjustments to the 

14 data to ensure that the data reflect expenditures 

15 under the State program funded under this part and 

16 qualified State expenditures. The Secretary may de17 velop a mechanism for collecting expenditure data, 

18 including procedures which allow States to make 

19 reasonable estimates, and may set deadlines for 

20 making revisions to the data. 

21 ‘‘(5) LIMITATION.—The total amount payable 

22 to a single State under subsection (b) and this sub23 section for a fiscal year shall not exceed 25 percent 

24 of the State family assistance grant. 


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1 ‘‘(6) LIMITATIONS ON USE OF FUNDS.—A State 

2 to which an amount is paid under this subsection 

3 may use the amount only as authorized by section 

4 404. 

5 ‘‘(7) TIMING OF IMPLEMENTATION.—The Sec6 retary shall implement this subsection as quickly as 

7 reasonably possible, pursuant to appropriate guid8 ance to States. 

9 ‘‘(8) DEFINITIONS.—In this subsection: 

10 ‘‘(A) AVERAGE MONTHLY ASSISTANCE

11 CASELOAD DEFINED.—The term ‘average 

12 monthly assistance caseload’ means, with re13 spect to a State and a quarter, the number of 

14 families receiving assistance during the quarter 

15 under the State program funded under this 

16 part or as qualified State expenditures, subject 

17 to adjustment under paragraph (4). 

18 ‘‘(B) EMERGENCY FUND BASE YEAR.— 

19 ‘‘(i) IN GENERAL.—The term ‘emer20 gency fund base year’ means, with respect 

21 to a State and a category described in 

22 clause (ii), whichever of fiscal year 2007 or 

23 2008 is the fiscal year in which the 

24 amount described by the category with re25 spect to the State is the lesser. 


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1 ‘‘(ii) CATEGORIES DESCRIBED.—The 

2 categories described in this clause are the 

3 following: 

4 ‘‘(I) The average monthly assist5 ance caseload of the State. 

6 ‘‘(II) The total expenditures of 

7 the State for non-recurrent short-term 

8 benefits, whether under the State pro9 gram funded under this part or as 

10 qualified State expenditures. 

11 ‘‘(III) The total expenditures of 

12 the State for subsidized employment, 

13 whether under the State program 

14 funded under this part or as qualified 

15 State expenditures. 

16 ‘‘(C) QUALIFIED STATE EXPENDITURES.— 

17 The term ‘qualified State expenditures’ has the 

18 meaning given the term in section 409(a)(7).’’. 

19 (2) REPEAL.—Effective October 1, 2010, sub20 section (c) of section 403 of the Social Security Act 

21 (42 U.S.C. 603) (as added by paragraph (1)) is re22 pealed. 

23 (b) TEMPORARY MODIFICATION OF CASELOAD RE24 DUCTION CREDIT.—Section 407(b)(3)(A)(i) of such Act 

25 (42 U.S.C. 607(b)(3)(A)(i)) is amended by inserting ‘‘(or 


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1 if the immediately preceding fiscal year is fiscal year 2008, 

2 2009, or 2010, then, at State option, during the emer3 gency fund base year of the State with respect to the aver4 age monthly assistance caseload of the State (within the 

5 meaning of section 403(c)(8)(B), except that, if a State 

6 elects such option for fiscal year 2008, the emergency fund 

7 base year of the State with respect to such caseload shall 

8 be fiscal year 2007))’’ before ‘‘under the State’’. 

9 (c) DISREGARD FROM LIMITATION ON TOTAL PAY10 MENTS TO TERRITORIES.—Section 1108(a)(2) of the So11 cial Security Act (42 U.S.C. 1308(a)(2)) is amended by 

12 inserting ‘‘403(c)(3),’’ after ‘‘403(a)(5),’’. 

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

14 this section shall take effect on the date of the enactment 

15 of this Act. 

16 SEC. 2102. EXTENSION OF TANF SUPPLEMENTAL GRANTS. 

17 (a) EXTENSION THROUGH FISCAL YEAR 2010.—Sec18 tion 7101(a) of the Deficit Reduction Act of 2005 (Public 

19 Law 109–171; 120 Stat. 135), as amended by section 

20 301(a) of the Medicare Improvements for Patients and 

21 Providers Act of 2008 (Public Law 110–275), is amended 

22 by striking ‘‘fiscal year 2009’’ and inserting ‘‘fiscal year 

23 2010’’. 


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1 (b) CONFORMING AMENDMENT.—Section 

2 403(a)(3)(H)(ii) of the Social Security Act (42 U.S.C. 

3 603(a)(3)(H)(ii)) is amended to read as follows: 

4 ‘‘(ii) subparagraph (G) shall be ap5 plied as if ‘fiscal year 2010’ were sub6 stituted for ‘fiscal year 2001’; and’’. 

7 SEC. 2103. CLARIFICATION OF AUTHORITY OF STATES TO 

8 USE TANF FUNDS CARRIED OVER FROM 

9 PRIOR YEARS TO PROVIDE TANF BENEFITS 

10 AND SERVICES. 

11 Section 404(e) of the Social Security Act (42 U.S.C. 

12 604(e)) is amended to read as follows: 

13 ‘‘(e) AUTHORITY TO CARRY OVER CERTAIN

14 AMOUNTS FOR BENEFITS OR SERVICES OR FOR FUTURE

15 CONTINGENCIES.—A State or tribe may use a grant made 

16 to the State or tribe under this part for any fiscal year 

17 to provide, without fiscal year limitation, any benefit or 

18 service that may be provided under the State or tribal pro19 gram funded under this part.’’. 

20 SEC. 2104. TEMPORARY REINSTATEMENT OF AUTHORITY 

21 TO PROVIDE FEDERAL MATCHING PAYMENTS 

22 FOR STATE SPENDING OF CHILD SUPPORT 

23 INCENTIVE PAYMENTS. 

24 During the period that begins on October 1, 2008, 

25 and ends on December 31, 2010, section 455(a)(1) of the 


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1 Social Security Act (42 U.S.C. 655(a)(1)) shall be applied 

2 without regard to the amendment made by section 

3 7309(a) of the Deficit Reduction Act of 2005 (Public Law 

4 109–171, 120 Stat. 147). 

5 TITLE III—HEALTH INSURANCE 

6 ASSISTANCE 

7 SEC. 3000. TABLE OF CONTENTS OF TITLE. 

8 The table of contents for this title is as follows: 

TITLE III—HEALTH INSURANCE ASSISTANCE 

Sec. 3000. Table of contents of title. 

Subtitle A—Premium Subsidies for COBRA Continuation Coverage for 

Unemployed Workers 

Sec. 3001. Premium assistance for COBRA benefits. 

Subtitle B—Transitional Medical Assistance (TMA) 

Sec. 3101. Extension of transitional medical assistance (TMA). 

Subtitle C—Extension of the Qualified Individual (QI) Program 

Sec. 3201. Extension of the qualifying individual (QI) program. 

Subtitle D—Other Provisions 

Sec. 3301. Premiums and cost sharing protections under Medicaid, eligibility 

determinations under Medicaid and CHIP, and protection of 

certain Indian property from Medicaid estate recovery. 

Sec. 3302. Rules applicable under Medicaid and CHIP to managed care entities 

with respect to Indian enrollees and Indian health care providers and Indian managed care entities. 

Sec. 3303. Consultation on Medicaid, CHIP, and other health care programs 

funded under the Social Security Act involving Indian Health 

Programs and Urban Indian Organizations. 

Sec. 3304. Application of prompt pay requirements to nursing facilities. 

Sec. 3305. Period of application; sunset. 


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1 Subtitle A—Premium Subsidies for 

2 COBRA Continuation Coverage 

3 for Unemployed Workers 

4 SEC. 3001. PREMIUM ASSISTANCE FOR COBRA BENEFITS. 

5 (a) TABLE OF CONTENTS OF SUBTITLE.—The table 

6 of contents of this subtitle is as follows: 

Sec. 3001. Premium assistance for COBRA benefits. 

7 (b) PREMIUM ASSISTANCE FOR COBRA CONTINU8 ATION COVERAGE FOR UNEMPLOYED WORKERS AND

9 THEIR FAMILIES.— 

10 (1) PROVISION OF PREMIUM ASSISTANCE.— 

11 (A) REDUCTION OF PREMIUMS PAY12 ABLE.—In the case of any premium for a 

13 month of coverage beginning after the date of 

14 the enactment of the Act for COBRA continu15 ation coverage with respect to any assistance el16 igible individual, such individual shall be treated 

17 for purposes of any COBRA continuation provi18 sion as having paid the amount of such pre19 mium if such individual pays 35 percent of the 

20 amount of such premium (as determined with21 out regard to this subsection). 

22 (B) PLAN ENROLLMENT OPTION.— 

23 (i) IN GENERAL.—Notwithstanding 

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1 sistance eligible individual may, not later 

2 than 90 days after the date of notice of the 

3 plan enrollment option described in this 

4 subparagraph, elect to enroll in coverage 

5 under a plan offered by the employer in6 volved, or the employee organization in7 volved (including, for this purpose, a joint 

8 board of trustees of a multiemployer trust 

9 affiliated with one or more multiemployer 

10 plans), that is different than coverage 

11 under the plan in which such individual 

12 was enrolled at the time the qualifying 

13 event occurred, and such coverage shall be 

14 treated as COBRA continuation coverage 

15 for purposes of the applicable COBRA con16 tinuation coverage provision. 

17 (ii) REQUIREMENTS.—An assistance 

18 eligible individual may elect to enroll in 

19 different coverage as described in clause (i) 

20 only if— 

21 (I) the employer involved has 

22 made a determination that such em23 ployer will permit assistance eligible 

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1 erage as provided for this subpara2 graph; 

3 (II) the premium for such dif4 ferent coverage does not exceed the 

5 premium for coverage in which the in6 dividual was enrolled at the time the 

7 qualifying event occurred; 

8 (III) the different coverage in 

9 which the individual elects to enroll is 

10 coverage that is also offered to the ac11 tive employees of the employer at the 

12 time at which such election is made; 

13 and 

14 (IV) the different coverage is 

15 not— 

16 (aa) coverage that provides 

17 only dental, vision, counseling, or 

18 referral services (or a combina19 tion of such services); 

20 (bb) a health flexible spend21 ing account or health reimburse22 ment arrangement; or 

23 (cc) coverage that provides 

24 coverage for services or treat25 ments furnished in an on-site 


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1 medical facility maintained by 

2 the employer and that consists 

3 primarily of first-aid services, 

4 prevention and wellness care, or 

5 similar care (or a combination of 

6 such care). 

7 (C) PREMIUM REIMBURSEMENT.—For pro8 visions providing the balance of such premium, 

9 see section 6432 of the Internal Revenue Code 

10 of 1986, as added by paragraph (12). 

11 (2) LIMITATION OF PERIOD OF PREMIUM AS12 SISTANCE.— 

13 (A) IN GENERAL.—Paragraph (1)(A) shall 

14 not apply with respect to any assistance eligible 

15 individual for months of coverage beginning on 

16 or after the earlier of— 

17 (i) the first date that such individual 

18 is eligible for coverage under any other 

19 group health plan (other than coverage 

20 consisting of only dental, vision, coun21 seling, or referral services (or a combina22 tion thereof), coverage under a health re23 imbursement arrangement or a health 

24 flexible spending arrangement, or coverage 

25 of treatment that is furnished in an on-site 


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1 medical facility maintained by the em2 ployer and that consists primarily of first3 aid services, prevention and wellness care, 

4 or similar care (or a combination thereof)) 

5 or is eligible for benefits under title XVIII 

6 of the Social Security Act; or 

7 (ii) the earliest of— 

8 (I) the date which is 9 months 

9 after the first day of first month that 

10 paragraph (1)(A) applies with respect 

11 to such individual, 

12 (II) the date following the expira13 tion of the maximum period of con14 tinuation coverage required under the 

15 applicable COBRA continuation cov16 erage provision, or 

17 (III) the date following the expi18 ration of the period of continuation 

19 coverage allowed under paragraph 

20 (4)(B)(ii). 

21 (B) TIMING OF ELIGIBILITY FOR ADDI22 TIONAL COVERAGE.—For purposes of subpara23 graph (A)(i), an individual shall not be treated 

24 as eligible for coverage under a group health 


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1 plan before the first date on which such indi2 vidual could be covered under such plan. 

3 (C) NOTIFICATION REQUIREMENT.—An 

4 assistance eligible individual shall notify in writ5 ing the group health plan with respect to which 

6 paragraph (1)(A) applies if such paragraph 

7 ceases to apply by reason of subparagraph 

8 (A)(i). Such notice shall be provided to the 

9 group health plan in such time and manner as 

10 may be specified by the Secretary of Labor. 

11 (3) ASSISTANCE ELIGIBLE INDIVIDUAL.—For 

12 purposes of this section, the term ‘‘assistance eligible 

13 individual’’ means any qualified beneficiary if— 

14 (A) at any time during the period that be15 gins with September 1, 2008, and ends with 

16 December 31, 2009, such qualified beneficiary 

17 is eligible for COBRA continuation coverage, 

18 (B) such qualified beneficiary elects such 

19 coverage, and 

20 (C) the qualifying event with respect to the 

21 COBRA continuation coverage consists of the 

22 involuntary termination of the covered employ23 ee’s employment and occurred during such pe24 riod. 


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1 (4) EXTENSION OF ELECTION PERIOD AND EF2 FECT ON COVERAGE.— 

3 (A) IN GENERAL.—Notwithstanding sec4 tion 605(a) of the Employee Retirement Income 

5 Security Act of 1974, section 4980B(f)(5)(A) of 

6 the Internal Revenue Code of 1986, section 

7 2205(a) of the Public Health Service Act, and 

8 section 8905a(c)(2) of title 5, United States 

9 Code, in the case of an individual who is a 

10 qualified beneficiary described in paragraph 

11 (3)(A) as of the date of the enactment of this 

12 Act and has not made the election referred to 

13 in paragraph (3)(B) as of such date, such indi14 vidual may elect the COBRA continuation cov15 erage under the COBRA continuation coverage 

16 provisions containing such sections during the 

17 60-day period commencing with the date on 

18 which the notification required under paragraph 

19 (7)(C) is provided to such individual. 

20 (B) COMMENCEMENT OF COVERAGE; NO

21 REACH-BACK.—Any COBRA continuation cov22 erage elected by a qualified beneficiary during 

23 an extended election period under subparagraph 

24 (A)— 


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1 (i) shall commence on the date of the 

2 enactment of this Act, and 

3 (ii) shall not extend beyond the period 

4 of COBRA continuation coverage that 

5 would have been required under the appli6 cable COBRA continuation coverage provi7 sion if the coverage had been elected as re8 quired under such provision. 

9 (C) PREEXISTING CONDITIONS.—With re10 spect to a qualified beneficiary who elects 

11 COBRA continuation coverage pursuant to sub12 paragraph (A), the period— 

13 (i) beginning on the date of the quali14 fying event, and 

15 (ii) ending with the day before the 

16 date of the enactment of this Act, 

17 shall be disregarded for purposes of deter18 mining the 63-day periods referred to in section 

19 701)(2) of the Employee Retirement Income 

20 Security Act of 1974, section 9801(c)(2) of the 

21 Internal Revenue Code of 1986, and section 

22 2701(c)(2) of the Public Health Service Act. 

23 (5) EXPEDITED REVIEW OF DENIALS OF PRE24 MIUM ASSISTANCE.—In any case in which an indi25 vidual requests treatment as an assistance eligible 


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1 individual and is denied such treatment by the group 

2 health plan by reason of such individual’s ineligi3 bility for COBRA continuation coverage, the Sec4 retary of Labor (or the Secretary of Health and 

5 Human services in connection with COBRA continu6 ation coverage which is provided other than pursu7 ant to part 6 of subtitle B of title I of the Employee 

8 Retirement Income Security Act of 1974), in con9 sultation with the Secretary of the Treasury, shall 

10 provide for expedited review of such denial. An indi11 vidual shall be entitled to such review upon applica12 tion to such Secretary in such form and manner as 

13 shall be provided by such Secretary. Such Secretary 

14 shall make a determination regarding such individ15 ual’s eligibility within 10 business days after receipt 

16 of such individual’s application for review under this 

17 paragraph. 

18 (6) DISREGARD OF SUBSIDIES FOR PURPOSES

19 OF FEDERAL AND STATE PROGRAMS.—Notwith20 standing any other provision of law, any premium 

21 reduction with respect to an assistance eligible indi22 vidual under this subsection shall not be considered 

23 income or resources in determining eligibility for, or 

24 the amount of assistance or benefits provided under, 

25 any other public benefit provided under Federal law 


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1 or the law of any State or political subdivision there2 of. 

3 (7) NOTICES TO INDIVIDUALS.— 

4 (A) GENERAL NOTICE.— 

5 (i) IN GENERAL.—In the case of no6 tices provided under section 606(4) of the 

7 Employee Retirement Income Security Act 

8 of 1974 (29 U.S.C. 1166(4)), section 

9 4980B(f)(6)(D) of the Internal Revenue 

10 Code of 1986, section 2206(4) of the Pub11 lic Health Service Act (42 U.S.C. 300bb– 

12 6(4)), or section 8905a(f)(2)(A) of title 5, 

13 United States Code, with respect to indi14 viduals who, during the period described in 

15 paragraph (3)(A), become entitled to elect 

16 COBRA continuation coverage, such no17 tices shall include an additional notifica18 tion to the recipient of— 

19 (I) the availability of premium 

20 reduction with respect to such cov21 erage under this subsection; and 

22 (II) the option to enroll in dif23 ferent coverage if an employer that 

24 permits assistance eligible individuals 

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1 erage (as described in paragraph 

2 (1)(B)). 

3 (ii) ALTERNATIVE NOTICE.—In the 

4 case of COBRA continuation coverage to 

5 which the notice provision under such sec6 tions does not apply, the Secretary of 

7 Labor, in consultation with the Secretary 

8 of the Treasury and the Secretary of 

9 Health and Human Services, shall, in co10 ordination with administrators of the 

11 group health plans (or other entities) that 

12 provide or administer the COBRA continu13 ation coverage involved, provide rules re14 quiring the provision of such notice. 

15 (iii) FORM.—The requirement of the 

16 additional notification under this subpara17 graph may be met by amendment of exist18 ing notice forms or by inclusion of a sepa19 rate document with the notice otherwise 

20 required. 

21 (B) SPECIFIC REQUIREMENTS.—Each ad22 ditional notification under subparagraph (A) 

23 shall include— 


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1 (i) the forms necessary for estab2 lishing eligibility for premium reduction 

3 under this subsection, 

4 (ii) the name, address, and telephone 

5 number necessary to contact the plan ad6 ministrator and any other person main7 taining relevant information in connection 

8 with such premium reduction, 

9 (iii) a description of the extended elec10 tion period provided for in paragraph 

11 (4)(A), 

12 (iv) a description of the obligation of 

13 the qualified beneficiary under paragraph 

14 (2)(C) to notify the plan providing continu15 ation coverage of eligibility for subsequent 

16 coverage under another group health plan 

17 or eligibility for benefits under title XVIII 

18 of the Social Security Act and the penalty 

19 provided for failure to so notify the plan, 

20 (v) a description, displayed in a 

21 prominent manner, of the qualified bene22 ficiary’s right to a reduced premium and 

23 any conditions on entitlement to the re24 duced premium; and 


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1 (vi) a description of the option of the 

2 qualified beneficiary to enroll in different 

3 coverage if the employer permits such ben4 eficiary to elect to enroll in such different 

5 coverage under paragraph (1)(B). 

6 (C) NOTICE RELATING TO RETROACTIVE

7 COVERAGE.—In the case of an individual de8 scribed in paragraph (3)(A) who has elected 

9 COBRA continuation coverage as of the date of 

10 enactment of this Act or an individual described 

11 in paragraph (4)(A), the administrator of the 

12 group health plan (or other person) involved 

13 shall provide (within 60 days after the date of 

14 enactment of this Act) for the additional notifi15 cation required to be provided under subpara16 graph (A). 

17 (D) MODEL NOTICES.—Not later than 30 

18 days after the date of enactment of this Act, 

19 the Secretary of the Labor, in consultation with 

20 the Secretary of the Treasury and the Secretary 

21 of Health and Human Services, shall prescribe 

22 models for the additional notification required 

23 under this paragraph. 

24 (8) SAFEGUARDS.—The Secretary of the Treas25 ury shall provide such rules, procedures, regulations, 


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1 and other guidance as may be necessary and appro2 priate to prevent fraud and abuse under this sub3 section. 

4 (9) OUTREACH.—The Secretary of Labor, in 

5 consultation with the Secretary of the Treasury and 

6 the Secretary of Health and Human Services, shall 

7 provide outreach consisting of public education and 

8 enrollment assistance relating to premium reduction 

9 provided under this subsection. Such outreach shall 

10 target employers, group health plan administrators, 

11 public assistance programs, States, insurers, and 

12 other entities as determined appropriate by such 

13 Secretaries. Such outreach shall include an initial 

14 focus on those individuals electing continuation cov15 erage who are referred to in paragraph (7)(C). In16 formation on such premium reduction, including en17 rollment, shall also be made available on website of 

18 the Departments of Labor, Treasury, and Health 

19 and Human Services. 

20 (10) DEFINITIONS.—For purposes of this sub21 section— 

22 (A) ADMINISTRATOR.—The term ‘‘admin23 istrator’’ has the meaning given such term in 

24 section 3(16) of the Employee Retirement In25 come Security Act of 1974. 


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1 (B) COBRA CONTINUATION COVERAGE.— 

2 The term ‘‘COBRA continuation coverage’’ 

3 means continuation coverage provided pursuant 

4 to part 6 of subtitle B of title I of the Em5 ployee Retirement Income Security Act of 1974 

6 (other than under section 609), title XXII of 

7 the Public Health Service Act, section 4980B of 

8 the Internal Revenue Code of 1986 (other than 

9 subsection (f)(1) of such section insofar as it 

10 relates to pediatric vaccines), or section 8905a 

11 of title 5, United States Code, or under a State 

12 program that provides continuation coverage 

13 comparable to such continuation coverage. Such 

14 term does not include coverage under a health 

15 flexible spending arrangement. 

16 (C) COBRA CONTINUATION PROVISION.— 

17 The term ‘‘COBRA continuation provision’’ 

18 means the provisions of law described in sub19 paragraph (B). 

20 (D) COVERED EMPLOYEE.—The term 

21 ‘‘covered employee’’ has the meaning given such 

22 term in section 607(2) of the Employee Retire23 ment Income Security Act of 1974. 

24 (E) QUALIFIED BENEFICIARY.—The term 

25 ‘‘qualified beneficiary’’ has the meaning given 


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1 such term in section 607(3) of the Employee 

2 Retirement Income Security Act of 1974. 

3 (F) GROUP HEALTH PLAN.—The term 

4 ‘‘group health plan’’ has the meaning given 

5 such term in section 607(1) of the Employee 

6 Retirement Income Security Act of 1974. 

7 (G) STATE.—The term ‘‘State’’ includes 

8 the District of Columbia, the Commonwealth of 

9 Puerto Rico, the Virgin Islands, Guam, Amer10 ican Samoa, and the Commonwealth of the 

11 Northern Mariana Islands. 

12 (11) REPORTS.— 

13 (A) INTERIM REPORT.—The Secretary of 

14 the Treasury shall submit an interim report to 

15 the Committee on Education and Labor, the 

16 Committee on Ways and Means, and the Com17 mittee on Energy and Commerce of the House 

18 of Representatives and the Committee on 

19 Health, Education, Labor, and Pensions and 

20 the Committee on Finance of the Senate re21 garding the premium reduction provided under 

22 this subsection that includes— 

23 (i) the number of individuals provided 

24 such assistance as of the date of the re25 port; and 


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1 (ii) the total amount of expenditures 

2 incurred (with administrative expenditures 

3 noted separately) in connection with such 

4 assistance as of the date of the report. 

5 (B) FINAL REPORT.—As soon as prac6 ticable after the last period of COBRA continu7 ation coverage for which premium reduction is 

8 provided under this section, the Secretary of the 

9 Treasury shall submit a final report to each 

10 Committee referred to in subparagraph (A) that 

11 includes— 

12 (i) the number of individuals provided 

13 premium reduction under this section; 

14 (ii) the average dollar amount 

15 (monthly and annually) of premium reduc16 tions provided to such individuals; and 

17 (iii) the total amount of expenditures 

18 incurred (with administrative expenditures 

19 noted separately) in connection with pre20 mium reduction under this section. 

21 (12) COBRA PREMIUM ASSISTANCE.— 

22 (A) IN GENERAL.—Subchapter B of chap23 ter 65 of the Internal Revenue Code of 1986 is 

24 amended by adding at the end the following 

25 new section: 


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1 ‘‘SEC. 6432. COBRA PREMIUM ASSISTANCE. 

2 ‘‘(a) IN GENERAL.—The person to whom premiums 

3 are payable under COBRA continuation coverage shall be 

4 reimbursed for the amount of premiums not paid by plan 

5 beneficiaries by reason of section 3001(b) of the American 

6 Recovery and Reinvestment Act of 2009. Such amount 

7 shall be treated as a credit against the requirement of such 

8 person to make deposits of payroll taxes and the liability 

9 of such person for payroll taxes. To the extent that such 

10 amount exceeds the amount of such taxes, the Secretary 

11 shall pay to such person the amount of such excess. No 

12 payment may be made under this subsection to a person 

13 with respect to any assistance eligible individual until after 

14 such person has received the reduced premium from such 

15 individual required under section 3001(a)(1)(A) of such 

16 Act. 

17 ‘‘(b) PAYROLL TAXES.—For purposes of this section, 

18 the term ‘payroll taxes’ means— 

19 ‘‘(1) amounts required to be deducted and with20 held for the payroll period under section 3401 (relat21 ing to wage withholding), 

22 ‘‘(2) amounts required to be deducted for the 

23 payroll period under section 3102 (relating to FICA 

24 employee taxes), and 


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1 ‘‘(3) amounts of the taxes imposed for the pay2 roll period under section 3111 (relating to FICA em3 ployer taxes). 

4 ‘‘(c) TREATMENT OF CREDIT.—Except as otherwise 

5 provided by the Secretary, the credit described in sub6 section (a) shall be applied as though the employer had 

7 paid to the Secretary, on the day that the qualified bene8 ficiary’s premium payment is received, an amount equal 

9 to such credit. 

10 ‘‘(d) TREATMENT OF PAYMENT.—For purposes of 

11 section 1324(b)(2) of title 31, United States Code, any 

12 payment under this subsection shall be treated in the same 

13 manner as a refund of the credit under section 35. 

14 ‘‘(e) REPORTING.— 

15 ‘‘(1) IN GENERAL.—Each person entitled to re16 imbursement under subsection (a) for any period 

17 shall submit such reports as the Secretary may re18 quire, including— 

19 ‘‘(A) an attestation of involuntary termi20 nation of employment for each covered em21 ployee on the basis of whose termination entitle22 ment to reimbursement is claimed under sub23 section (a), and 

24 ‘‘(B) a report of the amount of payroll 

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1 ing period and the estimated offsets of such 

2 taxes for the subsequent reporting period in 

3 connection with reimbursements under sub4 section (a). 

5 ‘‘(2) TIMING OF REPORTS RELATING TO

6 AMOUNT OF PAYROLL TAXES.—Reports required 

7 under paragraph (1)(B) shall be submitted at the 

8 same time as deposits of taxes imposed by chapters 

9 21, 22, and 24 or at such time as is specified by the 

10 Secretary. 

11 ‘‘(f) REGULATIONS.—The Secretary may issue such 

12 regulations or other guidance as may be necessary or ap13 propriate to carry out this section, including the require14 ment to report information or the establishment of other 

15 methods for verifying the correct amounts of payments 

16 and credits under this section, and the application of this 

17 section to group health plans which are multiemployer 

18 plans.’’. 

19 (B) SOCIAL SECURITY TRUST FUNDS HELD

20 HARMLESS.—In determining any amount trans21 ferred or appropriated to any fund under the 

22 Social Security Act, section 6432 of the Inter23 nal Revenue Code of 1986 shall not be taken 

24 into account. 


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1 (C) CLERICAL AMENDMENT.—The table of 

2 sections for subchapter B of chapter 65 of the 

3 Internal Revenue Code of 1986 is amended by 

4 adding at the end the following new item: 

‘‘Sec. 6432. COBRA premium assistance.’’. 

5 (D) EFFECTIVE DATE.—The amendments 

6 made by this paragraph shall apply to pre7 miums to which subsection (a)(1)(A) applies. 

8 (E) SPECIAL RULE.— 

9 (i) IN GENERAL.—In the case of an 

10 assistance eligible individual who pays the 

11 full premium amount required for COBRA 

12 continuation coverage for any month dur13 ing the 60-day period beginning on the 

14 first day of the first month after the date 

15 of enactment of this Act, the person to 

16 whom such payment is made shall— 

17 (I) make a reimbursement pay18 ment to such individual for the 

19 amount of such premium paid in ex20 cess of the amount required to be paid 

21 under subsection (b)(1)(A); or 

22 (II) provide credit to the indi23 vidual for such amount in a manner 

24 that reduces one or more subsequent 

25 premium payments that the individual 


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1 is required to pay under such sub2 section for the coverage involved. 

3 (ii) REIMBURSING EMPLOYER.—A 

4 person to which clause (i) applies shall be 

5 reimbursed as provided for in section 6432 

6 of the Internal Revenue Code of 1986 for 

7 any payment made, or credit provided, to 

8 the employee under such clause. 

9 (iii) PAYMENT OR CREDITS.—Unless 

10 it is reasonable to believe that the credit 

11 for the excess payment in clause (i)(II) will 

12 be used by the assistance eligible individual 

13 within 180 days of the date on which the 

14 person receives from the individual the 

15 payment of the full premium amount, a 

16 person to which clause (i) applies shall 

17 make the payment required under such 

18 clause to the individual within 60 days of 

19 such payment of the full premium amount. 

20 If, as of any day within the 180-day pe21 riod, it is no longer reasonable to believe 

22 that the credit will be used during that pe23 riod, payment equal to the remainder of 

24 the credit outstanding shall be made to the 

25 individual within 60 days of such day. 


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1 (13) PENALTY FOR FAILURE TO NOTIFY

2 HEALTH PLAN OF CESSATION OF ELIGIBILITY FOR

3 PREMIUM ASSISTANCE.— 

4 (A) IN GENERAL.—Part I of subchapter B 

5 of chapter 68 of the Internal Revenue Code of 

6 1986 is amended by adding at the end the fol7 lowing new section: 

8 ‘‘SEC. 6720C. PENALTY FOR FAILURE TO NOTIFY HEALTH 

9 PLAN OF CESSATION OF ELIGIBILITY FOR 

10 COBRA PREMIUM ASSISTANCE. 

11 ‘‘(a) IN GENERAL.—Any person required to notify a 

12 group health plan under section 3001(a)(2)(C) of the 

13 American Recovery and Reinvestment Act of 2009 who 

14 fails to make such a notification at such time and in such 

15 manner as the Secretary of Labor may require shall pay 

16 a penalty of 110 percent of the premium reduction pro17 vided under such section after termination of eligibility 

18 under such subsection. 

19 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty 

20 shall be imposed under subsection (a) with respect to any 

21 failure if it is shown that such failure is due to reasonable 

22 cause and not to willful neglect.’’. 

23 (B) CLERICAL AMENDMENT.—The table of 

24 sections of part I of subchapter B of chapter 68 


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1 of such Code is amended by adding at the end 

2 the following new item: 

‘‘Sec. 6720C. Penalty for failure to notify health plan of cessation of eligibility 

for COBRA premium assistance.’’. 

3 (C) EFFECTIVE DATE.—The amendments 

4 made by this paragraph shall apply to failures 

5 occurring after the date of the enactment of 

6 this Act. 

7 (14) COORDINATION WITH HCTC.— 

8 (A) IN GENERAL.—Subsection (g) of sec9 tion 35 of the Internal Revenue Code of 1986 

10 is amended by redesignating paragraph (9) as 

11 paragraph (10) and inserting after paragraph 

12 (8) the following new paragraph: 

13 ‘‘(9) COBRA PREMIUM ASSISTANCE.—In the 

14 case of an assistance eligible individual who receives 

15 premium reduction for COBRA continuation cov16 erage under section 3001(a) of the American Recov17 ery and Reinvestment Act of 2009 for any month 

18 during the taxable year, such individual shall not be 

19 treated as an eligible individual, a certified indi20 vidual, or a qualifying family member for purposes 

21 of this section or section 7527 with respect to such 

22 month.’’. 

23 (B) EFFECTIVE DATE.—The amendment 

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1 able years ending after the date of the enact2 ment of this Act. 

3 (15) EXCLUSION OF COBRA PREMIUM ASSIST4 ANCE FROM GROSS INCOME.— 

5 (A) IN GENERAL.—Part III of subchapter 

6 B of chapter 1 of the Internal Revenue Code of 

7 1986 is amended by inserting after section 

8 139B the following new section: 

9 ‘‘SEC. 139C. COBRA PREMIUM ASSISTANCE. 

10 ‘‘In the case of an assistance eligible individual (as 

11 defined in section 3001 of the American Recovery and Re12 investment Act of 2009), gross income does not include 

13 any premium reduction provided under subsection (a) of 

14 such section.’’. 

15 (B) CLERICAL AMENDMENT.—The table of 

16 sections for part III of subchapter B of chapter 

17 1 of such Code is amended by inserting after 

18 the item relating to section 139B the following 

19 new item: 

‘‘Sec. 139C. COBRA premium assistance.’’. 

20 (C) EFFECTIVE DATE.—The amendments 

21 made by this paragraph shall apply to taxable 

22 years ending after the date of the enactment of 

23 this Act. 


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1 Subtitle B—Transitional Medical 

2 Assistance (TMA) 

3 SEC. 3101. EXTENSION OF TRANSITIONAL MEDICAL ASSIST4 ANCE (TMA). 

5 (a) 18-MONTH EXTENSION.— 

6 (1) IN GENERAL.—Sections 1902(e)(1)(B) and 

7 1925(f) of the Social Security Act (42 U.S.C. 

8 1396a(e)(1)(B), 1396r–6(f)) are each amended by 

9 striking ‘‘September 30, 2003’’ and inserting ‘‘De10 cember 31, 2010’’. 

11 (2) EFFECTIVE DATE.—The amendments made 

12 by this subsection shall take effect on July 1, 2009. 

13 (b) STATE OPTION OF INITIAL 12-MONTH ELIGI14 BILITY.—Section 1925 of the Social Security Act (42 

15 U.S.C. 1396r–6) is amended— 

16 (1) in subsection (a)(1), by inserting ‘‘but sub17 ject to paragraph (5)’’ after ‘‘Notwithstanding any 

18 other provision of this title’’; 

19 (2) by adding at the end of subsection (a) the 

20 following: 

21 ‘‘(5) OPTION OF 12-MONTH INITIAL ELIGIBILITY

22 PERIOD.—A State may elect to treat any reference 

23 in this subsection to a 6-month period (or 6 months) 

24 as a reference to a 12-month period (or 12 months). 


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1 In the case of such an election, subsection (b) shall 

2 not apply.’’; and 

3 (3) in subsection (b)(1), by inserting ‘‘but sub4 ject to subsection (a)(5)’’ after ‘‘Notwithstanding 

5 any other provision of this title’’. 

6 (c) REMOVAL OF REQUIREMENT FOR PREVIOUS RE7 CEIPT OF MEDICAL ASSISTANCE.—Section 1925(a)(1) of 

8 such Act (42 U.S.C. 1396r–6(a)(1)), as amended by sub9 section (b)(1), is further amended— 

10 (1) by inserting ‘‘subparagraph (B) and’’ before 

11 ‘‘paragraph (5)’’; 

12 (2) by redesignating the matter after ‘‘RE13 QUIREMENT.—’’ as a subparagraph (A) with the 

14 heading ‘‘IN GENERAL.—’’ and with the same inden15 tation as subparagraph (B) (as added by paragraph 

16 (3)); and 

17 (3) by adding at the end the following: 

18 ‘‘(B) STATE OPTION TO WAIVE REQUIRE19 MENT FOR 3 MONTHS BEFORE RECEIPT OF

20 MEDICAL ASSISTANCE.—A State may, at its op21 tion, elect also to apply subparagraph (A) in 

22 the case of a family that was receiving such aid 

23 for fewer than three months or that had applied 

24 for and was eligible for such aid for fewer than 


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1 3 months during the 6 immediately preceding 

2 months described in such subparagraph.’’. 

3 (d) CMS REPORT ON ENROLLMENT AND PARTICIPA4 TION RATES UNDER TMA.—Section 1925 of such Act (42 

5 U.S.C. 1396r–6), as amended by this section, is further 

6 amended by adding at the end the following new sub7 section: 

8 ‘‘(g) COLLECTION AND REPORTING OF PARTICIPA9 TION INFORMATION.— 

10 ‘‘(1) COLLECTION OF INFORMATION FROM

11 STATES.—Each State shall collect and submit to the 

12 Secretary (and make publicly available), in a format 

13 specified by the Secretary, information on average 

14 monthly enrollment and average monthly participa15 tion rates for adults and children under this section 

16 and of the number and percentage of children who 

17 become ineligible for medical assistance under this 

18 section whose medical assistance is continued under 

19 another eligibility category or who are enrolled under 

20 the State’s child health plan under title XXI. Such 

21 information shall be submitted at the same time and 

22 frequency in which other enrollment information 

23 under this title is submitted to the Secretary. 

24 ‘‘(2) ANNUAL REPORTS TO CONGRESS.—Using 

25 the information submitted under paragraph (1), the 


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1 Secretary shall submit to Congress annual reports 

2 concerning enrollment and participation rates de3 scribed in such paragraph.’’. 

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

5 subsections (b) through (d) shall take effect on July 1, 

6 2009. 

7 Subtitle C—Extension of the 

8 Qualified Individual (QI) Program 

9 SEC. 3201. EXTENSION OF THE QUALIFYING INDIVIDUAL 

10 (QI) PROGRAM. 

11 (a) EXTENSION.—Section 1902(a)(10)(E)(iv) of the 

12 Social Security Act (42 U.S.C. 1396a(a)(10)(E)(iv)) is 

13 amended by striking ‘‘December 2009’’ and inserting ‘‘De14 cember 2010’’. 

15 (b) EXTENDING TOTAL AMOUNT AVAILABLE FOR

16 ALLOCATION.—Section 1933(g) of such Act (42 U.S.C. 

17 1396u–3(g)) is amended— 

18 (1) in paragraph (2)— 

19 (A) by striking ‘‘and’’ at the end of sub20 paragraph (K); 

21 (B) in subparagraph (L), by striking the 

22 period at the end and inserting a semicolon; 

23 and 

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

25 subparagraphs: 


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1 ‘‘(M) for the period that begins on Janu2 ary 1, 2010, and ends on September 30, 2010, 

3 the total allocation amount is $412,500,000; 

4 and 

5 ‘‘(N) for the period that begins on October 

6 1, 2010, and ends on December 31, 2010, the 

7 total allocation amount is $150,000,000.’’; and 

8 (2) in paragraph (3), in the matter preceding 

9 subparagraph (A), by striking ‘‘or (L)’’ and insert10 ing ‘‘(L), or (N)’’. 

11 Subtitle D—Other Provisions 

12 SEC. 3301. PREMIUMS AND COST SHARING PROTECTIONS 

13 UNDER MEDICAID, ELIGIBILITY DETERMINA14 TIONS UNDER MEDICAID AND CHIP, AND 

15 PROTECTION OF CERTAIN INDIAN PROPERTY 

16 FROM MEDICAID ESTATE RECOVERY. 

17 (a) PREMIUMS AND COST SHARING PROTECTION

18 UNDER MEDICAID.— 

19 (1) IN GENERAL.—Section 1916 of the Social 

20 Security Act (42 U.S.C. 1396o) is amended— 

21 (A) in subsection (a), in the matter pre22 ceding paragraph (1), by striking ‘‘and (i)’’ and 

23 inserting ‘‘, (i), and (j)’’; and 

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

25 subsection: 


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1 ‘‘(j) NO PREMIUMS OR COST SHARING FOR INDIANS

2 FURNISHED ITEMS OR SERVICES DIRECTLY BY INDIAN

3 HEALTH PROGRAMS OR THROUGH REFERRAL UNDER

4 CONTRACT HEALTH SERVICES.— 

5 ‘‘(1) NO COST SHARING FOR ITEMS OR SERV6 ICES FURNISHED TO INDIANS THROUGH INDIAN

7 HEALTH PROGRAMS.— 

8 ‘‘(A) IN GENERAL.—No enrollment fee, 

9 premium, or similar charge, and no deduction, 

10 copayment, cost sharing, or similar charge shall 

11 be imposed against an Indian who is furnished 

12 an item or service directly by the Indian Health 

13 Service, an Indian Tribe, Tribal Organization, 

14 or Urban Indian Organization or through refer15 ral under contract health services for which 

16 payment may be made under this title. 

17 ‘‘(B) NO REDUCTION IN AMOUNT OF PAY18 MENT TO INDIAN HEALTH PROVIDERS.—Pay19 ment due under this title to the Indian Health 

20 Service, an Indian Tribe, Tribal Organization, 

21 or Urban Indian Organization, or a health care 

22 provider through referral under contract health 

23 services for the furnishing of an item or service 

24 to an Indian who is eligible for assistance under 

25 such title, may not be reduced by the amount 


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1 of any enrollment fee, premium, or similar 

2 charge, or any deduction, copayment, cost shar3 ing, or similar charge that would be due from 

4 the Indian but for the operation of subpara5 graph (A). 

6 ‘‘(2) RULE OF CONSTRUCTION.—Nothing in 

7 this subsection shall be construed as restricting the 

8 application of any other limitations on the imposi9 tion of premiums or cost sharing that may apply to 

10 an individual receiving medical assistance under this 

11 title who is an Indian.’’. 

12 (2) CONFORMING AMENDMENT.—Section 

13 1916A(b)(3) of such Act (42 U.S.C. 1396o–1(b)(3)) 

14 is amended— 

15 (A) in subparagraph (A), by adding at the 

16 end the following new clause: 

17 ‘‘(vi) An Indian who is furnished an 

18 item or service directly by the Indian 

19 Health Service, an Indian Tribe, Tribal 

20 Organization or Urban Indian Organiza21 tion or through referral under contract 

22 health services.’’; and 

23 (B) in subparagraph (B), by adding at the 

24 end the following new clause: 


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1 ‘‘(ix) Items and services furnished to 

2 an Indian directly by the Indian Health 

3 Service, an Indian Tribe, Tribal Organiza4 tion or Urban Indian Organization or 

5 through referral under contract health 

6 services.’’. 

7 (b) TREATMENT OF CERTAIN PROPERTY FROM RE8 SOURCES FOR MEDICAID AND CHIP ELIGIBILITY.— 

9 (1) MEDICAID.—Section 1902 of the Social Se10 curity Act (42 U.S.C. 1396a) is amended by adding 

11 at the end the following new subsection: 

12 ‘‘(dd) Notwithstanding any other requirement of this 

13 title or any other provision of Federal or State law, a State 

14 shall disregard the following property from resources for 

15 purposes of determining the eligibility of an individual who 

16 is an Indian for medical assistance under this title: 

17 ‘‘(1) Property, including real property and im18 provements, that is held in trust, subject to Federal 

19 restrictions, or otherwise under the supervision of 

20 the Secretary of the Interior, located on a reserva21 tion, including any federally recognized Indian 

22 Tribe’s reservation, pueblo, or colony, including 

23 former reservations in Oklahoma, Alaska Native re24 gions established by the Alaska Native Claims Set25 tlement Act, and Indian allotments on or near a resVerDate Nov 24 2008 21:32 Jan 30, 2009 Jkt 079200 PO 00000 Frm 00203 Fmt 6652 Sfmt 6201 E:\BILLS\S350.PCS S350

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1 ervation as designated and approved by the Bureau 

2 of Indian Affairs of the Department of the Interior. 

3 ‘‘(2) For any federally recognized Tribe not de4 scribed in paragraph (1), property located within the 

5 most recent boundaries of a prior Federal reserva6 tion. 

7 ‘‘(3) Ownership interests in rents, leases, royal8 ties, or usage rights related to natural resources (in9 cluding extraction of natural resources or harvesting 

10 of timber, other plants and plant products, animals, 

11 fish, and shellfish) resulting from the exercise of fed12 erally protected rights. 

13 ‘‘(4) Ownership interests in or usage rights to 

14 items not covered by paragraphs (1) through (3) 

15 that have unique religious, spiritual, traditional, or 

16 cultural significance or rights that support subsist17 ence or a traditional lifestyle according to applicable 

18 tribal law or custom.’’. 

19 (2) APPLICATION TO CHIP.—Section 2107(e)(1) 

20 of such Act (42 U.S.C. 1397gg(e)(1)) is amended— 

21 (A) by redesignating subparagraphs (B) 

22 through (E), as subparagraphs (C) through 

23 (F), respectively; and 

24 (B) by inserting after subparagraph (A), 

25 the following new subparagraph: 


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1 ‘‘(B) Section 1902(dd) (relating to dis2 regard of certain property for purposes of mak3 ing eligibility determinations).’’. 

4 (c) CONTINUATION OF CURRENT LAW PROTECTIONS

5 OF CERTAIN INDIAN PROPERTY FROM MEDICAID ESTATE

6 RECOVERY.—Section 1917(b)(3) of the Social Security 

7 Act (42 U.S.C. 1396p(b)(3)) is amended— 

8 (1) by inserting ‘‘(A)’’ after ‘‘(3)’’; and 

9 (2) by adding at the end the following new sub10 paragraph: 

11 ‘‘(B) The standards specified by the Sec12 retary under subparagraph (A) shall require 

13 that the procedures established by the State 

14 agency under subparagraph (A) exempt income, 

15 resources, and property that are exempt from 

16 the application of this subsection as of April 1, 

17 2003, under manual instructions issued to carry 

18 out this subsection (as in effect on such date) 

19 because of the Federal responsibility for Indian 

20 Tribes and Alaska Native Villages. Nothing in 

21 this subparagraph shall be construed as pre22 venting the Secretary from providing additional 

23 estate recovery exemptions under this title for 

24 Indians.’’. 


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1 SEC. 3302. RULES APPLICABLE UNDER MEDICAID AND CHIP 

2 TO MANAGED CARE ENTITIES WITH RESPECT 

3 TO INDIAN ENROLLEES AND INDIAN HEALTH 

4 CARE PROVIDERS AND INDIAN MANAGED 

5 CARE ENTITIES. 

6 (a) IN GENERAL.—Section 1932 of the Social Secu7 rity Act (42 U.S.C. 1396u–2) is amended by adding at 

8 the end the following new subsection: 

9 ‘‘(h) SPECIAL RULES WITH RESPECT TO INDIAN EN10 ROLLEES, INDIAN HEALTH CARE PROVIDERS, AND IN11 DIAN MANAGED CARE ENTITIES.— 

12 ‘‘(1) ENROLLEE OPTION TO SELECT AN INDIAN

13 HEALTH CARE PROVIDER AS PRIMARY CARE PRO14 VIDER.—In the case of a non-Indian Medicaid man15 aged care entity that— 

16 ‘‘(A) has an Indian enrolled with the enti17 ty; and 

18 ‘‘(B) has an Indian health care provider 

19 that is participating as a primary care provider 

20 within the network of the entity, 

21 insofar as the Indian is otherwise eligible to receive 

22 services from such Indian health care provider and 

23 the Indian health care provider has the capacity to 

24 provide primary care services to such Indian, the 

25 contract with the entity under section 1903(m) or 

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1 tion of receiving payment under such contract, that 

2 the Indian shall be allowed to choose such Indian 

3 health care provider as the Indian’s primary care 

4 provider under the entity. 

5 ‘‘(2) ASSURANCE OF PAYMENT TO INDIAN

6 HEALTH CARE PROVIDERS FOR PROVISION OF COV7 ERED SERVICES.—Each contract with a managed 

8 care entity under section 1903(m) or under section 

9 1905(t)(3) shall require any such entity, as a condi10 tion of receiving payment under such contract, to 

11 satisfy the following requirements: 

12 ‘‘(A) DEMONSTRATION OF ACCESS TO IN13 DIAN HEALTH CARE PROVIDERS AND APPLICA14 TION OF ALTERNATIVE PAYMENT ARRANGE15 MENTS.—Subject to subparagraph (C), to— 

16 ‘‘(i) demonstrate that the number of 

17 Indian health care providers that are par18 ticipating providers with respect to such 

19 entity are sufficient to ensure timely access 

20 to covered Medicaid managed care services 

21 for those Indian enrollees who are eligible 

22 to receive services from such providers; and 

23 ‘‘(ii) agree to pay Indian health care 

24 providers, whether such providers are par25 ticipating or nonparticipating providers 


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1 with respect to the entity, for covered Med2 icaid managed care services provided to 

3 those Indian enrollees who are eligible to 

4 receive services from such providers at a 

5 rate equal to the rate negotiated between 

6 such entity and the provider involved or, if 

7 such a rate has not been negotiated, at a 

8 rate that is not less than the level and 

9 amount of payment which the entity would 

10 make for the services if the services were 

11 furnished by a participating provider which 

12 is not an Indian health care provider. 

13 ‘‘(B) PROMPT PAYMENT.—To agree to 

14 make prompt payment (consistent with rule for 

15 prompt payment of providers under section 

16 1932(f)) to Indian health care providers that 

17 are participating providers with respect to such 

18 entity or, in the case of an entity to which sub19 paragraph (A)(ii) or (C) applies, that the entity 

20 is required to pay in accordance with that sub21 paragraph. 

22 ‘‘(C) APPLICATION OF SPECIAL PAYMENT

23 REQUIREMENTS FOR FEDERALLY-QUALIFIED

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1 VIDED BY CERTAIN INDIAN HEALTH CARE PRO2 VIDERS.— 

3 ‘‘(i) FEDERALLY-QUALIFIED HEALTH

4 CENTERS.— 

5 ‘‘(I) MANAGED CARE ENTITY

6 PAYMENT REQUIREMENT.—To agree 

7 to pay any Indian health care provider 

8 that is a federally-qualified health 

9 center under this title but not a par10 ticipating provider with respect to the 

11 entity, for the provision of covered 

12 Medicaid managed care services by 

13 such provider to an Indian enrollee of 

14 the entity at a rate equal to the 

15 amount of payment that the entity 

16 would pay a federally-qualified health 

17 center that is a participating provider 

18 with respect to the entity but is not 

19 an Indian health care provider for 

20 such services. 

21 ‘‘(II) CONTINUED APPLICATION

22 OF STATE REQUIREMENT TO MAKE

23 SUPPLEMENTAL PAYMENT.—Nothing 

24 in subclause (I) or subparagraph (A) 

25 or (B) shall be construed as waiving 


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1 the application of section 1902(bb)(5) 

2 regarding the State plan requirement 

3 to make any supplemental payment 

4 due under such section to a federally5 qualified health center for services 

6 furnished by such center to an en7 rollee of a managed care entity (re8 gardless of whether the federally9 qualified health center is or is not a 

10 participating provider with the entity). 

11 ‘‘(ii) PAYMENT RATE FOR SERVICES

12 PROVIDED BY CERTAIN INDIAN HEALTH

13 CARE PROVIDERS.—If the amount paid by 

14 a managed care entity to an Indian health 

15 care provider that is not a federally-quali16 fied health center for services provided by 

17 the provider to an Indian enrollee with the 

18 managed care entity is less than the rate 

19 that applies to the provision of such serv20 ices by the provider under the State plan, 

21 the plan shall provide for payment to the 

22 Indian health care provider, whether the 

23 provider is a participating or nonpartici24 pating provider with respect to the entity, 

25 of the difference between such applicable 


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1 rate and the amount paid by the managed 

2 care entity to the provider for such serv3 ices. 

4 ‘‘(D) CONSTRUCTION.—Nothing in this 

5 paragraph shall be construed as waiving the ap6 plication of section 1902(a)(30)(A) (relating to 

7 application of standards to assure that pay8 ments are consistent with efficiency, economy, 

9 and quality of care). 

10 ‘‘(3) SPECIAL RULE FOR ENROLLMENT FOR IN11 DIAN MANAGED CARE ENTITIES.—Regarding the ap12 plication of a Medicaid managed care program to In13 dian Medicaid managed care entities, an Indian 

14 Medicaid managed care entity may restrict enroll15 ment under such program to Indians and to mem16 bers of specific Tribes in the same manner as Indian 

17 Health Programs may restrict the delivery of serv18 ices to such Indians and tribal members. 

19 ‘‘(4) DEFINITIONS.—For purposes of this sub20 section: 

21 ‘‘(A) INDIAN HEALTH CARE PROVIDER.— 

22 The term ‘Indian health care provider’ means 

23 an Indian Health Program or an Urban Indian 

24 Organization. 


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1 ‘‘(B) INDIAN MEDICAID MANAGED CARE

2 ENTITY.—The term ‘Indian Medicaid managed 

3 care entity’ means a managed care entity that 

4 is controlled (within the meaning of the last 

5 sentence of section 1903(m)(1)(C)) by the In6 dian Health Service, a Tribe, Tribal Organiza7 tion, or Urban Indian Organization, or a con8 sortium, which may be composed of 1 or more 

9 Tribes, Tribal Organizations, or Urban Indian 

10 Organizations, and which also may include the 

11 Service. 

12 ‘‘(C) NON-INDIAN MEDICAID MANAGED

13 CARE ENTITY.—The term ‘non-Indian Medicaid 

14 managed care entity’ means a managed care en15 tity that is not an Indian Medicaid managed 

16 care entity. 

17 ‘‘(D) COVERED MEDICAID MANAGED CARE

18 SERVICES.—The term ‘covered Medicaid man19 aged care services’ means, with respect to an 

20 individual enrolled with a managed care entity, 

21 items and services for which benefits are avail22 able with respect to the individual under the 

23 contract between the entity and the State in24 volved. 


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1 ‘‘(E) MEDICAID MANAGED CARE PRO2 GRAM.—The term ‘Medicaid managed care pro3 gram’ means a program under sections 

4 1903(m), 1905(t), and 1932 and includes a 

5 managed care program operating under a waiv6 er under section 1915(b) or 1115 or other7 wise.’’. 

8 (b) APPLICATION TO CHIP.—Subject to section 

9 l013(d), section 2107(e)(1) of such Act (42 U.S.C. 

10 1397gg(1)) is amended by adding at the end the following 

11 new subparagraph: 

12 ‘‘(E) Subsections (a)(2)(C) and (h) of sec13 tion 1932.’’. 

14 SEC. 3303. CONSULTATION ON MEDICAID, CHIP, AND 

15 OTHER HEALTH CARE PROGRAMS FUNDED 

16 UNDER THE SOCIAL SECURITY ACT INVOLV17 ING INDIAN HEALTH PROGRAMS AND URBAN 

18 INDIAN ORGANIZATIONS. 

19 (a) CONSULTATION WITH TRIBAL TECHNICAL ADVI20 SORY GROUP (TTAG).—The Secretary of Health and 

21 Human Services shall maintain within the Centers for 

22 Medicaid & Medicare Services (CMS) a Tribal Technical 

23 Advisory Group (TTAG), which was first established in 

24 accordance with requirements of the charter dated Sep25 tember 30, 2003, and the Secretary of Health and Human 


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1 Services shall include in such Group a representative of 

2 a national urban Indian health organization and a rep3 resentative of the Indian Health Service. The inclusion of 

4 a representative of a national urban Indian health organi5 zation in such Group shall not affect the nonapplication 

6 of the Federal Advisory Committee Act (5 U.S.C. App.) 

7 to such Group. 

8 (b) SOLICITATION OF ADVICE UNDER MEDICAID AND

9 CHIP.— 

10 (1) MEDICAID STATE PLAN AMENDMENT.— 

11 Subject to subsection (d), section 1902(a) of the So12 cial Security Act (42 U.S.C. 1396a(a)) is amend13 ed— 

14 (A) in paragraph (70), by striking ‘‘and’’ 

15 at the end; 

16 (B) in paragraph (71), by striking the pe17 riod at the end and inserting ‘‘; and’’; and 

18 (C) by inserting after paragraph (71), the 

19 following new paragraph: 

20 ‘‘(72) in the case of any State in which 1 or 

21 more Indian Health Programs or Urban Indian Or22 ganizations furnishes health care services, provide 

23 for a process under which the State seeks advice on 

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1 tions on matters relating to the application of this 

2 title that are likely to have a direct effect on such 

3 Indian Health Programs and Urban Indian Organi4 zations and that— 

5 ‘‘(A) shall include solicitation of advice 

6 prior to submission of any plan amendments, 

7 waiver requests, and proposals for demonstra8 tion projects likely to have a direct effect on In9 dians, Indian Health Programs, or Urban In10 dian Organizations; and 

11 ‘‘(B) may include appointment of an advi12 sory committee and of a designee of such In13 dian Health Programs and Urban Indian Orga14 nizations to the medical care advisory com15 mittee advising the State on its State plan 

16 under this title.’’. 

17 (2) APPLICATION TO CHIP.—Subject to sub18 section (d), section 2107(e)(1) of such Act (42 

19 U.S.C. 1397gg(e)(1)), as amended by section 

20 3302(b)(2), is amended— 

21 (A) by redesignating subparagraphs (B) 

22 through (E) as subparagraphs (C) through (F), 

23 respectively; and 

24 (B) by inserting after subparagraph (A), 

25 the following new subparagraph: 


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1 ‘‘(B) Section 1902(a)(72) (relating to re2 quiring certain States to seek advice from des3 ignees of Indian Health Programs and Urban 

4 Indian Organizations).’’. 

5 (c) RULE OF CONSTRUCTION.—Nothing in the 

6 amendments made by this section shall be construed as 

7 superseding existing advisory committees, working groups, 

8 guidance, or other advisory procedures established by the 

9 Secretary of Health and Human Services or by any State 

10 with respect to the provision of health care to Indians. 

11 (d) CONTINGENCY RULE.—If the Children’s Health 

12 Insurance Program Reauthorization Act of 2009 (in this 

13 subsection referred to as ‘‘CHIPRA’’) has been enacted 

14 as of the date of enactment of this Act, the following shall 

15 apply: 

16 (1) Subparagraph (I) of section 2107(e) of the 

17 Social Security Act (as redesignated by CHIPRA) is 

18 redesignated as subparagraph (K) and the subpara19 graph (E) added to section 2107(e) of the Social Se20 curity Act by section l013(b) is redesignated as 

21 subparagraph (J). 

22 (2) Subparagraphs (D) through (H) of section 

23 2107(e) of the Social Security Act (as added and re24 designated by CHIPRA) are redesignated as sub25 paragraphs (E) through (I), respectively and the 


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1 subparagraph (B) of section 2107(e) of the Social 

2 Security Act added by subsection (b)(2) of this sec3 tion is redesignated as subparagraph (D) and 

4 amended by striking ‘‘1902(a)(72)’’ and inserting 

5 ‘‘1902(a)(73)’’. 

6 (3) Section 1902(a) of the Social Security Act 

7 (as amended by CHIPRA) is amended by striking 

8 ‘‘and’’ at the end of paragraph (71), by striking the 

9 period at the end of the paragraph (72) added by 

10 CHIPRA and inserting ‘‘; and’’ and by redesignated 

11 the paragraph (72) added to such section by sub12 section (b)(1) of this section as paragraph (73). 

13 SEC. 3304. APPLICATION OF PROMPT PAY REQUIREMENTS 

14 TO NURSING FACILITIES. 

15 Section 1902(a)(37)(A) of the Social Security Act 

16 (42 U.S.C. 1396a(a)(37)(A)) is amended by inserting ‘‘, 

17 or by nursing facilities,’’ after ‘‘health facilities’’ 

18 SEC. 3305. PERIOD OF APPLICATION; SUNSET. 

19 This subtitle and the amendments made by this sub20 title shall be in effect only during the period that begins 

21 on April 1, 2009, and ends on December 31, 2010. On 

22 and after January 1, 2011, the Social Security Act shall 

23 be applied as if this subtitle and the amendments made 

24 by this subtitle had not been enacted. 


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1 TITLE IV—HEALTH 

2 INFORMATION TECHNOLOGY 

3 SEC. 4001. SHORT TITLE; TABLE OF CONTENTS OF TITLE. 

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

5 ‘‘Health Information Technology for Economic and Clin6 ical Health Act’’ or the ‘‘HITECH Act’’. 

7 (b) TABLE OF CONTENTS OF TITLE.—The table of 

8 contents for this title is as follows: 

TITLE IV—HEALTH INFORMATION TECHNOLOGY 

Sec. 4001. Short title; table of contents of title. 

Subtitle A—Promotion of Health Information Technology 

Sec. 4101. ONCHIT; standards development and adoption. 

‘‘Sec. 3000. Definitions. 

‘‘Sec. 3001. Office of the National Coordinator for Health Information 

Technology. 

‘‘Sec. 3002. HIT Policy Committee. 

‘‘Sec. 3003. HIT Standards Committee. 

‘‘Sec. 3004. Process for adoption of endorsed recommendations; adoption 

of initial set of standards, implementation specifications, 

and certification criteria. 

‘‘Sec. 3005. Transitions. 

Subtitle B—Incentives for the Use of Health Information Technology 

PART I—MEDICARE PROGRAM

Sec. 4201. Incentives for eligible professionals. 

Sec. 4202. Incentives for hospitals. 

Sec. 4203. Premium hold harmless and implementation funding. 

Sec. 4204. Non-application of phased-out indirect medical education (IME) adjustment factor for fiscal year 2009. 

Sec. 4205. Study on application of EHR payment incentives for providers not 

receiving other incentive payments. 

Sec. 4206. Study on availability of open source health information technology 

systems. 

PART II—MEDICAID FUNDING

Sec. 4211. Medicaid provider EHR adoption and operation payments; implementation funding. 


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1 Subtitle A—Promotion of Health 

2 Information Technology 

3 SEC. 4101. ONCHIT; STANDARDS DEVELOPMENT AND ADOP4 TION. 

5 The Public Health Service Act (42 U.S.C. 201 et 

6 seq.) is amended by adding at the end the following: 

7 ‘‘TITLE XXX—HEALTH INFORMA8 TION TECHNOLOGY AND 

9 QUALITY 

10 ‘‘SEC. 3000. DEFINITIONS. 

11 ‘‘In this title: 

12 ‘‘(1) CERTIFIED EHR TECHNOLOGY.—The term 

13 ‘certified EHR technology’ means a qualified elec14 tronic health record that is certified pursuant to sec15 tion 3001(c)(5) as meeting standards adopted under 

16 section 3004 that are applicable to the type of 

17 record involved (as determined by the Secretary, 

18 such as an ambulatory electronic health record for 

19 office-based physicians or an inpatient hospital elec20 tronic health record for hospitals). 

21 ‘‘(2) ENTERPRISE INTEGRATION.—The term 

22 ‘enterprise integration’ means the electronic linkage 

23 of health care providers, health plans, the govern24 ment, and other interested parties, to enable the 

25 electronic exchange and use of health information 


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1 among all the components in the health care infra2 structure in accordance with applicable law, and 

3 such term includes related application protocols and 

4 other related standards. 

5 ‘‘(3) HEALTH CARE PROVIDER.—The term 

6 ‘health care provider’ means a hospital, skilled nurs7 ing facility, nursing facility, home health entity or 

8 other long term care facility, health care clinic, Fed9 erally qualified health center, group practice (as de10 fined in section 1877(h)(4) of the Social Security 

11 Act), a pharmacist, a pharmacy, a laboratory, a phy12 sician (as defined in section 1861(r) of the Social 

13 Security Act), a practitioner (as described in section 

14 1842(b)(18)(C) of the Social Security Act), a pro15 vider operated by, or under contract with, the Indian 

16 Health Service or by an Indian tribe (as defined in 

17 the Indian Self-Determination and Education Assist18 ance Act), tribal organization, or urban Indian orga19 nization (as defined in section 4 of the Indian 

20 Health Care Improvement Act), a rural health clinic, 

21 a covered entity under section 340B, and any other 

22 category of facility or clinician determined appro23 priate by the Secretary. 


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1 ‘‘(4) HEALTH INFORMATION.—The term ‘health 

2 information’ has the meaning given such term in 

3 section 1171(4) of the Social Security Act. 

4 ‘‘(5) HEALTH INFORMATION TECHNOLOGY.— 

5 The term ‘health information technology’ means 

6 hardware, software, integrated technologies and re7 lated licenses, intellectual property, upgrades, and 

8 packaged solutions sold as services that are specifi9 cally designed for use by health care entities for the 

10 electronic creation, maintenance, or exchange of 

11 health information. 

12 ‘‘(6) HEALTH PLAN.—The term ‘health plan’ 

13 has the meaning given such term in section 1171(5) 

14 of the Social Security Act. 

15 ‘‘(7) HIT POLICY COMMITTEE.—The term ‘HIT 

16 Policy Committee’ means such Committee estab17 lished under section 3002(a). 

18 ‘‘(8) HIT STANDARDS COMMITTEE.—The term 

19 ‘HIT Standards Committee’ means such Committee 

20 established under section 3003(a). 

21 ‘‘(9) INDIVIDUALLY IDENTIFIABLE HEALTH IN22 FORMATION.—The term ‘individually identifiable 

23 health information’ has the meaning given such term 

24 in section 1171(6) of the Social Security Act. 


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1 ‘‘(10) LABORATORY.—The term ‘laboratory’ 

2 has the meaning given such term in section 353(a). 

3 ‘‘(11) NATIONAL COORDINATOR.—The term 

4 ‘National Coordinator’ means the head of the Office 

5 of the National Coordinator for Health Information 

6 Technology established under section 3001(a). 

7 ‘‘(12) PHARMACIST.—The term ‘pharmacist’ 

8 has the meaning given such term in section 804(2) 

9 of the Federal Food, Drug, and Cosmetic Act. 

10 ‘‘(13) QUALIFIED ELECTRONIC HEALTH

11 RECORD.—The term ‘qualified electronic health 

12 record’ means an electronic record of health-related 

13 information on an individual that— 

14 ‘‘(A) includes patient demographic and 

15 clinical health information, such as medical his16 tory and problem lists; and 

17 ‘‘(B) has the capacity— 

18 ‘‘(i) to provide clinical decision sup19 port; 

20 ‘‘(ii) to support physician order entry; 

21 ‘‘(iii) to capture and query informa22 tion relevant to health care quality; and 

23 ‘‘(iv) to exchange electronic health in24 formation with, and integrate such infor25 mation from other sources. 


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1 ‘‘(14) STATE.—The term ‘State’ means each of 

2 the several States, the District of Columbia, Puerto 

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

4 and the Northern Mariana Islands. 

5 ‘‘SEC. 3001. OFFICE OF THE NATIONAL COORDINATOR FOR 

6 HEALTH INFORMATION TECHNOLOGY. 

7 ‘‘(a) ESTABLISHMENT.—There is established within 

8 the Department of Health and Human Services an Office 

9 of the National Coordinator for Health Information Tech10 nology (referred to in this section as the ‘Office’). The Of11 fice shall be headed by a National Coordinator who shall 

12 be appointed by the Secretary and shall report directly to 

13 the Secretary. 

14 ‘‘(b) PURPOSE.—The National Coordinator shall per15 form the duties under subsection (c) in a manner con16 sistent with the development of a nationwide health infor17 mation technology infrastructure that allows for the elec18 tronic use and exchange of information and that— 

19 ‘‘(1) ensures that each patient’s health informa20 tion is secure and protected, in accordance with ap21 plicable law; 

22 ‘‘(2) improves health care quality, reduces med23 ical errors, and advances the delivery of patient-cen24 tered medical care; 


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1 ‘‘(3) reduces health care costs resulting from 

2 inefficiency, medical errors, inappropriate care, du3 plicative care, and incomplete information; 

4 ‘‘(4) provides appropriate information to help 

5 guide medical decisions at the time and place of 

6 care; 

7 ‘‘(5) ensures the inclusion of meaningful public 

8 input in such development of such infrastructure; 

9 ‘‘(6) improves the coordination of care and in10 formation among hospitals, laboratories, physician 

11 offices, and other entities through an effective infra12 structure for the secure and authorized exchange of 

13 health care information; 

14 ‘‘(7) improves public health activities and facili15 tates the early identification and rapid response to 

16 public health threats and emergencies, including bio17 terror events and infectious disease outbreaks; 

18 ‘‘(8) facilitates health and clinical research and 

19 health care quality; 

20 ‘‘(9) promotes prevention of chronic diseases; 

21 ‘‘(10) promotes a more effective marketplace, 

22 greater competition, greater systems analysis, in23 creased consumer choice, and improved outcomes in 

24 health care services; and 


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1 ‘‘(11) improves efforts to reduce health dispari2 ties. 

3 ‘‘(c) DUTIES OF THE NATIONAL COORDINATOR.— 

4 ‘‘(1) STANDARDS.—The National Coordinator 

5 shall review and determine whether to endorse each 

6 standard, implementation specification, and certifi7 cation criterion for the electronic exchange and use 

8 of health information that is recommended by the 

9 HIT Standards Committee under section 3003 for 

10 purposes of adoption under section 3004. The Coor11 dinator shall make such determination, and report to 

12 the Secretary such determination, not later than 45 

13 days after the date the recommendation is received 

14 by the Coordinator. 

15 ‘‘(2) HIT POLICY COORDINATION.— 

16 ‘‘(A) IN GENERAL.—The National Coordi17 nator shall coordinate health information tech18 nology policy and programs of the Department 

19 with those of other relevant executive branch 

20 agencies with a goal of avoiding duplication of 

21 efforts and of helping to ensure that each agen22 cy undertakes health information technology ac23 tivities primarily within the areas of its greatest 

24 expertise and technical capability and in a man25 ner towards a coordinated national goal. 


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1 ‘‘(B) HIT POLICY AND STANDARDS COM2 MITTEES.—The National Coordinator shall be a 

3 leading member in the establishment and oper4 ations of the HIT Policy Committee and the 

5 HIT Standards Committee and shall serve as a 

6 liaison among those two Committees and the 

7 Federal Government. 

8 ‘‘(3) STRATEGIC PLAN.— 

9 ‘‘(A) IN GENERAL.—The National Coordi10 nator shall, in consultation with other appro11 priate Federal agencies (including the National 

12 Institute of Standards and Technology), update 

13 the Federal Health IT Strategic Plan (devel14 oped as of June 3, 2008) to include specific ob15 jectives, milestones, and metrics with respect to 

16 the following: 

17 ‘‘(i) The electronic exchange and use 

18 of health information and the enterprise 

19 integration of such information. 

20 ‘‘(ii) The utilization of an electronic 

21 health record for each person in the United 

22 States by 2014. 

23 ‘‘(iii) The incorporation of privacy and 

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1 change of an individual’s individually iden2 tifiable health information. 

3 ‘‘(iv) Ensuring security methods to 

4 ensure appropriate authorization and elec5 tronic authentication of health information 

6 and specifying technologies or methodolo7 gies for rendering health information unus8 able, unreadable, or indecipherable. 

9 ‘‘(v) Specifying a framework for co10 ordination and flow of recommendations 

11 and policies under this title among the 

12 Secretary, the National Coordinator, the 

13 HIT Policy Committee, the HIT Standards 

14 Committee, and other health information 

15 exchanges and other relevant entities. 

16 ‘‘(vi) Methods to foster the public un17 derstanding of health information tech18 nology. 

19 ‘‘(vii) Strategies to enhance the use of 

20 health information technology in improving 

21 the quality of health care, reducing medical 

22 errors, reducing health disparities, improv23 ing public health, and improving the con24 tinuity of care among health care settings. 


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1 ‘‘(B) COLLABORATION.—The strategic 

2 plan shall be updated through collaboration of 

3 public and private entities. 

4 ‘‘(C) MEASURABLE OUTCOME GOALS.— 

5 The strategic plan update shall include measur6 able outcome goals. 

7 ‘‘(D) PUBLICATION.—The National Coor8 dinator shall republish the strategic plan, in9 cluding all updates. 

10 ‘‘(4) WEBSITE.—The National Coordinator 

11 shall maintain and frequently update an Internet 

12 website on which there is posted information on the 

13 work, schedules, reports, recommendations, and 

14 other information to ensure transparency in pro15 motion of a nationwide health information tech16 nology infrastructure. 

17 ‘‘(5) CERTIFICATION.— 

18 ‘‘(A) IN GENERAL.—The National Coordi19 nator, in consultation with the Director of the 

20 National Institute of Standards and Tech21 nology, shall develop a program (either directly 

22 or by contract) for the voluntary certification of 

23 health information technology as being in com24 pliance with applicable certification criteria 

25 adopted under this title. 


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1 ‘‘(B) CERTIFICATION CRITERIA DE2 SCRIBED.—In this title, the term ‘certification 

3 criteria’ means, with respect to standards and 

4 implementation specifications for health infor5 mation technology, criteria to establish that the 

6 technology meets such standards and implemen7 tation specifications. 

8 ‘‘(6) REPORTS AND PUBLICATIONS.— 

9 ‘‘(A) REPORT ON ADDITIONAL FUNDING

10 OR AUTHORITY NEEDED.—Not later than 12 

11 months after the date of the enactment of this 

12 title, the National Coordinator shall submit to 

13 the appropriate committees of jurisdiction of 

14 the House of Representatives and the Senate a 

15 report on any additional funding or authority 

16 the Coordinator or the HIT Policy Committee 

17 or HIT Standards Committee requires to evalu18 ate and develop standards, implementation 

19 specifications, and certification criteria, or to 

20 achieve full participation of stakeholders in the 

21 adoption of a nationwide health information 

22 technology infrastructure that allows for the 

23 electronic use and exchange of health informa24 tion. 


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1 ‘‘(B) IMPLEMENTATION REPORT.—The 

2 National Coordinator shall prepare a report 

3 that identifies lessons learned from major pub4 lic and private health care systems in their im5 plementation of health information technology, 

6 including information on whether the tech7 nologies and practices developed by such sys8 tems may be applicable to and usable in whole 

9 or in part by other health care providers. 

10 ‘‘(C) ASSESSMENT OF IMPACT OF HIT ON

11 COMMUNITIES WITH HEALTH DISPARITIES AND

12 UNINSURED, UNDERINSURED, AND MEDICALLY

13 UNDERSERVED AREAS.—The National Coordi14 nator shall assess and publish the impact of 

15 health information technology in communities 

16 with health disparities and in areas with a high 

17 proportion of individuals who are uninsured, 

18 underinsured, and medically underserved indi19 viduals (including urban and rural areas) and 

20 identify practices to increase the adoption of 

21 such technology by health care providers in 

22 such communities. 

23 ‘‘(D) EVALUATION OF BENEFITS AND

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1 tional Coordinator shall evaluate and publish 

2 evidence on the benefits and costs of the elec3 tronic use and exchange of health information 

4 and assess to whom these benefits and costs ac5 crue. 

6 ‘‘(E) RESOURCE REQUIREMENTS.—The 

7 National Coordinator shall estimate and publish 

8 resources required annually to reach the goal of 

9 utilization of an electronic health record for 

10 each person in the United States by 2014, in11 cluding the required level of Federal funding, 

12 expectations for regional, State, and private in13 vestment, and the expected contributions by vol14 unteers to activities for the utilization of such 

15 records. 

16 ‘‘(7) ASSISTANCE.—The National Coordinator 

17 may provide financial assistance to consumer advo18 cacy groups and not-for-profit entities that work in 

19 the public interest for purposes of defraying the cost 

20 to such groups and entities to participate under, 

21 whether in whole or in part, the National Tech22 nology Transfer Act of 1995 (15 U.S.C. 272 note). 

23 ‘‘(8) GOVERNANCE FOR NATIONWIDE HEALTH

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1 nator shall establish a governance mechanism for the 

2 nationwide health information network. 

3 ‘‘(d) DETAIL OF FEDERAL EMPLOYEES.— 

4 ‘‘(1) IN GENERAL.—Upon the request of the 

5 National Coordinator, the head of any Federal agen6 cy is authorized to detail, with or without reimburse7 ment from the Office, any of the personnel of such 

8 agency to the Office to assist it in carrying out its 

9 duties under this section. 

10 ‘‘(2) EFFECT OF DETAIL.—Any detail of per11 sonnel under paragraph (1) shall— 

12 ‘‘(A) not interrupt or otherwise affect the 

13 civil service status or privileges of the Federal 

14 employee; and 

15 ‘‘(B) be in addition to any other staff of 

16 the Department employed by the National Co17 ordinator. 

18 ‘‘(3) ACCEPTANCE OF DETAILEES.—Notwith19 standing any other provision of law, the Office may 

20 accept detailed personnel from other Federal agen21 cies without regard to whether the agency described 

22 under paragraph (1) is reimbursed. 

23 ‘‘(e) CHIEF PRIVACY OFFICER OF THE OFFICE OF

24 THE NATIONAL COORDINATOR.—Not later than 12 

25 months after the date of the enactment of this title, the 


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1 Secretary shall appoint a Chief Privacy Officer of the Of2 fice of the National Coordinator, whose duty it shall be 

3 to advise the National Coordinator on privacy, security, 

4 and data stewardship of electronic health information and 

5 to coordinate with other Federal agencies (and similar pri6 vacy officers in such agencies), with State and regional 

7 efforts, and with foreign countries with regard to the pri8 vacy, security, and data stewardship of electronic individ9 ually identifiable health information. 

10 ‘‘SEC. 3002. HIT POLICY COMMITTEE. 

11 ‘‘(a) ESTABLISHMENT.—There is established a HIT 

12 Policy Committee to make policy recommendations to the 

13 National Coordinator relating to the implementation of a 

14 nationwide health information technology infrastructure, 

15 including implementation of the strategic plan described 

16 in section 3001(c)(3). 

17 ‘‘(b) DUTIES.— 

18 ‘‘(1) RECOMMENDATIONS ON HEALTH INFOR19 MATION TECHNOLOGY INFRASTRUCTURE.—The HIT 

20 Policy Committee shall recommend a policy frame21 work for the development and adoption of a nation22 wide health information technology infrastructure 

23 that permits the electronic exchange and use of 

24 health information as is consistent with the strategic 

25 plan under section 3001(c)(3) and that includes the 


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1 recommendations under paragraph (2). The Com2 mittee shall update such recommendations and make 

3 new recommendations as appropriate. 

4 ‘‘(2) SPECIFIC AREAS OF STANDARD DEVELOP5 MENT.— 

6 ‘‘(A) IN GENERAL.—The HIT Policy Com7 mittee shall recommend the areas in which 

8 standards, implementation specifications, and 

9 certification criteria are needed for the elec10 tronic exchange and use of health information 

11 for purposes of adoption under section 3004 

12 and shall recommend an order of priority for 

13 the development, harmonization, and recogni14 tion of such standards, specifications, and cer15 tification criteria among the areas so rec16 ommended. Such standards and implementation 

17 specifications shall include named standards, 

18 architectures, and software schemes for the au19 thentication and security of individually identifi20 able health information and other information 

21 as needed to ensure the reproducible develop22 ment of common solutions across disparate en23 tities. 

24 ‘‘(B) AREAS REQUIRED FOR CONSIDER25 ATION.—For purposes of subparagraph (A), the 


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1 HIT Policy Committee shall make recommenda2 tions for at least the following areas: 

3 ‘‘(i) Technologies that protect the pri4 vacy of health information and promote se5 curity in a qualified electronic health 

6 record, including for the segmentation and 

7 protection from disclosure of specific and 

8 sensitive individually identifiable health in9 formation with the goal of minimizing the 

10 reluctance of patients to seek care (or dis11 close information about a condition) be12 cause of privacy concerns, in accordance 

13 with applicable law, and for the use and 

14 disclosure of limited data sets of such in15 formation. 

16 ‘‘(ii) A nationwide health information 

17 technology infrastructure that allows for 

18 the electronic use and accurate exchange of 

19 health information. 

20 ‘‘(iii) The utilization of a certified 

21 electronic health record for each person in 

22 the United States by 2014. 

23 ‘‘(iv) Technologies that as a part of a 

24 qualified electronic health record allow for 

25 an accounting of disclosures made by a 


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1 covered entity (as defined for purposes of 

2 regulations promulgated under section 

3 264(c) of the Health Insurance Portability 

4 and Accountability Act of 1996) for pur5 poses of treatment, payment, and health 

6 care operations (as such terms are defined 

7 for purposes of such regulations). 

8 ‘‘(v) The use of certified electronic 

9 health records to improve the quality of 

10 health care, such as by promoting the co11 ordination of health care and improving 

12 continuity of health care among health 

13 care providers, by reducing medical errors, 

14 by improving population health, and by ad15 vancing research and education. 

16 ‘‘(C) OTHER AREAS FOR CONSIDER17 ATION.—In making recommendations under 

18 subparagraph (A), the HIT Policy Committee 

19 may consider the following additional areas: 

20 ‘‘(i) The appropriate uses of a nation21 wide health information infrastructure, in22 cluding for purposes of— 

23 ‘‘(I) the collection of quality data 

24 and public reporting; 


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1 ‘‘(II) biosurveillance and public 

2 health; 

3 ‘‘(III) medical and clinical re4 search; and 

5 ‘‘(IV) drug safety. 

6 ‘‘(ii) Self-service technologies that fa7 cilitate the use and exchange of patient in8 formation and reduce wait times. 

9 ‘‘(iii) Telemedicine technologies, in 

10 order to reduce travel requirements for pa11 tients in remote areas. 

12 ‘‘(iv) Technologies that facilitate home 

13 health care and the monitoring of patients 

14 recuperating at home. 

15 ‘‘(v) Technologies that help reduce 

16 medical errors. 

17 ‘‘(vi) Technologies that facilitate the 

18 continuity of care among health settings. 

19 ‘‘(vii) Technologies that meet the 

20 needs of diverse populations. 

21 ‘‘(viii) Any other technology that the 

22 HIT Policy Committee finds to be among 

23 the technologies with the greatest potential 

24 to improve the quality and efficiency of 

25 health care. 


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1 ‘‘(3) FORUM.—The HIT Policy Committee shall 

2 serve as a forum for broad stakeholder input with 

3 specific expertise in policies relating to the matters 

4 described in paragraphs (1) and (2). 

5 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 

6 ‘‘(1) IN GENERAL.—The National Coordinator 

7 shall provide leadership in the establishment and op8 erations of the HIT Policy Committee. 

9 ‘‘(2) MEMBERSHIP.—The membership of the 

10 HIT Policy Committee shall at least reflect pro11 viders, ancillary health care workers, consumers, 

12 purchasers, health plans, technology vendors, re13 searchers, relevant Federal agencies, and individuals 

14 with technical expertise on health care quality, pri15 vacy and security, and on the electronic exchange 

16 and use of health information. 

17 ‘‘(3) CONSIDERATION.—The National Coordi18 nator shall ensure that the relevant recommenda19 tions and comments from the National Committee 

20 on Vital and Health Statistics are considered in the 

21 development of policies. 

22 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 

23 Committee Act (5 U.S.C. App.), other than section 14 of 

24 such Act, shall apply to the HIT Policy Committee. 


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1 ‘‘(e) PUBLICATION.—The Secretary shall provide for 

2 publication in the Federal Register and the posting on the 

3 Internet website of the Office of the National Coordinator 

4 for Health Information Technology of all policy rec5 ommendations made by the HIT Policy Committee under 

6 this section. 

7 ‘‘SEC. 3003. HIT STANDARDS COMMITTEE. 

8 ‘‘(a) ESTABLISHMENT.—There is established a com9 mittee to be known as the HIT Standards Committee to 

10 recommend to the National Coordinator standards, imple11 mentation specifications, and certification criteria for the 

12 electronic exchange and use of health information for pur13 poses of adoption under section 3004, consistent with the 

14 implementation of the strategic plan described in section 

15 3001(c)(3) and beginning with the areas listed in section 

16 3002(b)(2)(B) in accordance with policies developed by 

17 the HIT Policy Committee. 

18 ‘‘(b) DUTIES.— 

19 ‘‘(1) STANDARD DEVELOPMENT.— 

20 ‘‘(A) IN GENERAL.—The HIT Standards 

21 Committee shall recommend to the National 

22 Coordinator standards, implementation speci23 fications, and certification criteria described in 

24 subsection (a) that have been developed, har25 monized, or recognized by the HIT Standards 


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1 Committee. The HIT Standards Committee 

2 shall update such recommendations and make 

3 new recommendations as appropriate, including 

4 in response to a notification sent under section 

5 3004(b)(2). Such recommendations shall be 

6 consistent with the latest recommendations 

7 made by the HIT Policy Committee. 

8 ‘‘(B) PILOT TESTING OF STANDARDS AND

9 IMPLEMENTATION SPECIFICATIONS.—In the de10 velopment, harmonization, or recognition of 

11 standards and implementation specifications, 

12 the HIT Standards Committee shall, as appro13 priate, provide for the testing of such standards 

14 and specifications. 

15 ‘‘(C) CONSISTENCY.—The standards, im16 plementation specifications, and certification 

17 criteria recommended under this subsection 

18 shall be consistent with the standards for infor19 mation transactions and data elements adopted 

20 pursuant to section 1173 of the Social Security 

21 Act. 

22 ‘‘(2) FORUM.—The HIT Standards Committee 

23 shall serve as a forum for the participation of a 

24 broad range of stakeholders to provide input on the 

25 development, harmonization, and recognition of 


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1 standards, implementation specifications, and certifi2 cation criteria necessary for the development and 

3 adoption of a nationwide health information tech4 nology infrastructure that allows for the electronic 

5 use and exchange of health information. 

6 ‘‘(3) SCHEDULE.—Not later than 90 days after 

7 the date of the enactment of this title, the HIT 

8 Standards Committee shall develop a schedule for 

9 the assessment of policy recommendations developed 

10 by the HIT Policy Committee under section 3002. 

11 The HIT Standards Committee shall update such 

12 schedule annually. The Secretary shall publish such 

13 schedule in the Federal Register. 

14 ‘‘(4) PUBLIC INPUT.—The HIT Standards 

15 Committee shall conduct open public meetings and 

16 develop a process to allow for public comment on the 

17 schedule described in paragraph (3) and rec18 ommendations described in this subsection. Under 

19 such process comments shall be submitted in a time20 ly manner after the date of publication of a rec21 ommendation under this subsection. 

22 ‘‘(c) MEMBERSHIP AND OPERATIONS.— 

23 ‘‘(1) IN GENERAL.—The National Coordinator 

24 shall provide leadership in the establishment and op25 erations of the HIT Standards Committee. 


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1 ‘‘(2) MEMBERSHIP.—The membership of the 

2 HIT Standards Committee shall at least reflect pro3 viders, ancillary healthcare workers, consumers, pur4 chasers, health plans, technology vendors, research5 ers, relevant Federal agencies, and individuals with 

6 technical expertise on health care quality, privacy 

7 and security, and on the electronic exchange and use 

8 of health information. 

9 ‘‘(3) CONSIDERATION.—The National Coordi10 nator shall ensure that the relevant recommenda11 tions and comments from the National Committee 

12 on Vital and Health Statistics are considered in the 

13 development of standards. 

14 ‘‘(4) ASSISTANCE.—For the purposes of car15 rying out this section, the Secretary may provide or 

16 ensure that financial assistance is provided by the 

17 HIT Standards Committee to defray in whole or in 

18 part any membership fees or dues charged by such 

19 Committee to those consumer advocacy groups and 

20 not for profit entities that work in the public inter21 est as a part of their mission. 

22 ‘‘(d) APPLICATION OF FACA.—The Federal Advisory 

23 Committee Act (5 U.S.C. App.), other than section 14, 

24 shall apply to the HIT Standards Committee. 


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1 ‘‘(e) PUBLICATION.—The Secretary shall provide for 

2 publication in the Federal Register and the posting on the 

3 Internet website of the Office of the National Coordinator 

4 for Health Information Technology of all recommenda5 tions made by the HIT Standards Committee under this 

6 section. 

7 ‘‘SEC. 3004. PROCESS FOR ADOPTION OF ENDORSED REC8 OMMENDATIONS; ADOPTION OF INITIAL SET 

9 OF STANDARDS, IMPLEMENTATION SPECI10 FICATIONS, AND CERTIFICATION CRITERIA. 

11 ‘‘(a) PROCESS FOR ADOPTION OF ENDORSED REC12 OMMENDATIONS.— 

13 ‘‘(1) REVIEW OF ENDORSED STANDARDS, IM14 PLEMENTATION SPECIFICATIONS, AND CERTIFI15 CATION CRITERIA.—Not later than 90 days after the 

16 date of receipt of standards, implementation speci17 fications, or certification criteria endorsed under sec18 tion 3001(c), the Secretary, in consultation with rep19 resentatives of other relevant Federal agencies, shall 

20 jointly review such standards, implementation speci21 fications, or certification criteria and shall determine 

22 whether or not to propose adoption of such stand23 ards, implementation specifications, or certification 

24 criteria. 


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1 ‘‘(2) DETERMINATION TO ADOPT STANDARDS, 

2 IMPLEMENTATION SPECIFICATIONS, AND CERTIFI3 CATION CRITERIA.—If the Secretary determines— 

4 ‘‘(A) to propose adoption of any grouping 

5 of such standards, implementation specifica6 tions, or certification criteria, the Secretary 

7 shall, by regulation, determine whether or not 

8 to adopt such grouping of standards, implemen9 tation specifications, or certification criteria; or 

10 ‘‘(B) not to propose adoption of any group11 ing of standards, implementation specifications, 

12 or certification criteria, the Secretary shall no13 tify the National Coordinator and the HIT 

14 Standards Committee in writing of such deter15 mination and the reasons for not proposing the 

16 adoption of such recommendation. 

17 ‘‘(3) PUBLICATION.—The Secretary shall pro18 vide for publication in the Federal Register of all de19 terminations made by the Secretary under para20 graph (1). 

21 ‘‘(b) ADOPTION OF INITIAL SET OF STANDARDS, IM22 PLEMENTATION SPECIFICATIONS, AND CERTIFICATION

23 CRITERIA.— 

24 ‘‘(1) IN GENERAL.—Not later than December 

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1 making process described in section 3003, adopt an 

2 initial set of standards, implementation specifica3 tions, and certification criteria for the areas required 

4 for consideration under section 3002(b)(2)(B). 

5 ‘‘(2) APPLICATION OF CURRENT STANDARDS, 

6 IMPLEMENTATION SPECIFICATIONS, AND CERTIFI7 CATION CRITERIA.—The standards, implementation 

8 specifications, and certification criteria adopted be9 fore the date of the enactment of this title through 

10 the process existing through the Office of the Na11 tional Coordinator for Health Information Tech12 nology may be applied towards meeting the require13 ment of paragraph (1). 

14 ‘‘SEC. 3005. TRANSITIONS. 

15 ‘‘(a) ONCHIT.—To the extent consistent with sec16 tion 3001, all functions, personnel, assets, liabilities, and 

17 administrative actions applicable to the National Coordi18 nator for Health Information Technology appointed under 

19 Executive Order 13335 or the Office of such National Co20 ordinator on the date before the date of the enactment 

21 of this title shall be transferred to the National Coordi22 nator appointed under section 3001(a) and the Office of 

23 such National Coordinator as of the date of the enactment 

24 of this title. 

25 ‘‘(b) AHIC.— 


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1 ‘‘(1) To the extent consistent with sections 

2 3002 and 3003, all functions, personnel, assets, and 

3 liabilities applicable to the AHIC Successor, Inc. 

4 doing business as the National eHealth Collaborative 

5 as of the day before the date of the enactment of 

6 this title shall be transferred to the HIT Policy 

7 Committee or the HIT Standards Committee, estab8 lished under section 3002(a) or 3003(a), as appro9 priate, as of the date of the enactment of this title. 

10 ‘‘(2) In carrying out section 3003(b)(1)(A), 

11 until recommendations are made by the HIT Policy 

12 Committee, recommendations of the HIT Standards 

13 Committee shall be consistent with the most recent 

14 recommendations made by such AHIC Successor, 

15 Inc. 

16 ‘‘(c) RULES OF CONSTRUCTION.— 

17 ‘‘(1) ONCHIT.—Nothing in section 3001 or 

18 subsection (a) shall be construed as requiring the 

19 creation of a new entity to the extent that the Office 

20 of the National Coordinator for Health Information 

21 Technology established pursuant to Executive Order 

22 13335 is consistent with the provisions of section 

23 3001. 

24 ‘‘(2) AHIC.—Nothing in sections 3002 or 3003 

25 or subsection (b) shall be construed as prohibiting 


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1 the AHIC Successor, Inc. doing business as the Na2 tional eHealth Collaborative from modifying its char3 ter, duties, membership, and any other structure or 

4 function required to be consistent with section 3002 

5 and 3003 in a manner that would permit the Sec6 retary to choose to recognize such Community as the 

7 HIT Policy Committee or the HIT Standards Com8 mittee.’’. 

9 Subtitle B—Incentives for the Use 

10 of Health Information Technology 

11 PART I—MEDICARE PROGRAM 

12 SEC. 4201. INCENTIVES FOR ELIGIBLE PROFESSIONALS. 

13 (a) INCENTIVE PAYMENTS.—Section 1848 of the So14 cial Security Act (42 U.S.C. 1395w–4) is amended by add15 ing at the end the following new subsection: 

16 ‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL

17 USE OF CERTIFIED EHR TECHNOLOGY.— 

18 ‘‘(1) INCENTIVE PAYMENTS.— 

19 ‘‘(A) IN GENERAL.— 

20 ‘‘(i) IN GENERAL.—Subject to clause 

21 (ii) and the succeeding subparagraphs of 

22 this paragraph, with respect to covered 

23 professional services furnished by an eligi24 ble professional during a payment year (as 

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1 ble professional is a meaningful EHR user 

2 (as determined under paragraph (2)) for 

3 the reporting period with respect to such 

4 year, in addition to the amount otherwise 

5 paid under this part, there also shall be 

6 paid to the eligible professional (or to an 

7 employer or facility in the cases described 

8 in clause (A) of section 1842(b)(6)), from 

9 the Federal Supplementary Medical Insur10 ance Trust Fund established under section 

11 1841 an amount equal to 75 percent of the 

12 Secretary’s estimate (based on claims sub13 mitted not later than 2 months after the 

14 end of the payment year) of the allowed 

15 charges under this part for all such cov16 ered professional services furnished by the 

17 eligible professional during such year. 

18 ‘‘(ii) NO INCENTIVE PAYMENTS WITH

19 RESPECT TO YEARS AFTER 2015.—No in20 centive payments may be made under this 

21 subsection with respect to a year after 

22 2015. 

23 ‘‘(B) LIMITATIONS ON AMOUNTS OF IN24 CENTIVE PAYMENTS.— 


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1 ‘‘(i) IN GENERAL.—In no case shall 

2 the amount of the incentive payment pro3 vided under this paragraph for an eligible 

4 professional for a payment year exceed the 

5 applicable amount specified under this sub6 paragraph with respect to such eligible 

7 professional and such year. 

8 ‘‘(ii) AMOUNT.—Subject to clauses 

9 (iii) through (v), the applicable amount 

10 specified in this subparagraph for an eligi11 ble professional is as follows: 

12 ‘‘(I) For the first payment year 

13 for such professional, $15,000 (or, if 

14 the first payment year for such eligi15 ble professional is 2011 or 2012, 

16 $18,000). 

17 ‘‘(II) For the second payment 

18 year for such professional, $12,000. 

19 ‘‘(III) For the third payment 

20 year for such professional, $8,000. 

21 ‘‘(IV) For the fourth payment 

22 year for such professional, $4,000. 

23 ‘‘(V) For the fifth payment year 

24 for such professional, $2,000. 


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1 ‘‘(VI) For any succeeding pay2 ment year for such professional, $0. 

3 ‘‘(iii) PHASE DOWN FOR ELIGIBLE

4 PROFESSIONALS FIRST ADOPTING EHR IN

5 2014.—If the first payment year for an eli6 gible professional is 2014, then the amount 

7 specified in this subparagraph for a pay8 ment year for such professional is the 

9 same as the amount specified in clause (ii) 

10 for such payment year for an eligible pro11 fessional whose first payment year is 2013. 

12 ‘‘(iv) INCREASE FOR CERTAIN RURAL

13 ELIGIBLE PROFESSIONALS.—In the case of 

14 an eligible professional who predominantly 

15 furnishes services under this part in a 

16 rural area that is designated by the Sec17 retary (under section 332(a)(1)(A) of the 

18 Public Health Service Act) as a health pro19 fessional shortage area, the amount that 

20 would otherwise apply for a payment year 

21 for such professional under subclauses (I) 

22 through (V) of clause (ii) shall be in23 creased by 25 percent. In implementing 

24 the preceding sentence, the Secretary may, 

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1 sions of subsections (m) and (u) of section 

2 1833 in a similar manner as such provi3 sions apply under such subsection. 

4 ‘‘(v) NO INCENTIVE PAYMENT IF

5 FIRST ADOPTING AFTER 2014.—If the first 

6 payment year for an eligible professional is 

7 after 2014 then the applicable amount 

8 specified in this subparagraph for such 

9 professional for such year and any subse10 quent year shall be $0. 

11 ‘‘(C) NON-APPLICATION TO HOSPITAL12 BASED ELIGIBLE PROFESSIONALS.— 

13 ‘‘(i) IN GENERAL.—No incentive pay14 ment may be made under this paragraph 

15 in the case of a hospital-based eligible pro16 fessional. 

17 ‘‘(ii) HOSPITAL-BASED ELIGIBLE PRO18 FESSIONAL.—For purposes of clause (i), 

19 the term ‘hospital-based eligible profes20 sional’ means, with respect to covered pro21 fessional services furnished by an eligible 

22 professional during the reporting period for 

23 a payment year, an eligible professional, 

24 such as a pathologist, anesthesiologist, or 

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1 stantially all of such services in a hospital 

2 setting (whether inpatient or outpatient) 

3 and through the use of the facilities and 

4 equipment, including qualified electronic 

5 health records, of the hospital. 

6 ‘‘(D) PAYMENT.— 

7 ‘‘(i) FORM OF PAYMENT.—The pay8 ment under this paragraph may be in the 

9 form of a single consolidated payment or 

10 in the form of such periodic installments 

11 as the Secretary may specify. 

12 ‘‘(ii) COORDINATION OF APPLICATION

13 OF LIMITATION FOR PROFESSIONALS IN

14 DIFFERENT PRACTICES.—In the case of an 

15 eligible professional furnishing covered pro16 fessional services in more than one practice 

17 (as specified by the Secretary), the Sec18 retary shall establish rules to coordinate 

19 the incentive payments, including the ap20 plication of the limitation on amounts of 

21 such incentive payments under this para22 graph, among such practices. 

23 ‘‘(iii) COORDINATION WITH MED24 ICAID.—The Secretary shall seek, to the 

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1 plicative requirements from Federal and 

2 State Governments to demonstrate mean3 ingful use of certified EHR technology 

4 under this title and title XIX. In doing so, 

5 the Secretary may deem satisfaction of 

6 State requirements for such meaningful 

7 use for a payment year under title XIX to 

8 be sufficient to qualify as meaningful use 

9 under this subsection and subsection (a)(7) 

10 and vice versa. The Secretary may also ad11 just the reporting periods under such title 

12 and such subsections in order to carry out 

13 this clause. 

14 ‘‘(E) PAYMENT YEAR DEFINED.— 

15 ‘‘(i) IN GENERAL.—For purposes of 

16 this subsection, the term ‘payment year’ 

17 means a year beginning with 2011. 

18 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT

19 YEAR.—The term ‘first payment year’ 

20 means, with respect to covered professional 

21 services furnished by an eligible profes22 sional, the first year for which an incentive 

23 payment is made for such services under 

24 this subsection. The terms ‘second pay25 ment year’, ‘third payment year’, ‘fourth 


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1 payment year’, and ‘fifth payment year’ 

2 mean, with respect to covered professional 

3 services furnished by such eligible profes4 sional, each successive year immediately 

5 following the first payment year for such 

6 professional. 

7 ‘‘(2) MEANINGFUL EHR USER.— 

8 ‘‘(A) IN GENERAL.—For purposes of para9 graph (1), an eligible professional shall be 

10 treated as a meaningful EHR user for a report11 ing period for a payment year (or, for purposes 

12 of subsection (a)(7), for a reporting period 

13 under such subsection for a year) if each of the 

14 following requirements is met: 

15 ‘‘(i) MEANINGFUL USE OF CERTIFIED

16 EHR TECHNOLOGY.—The eligible profes17 sional demonstrates to the satisfaction of 

18 the Secretary, in accordance with subpara19 graph (C)(i), that during such period the 

20 professional is using certified EHR tech21 nology in a meaningful manner, which 

22 shall include the use of electronic pre23 scribing as determined to be appropriate 

24 by the Secretary. 


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1 ‘‘(ii) INFORMATION EXCHANGE.—The 

2 eligible professional demonstrates to the 

3 satisfaction of the Secretary, in accordance 

4 with subparagraph (C)(i), that during such 

5 period such certified EHR technology is 

6 connected in a manner that provides, in 

7 accordance with law and standards appli8 cable to the exchange of information, for 

9 the electronic exchange of health informa10 tion to improve the quality of health care, 

11 such as promoting care coordination. 

12 ‘‘(iii) REPORTING ON MEASURES

13 USING EHR.—Subject to subparagraph 

14 (B)(ii) and using such certified EHR tech15 nology, the eligible professional submits in16 formation for such period, in a form and 

17 manner specified by the Secretary, on such 

18 clinical quality measures and such other 

19 measures as selected by the Secretary 

20 under subparagraph (B)(i). 

21 The Secretary may provide for the use of alter22 native means for meeting the requirements of 

23 clauses (i), (ii), and (iii) in the case of an eligi24 ble professional furnishing covered professional 

25 services in a group practice (as defined by the 


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1 Secretary). The Secretary shall seek to improve 

2 the use of electronic health records and health 

3 care quality over time by requiring more strin4 gent measures of meaningful use selected under 

5 this paragraph. 

6 ‘‘(B) REPORTING ON MEASURES.— 

7 ‘‘(i) SELECTION.—The Secretary shall 

8 select measures for purposes of subpara9 graph (A)(iii) but only consistent with the 

10 following: 

11 ‘‘(I) The Secretary shall provide 

12 preference to clinical quality measures 

13 that have been endorsed by the entity 

14 with a contract with the Secretary 

15 under section 1890(a). 

16 ‘‘(II) Prior to any measure being 

17 selected under this subparagraph, the 

18 Secretary shall publish in the Federal 

19 Register such measure and provide for 

20 a period of public comment on such 

21 measure. 

22 ‘‘(ii) LIMITATION.—The Secretary 

23 may not require the electronic reporting of 

24 information on clinical quality measures 

25 under subparagraph (A)(iii) unless the 


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1 Secretary has the capacity to accept the in2 formation electronically, which may be on 

3 a pilot basis. 

4 ‘‘(iii) COORDINATION OF REPORTING

5 OF INFORMATION.—In selecting such 

6 measures, and in establishing the form and 

7 manner for reporting measures under sub8 paragraph (A)(iii), the Secretary shall seek 

9 to avoid redundant or duplicative reporting 

10 otherwise required, including reporting 

11 under subsection (k)(2)(C). 

12 ‘‘(C) DEMONSTRATION OF MEANINGFUL

13 USE OF CERTIFIED EHR TECHNOLOGY AND IN14 FORMATION EXCHANGE.— 

15 ‘‘(i) IN GENERAL.—A professional 

16 may satisfy the demonstration requirement 

17 of clauses (i) and (ii) of subparagraph (A) 

18 through means specified by the Secretary, 

19 which may include— 

20 ‘‘(I) an attestation; 

21 ‘‘(II) the submission of claims 

22 with appropriate coding (such as a 

23 code indicating that a patient encoun24 ter was documented using certified 

25 EHR technology); 


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1 ‘‘(III) a survey response; 

2 ‘‘(IV) reporting under subpara3 graph (A)(iii); and 

4 ‘‘(V) other means specified by the 

5 Secretary. 

6 ‘‘(ii) USE OF PART D DATA.—Not7 withstanding sections 1860D–15(d)(2)(B) 

8 and 1860D–15(f)(2), the Secretary may 

9 use data regarding drug claims submitted 

10 for purposes of section 1860D–15 that are 

11 necessary for purposes of subparagraph 

12 (A). 

13 ‘‘(3) APPLICATION.— 

14 ‘‘(A) PHYSICIAN REPORTING SYSTEM

15 RULES.—Paragraphs (5), (6), and (8) of sub16 section (k) shall apply for purposes of this sub17 section in the same manner as they apply for 

18 purposes of such subsection. 

19 ‘‘(B) COORDINATION WITH OTHER PAY20 MENTS.—The provisions of this subsection shall 

21 not be taken into account in applying the provi22 sions of subsection (m) of this section and of 

23 section 1833(m) and any payment under such 

24 provisions shall not be taken into account in 


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1 computing allowable charges under this sub2 section. 

3 ‘‘(C) LIMITATIONS ON REVIEW.—There 

4 shall be no administrative or judicial review 

5 under section 1869, section 1878, or otherwise 

6 of the determination of any incentive payment 

7 under this subsection and the payment adjust8 ment under subsection (a)(7), including the de9 termination of a meaningful EHR user under 

10 paragraph (2), a limitation under paragraph 

11 (1)(B), and the exception under subsection 

12 (a)(7)(B). 

13 ‘‘(D) POSTING ON WEBSITE.—The Sec14 retary shall post on the Internet website of the 

15 Centers for Medicare & Medicaid Services, in an 

16 easily understandable format, a list of the 

17 names, business addresses, and business phone 

18 numbers of the eligible professionals who are 

19 meaningful EHR users and, as determined ap20 propriate by the Secretary, of group practices 

21 receiving incentive payments under paragraph 

22 (1). 

23 ‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 

24 For purposes of this section, the term ‘certified 

25 EHR technology’ means a qualified electronic health 


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1 record (as defined in 3000(13) of the Public Health 

2 Service Act) that is certified pursuant to section 

3 3001(c)(5) of such Act as meeting standards adopt4 ed under section 3004 of such Act that are applica5 ble to the type of record involved (as determined by 

6 the Secretary, such as an ambulatory electronic 

7 health record for office-based physicians or an inpa8 tient hospital electronic health record for hospitals). 

9 ‘‘(5) DEFINITIONS.—For purposes of this sub10 section: 

11 ‘‘(A) COVERED PROFESSIONAL SERV12 ICES.—The term ‘covered professional services’ 

13 has the meaning given such term in subsection 

14 (k)(3). 

15 ‘‘(B) ELIGIBLE PROFESSIONAL.—The term 

16 ‘eligible professional’ means a physician, as de17 fined in section 1861(r). 

18 ‘‘(C) REPORTING PERIOD.—The term ‘re19 porting period’ means any period (or periods), 

20 with respect to a payment year, as specified by 

21 the Secretary.’’. 

22 (b) INCENTIVE PAYMENT ADJUSTMENT.—Section 

23 1848(a) of the Social Security Act (42 U.S.C. 1395w– 

24 4(a)) is amended by adding at the end the following new 

25 paragraph: 


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1 ‘‘(7) INCENTIVES FOR MEANINGFUL USE OF

2 CERTIFIED EHR TECHNOLOGY.— 

3 ‘‘(A) ADJUSTMENT.— 

4 ‘‘(i) IN GENERAL.—Subject to sub5 paragraphs (B) and (D), with respect to 

6 covered professional services furnished by 

7 an eligible professional during 2015 or any 

8 subsequent payment year, if the eligible 

9 professional is not a meaningful EHR user 

10 (as determined under subsection (o)(2)) for 

11 a reporting period for the year, the fee 

12 schedule amount for such services fur13 nished by such professional during the year 

14 (including the fee schedule amount for pur15 poses of determining a payment based on 

16 such amount) shall be equal to the applica17 ble percent of the fee schedule amount that 

18 would otherwise apply to such services 

19 under this subsection (determined after ap20 plication of paragraph (3) but without re21 gard to this paragraph). 

22 ‘‘(ii) APPLICABLE PERCENT.—Subject 

23 to clause (iii), for purposes of clause (i), 

24 the term ‘applicable percent’ means— 


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1 ‘‘(I) for 2015, 99 percent (or, in 

2 the case of an eligible professional 

3 who was subject to the application of 

4 the payment adjustment under section 

5 1848(a)(5) for 2014, 98 percent); 

6 ‘‘(II) for 2016, 98 percent; and 

7 ‘‘(III) for 2017 and each subse8 quent year, 97 percent. 

9 ‘‘(iii) AUTHORITY TO DECREASE AP10 PLICABLE PERCENTAGE FOR 2018 AND

11 SUBSEQUENT YEARS.—For 2018 and each 

12 subsequent year, if the Secretary finds that 

13 the proportion of eligible professionals who 

14 are meaningful EHR users (as determined 

15 under subsection (o)(2)) is less than 75 

16 percent, the applicable percent shall be de17 creased by 1 percentage point from the ap18 plicable percent in the preceding year, but 

19 in no case shall the applicable percent be 

20 less than 95 percent. 

21 ‘‘(B) SIGNIFICANT HARDSHIP EXCEP22 TION.—The Secretary may, on a case-by-case 

23 basis, exempt an eligible professional from the 

24 application of the payment adjustment under 

25 subparagraph (A) if the Secretary determines, 


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1 subject to annual renewal, that compliance with 

2 the requirement for being a meaningful EHR 

3 user would result in a significant hardship, such 

4 as in the case of an eligible professional who 

5 practices in a rural area without sufficient 

6 Internet access. In no case may an eligible pro7 fessional be granted an exemption under this 

8 subparagraph for more than 5 years. 

9 ‘‘(C) APPLICATION OF PHYSICIAN REPORT10 ING SYSTEM RULES.—Paragraphs (5), (6), and 

11 (8) of subsection (k) shall apply for purposes of 

12 this paragraph in the same manner as they 

13 apply for purposes of such subsection. 

14 ‘‘(D) NON-APPLICATION TO HOSPITAL15 BASED ELIGIBLE PROFESSIONALS.—No pay16 ment adjustment may be made under subpara17 graph (A) in the case of hospital-based eligible 

18 professionals (as defined in subsection 

19 (o)(1)(C)(ii)). 

20 ‘‘(E) DEFINITIONS.—For purposes of this 

21 paragraph: 

22 ‘‘(i) COVERED PROFESSIONAL SERV23 ICES.—The term ‘covered professional 

24 services’ has the meaning given such term 

25 in subsection (k)(3). 


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1 ‘‘(ii) ELIGIBLE PROFESSIONAL.—The 

2 term ‘eligible professional’ means a physi3 cian, as defined in section 1861(r). 

4 ‘‘(iii) REPORTING PERIOD.—The term 

5 ‘reporting period’ means, with respect to a 

6 year, a period specified by the Secretary.’’. 

7 (c) APPLICATION TO CERTAIN MA-AFFILIATED ELI8 GIBLE PROFESSIONALS.—Section 1853 of the Social Secu9 rity Act (42 U.S.C. 1395w–23) is amended by adding at 

10 the end the following new subsection: 

11 ‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL IN12 CENTIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOP13 TION AND MEANINGFUL USE OF CERTIFIED EHR TECH14 NOLOGY.— 

15 ‘‘(1) IN GENERAL.—Subject to paragraphs (3) 

16 and (4), in the case of a qualifying MA organization, 

17 the provisions of sections 1848(o) and 1848(a)(7) 

18 shall apply with respect to eligible professionals de19 scribed in paragraph (2) of the organization who the 

20 organization attests under paragraph (6) to be 

21 meaningful EHR users in a similar manner as they 

22 apply to eligible professionals under such sections. 

23 Incentive payments under paragraph (3) shall be 

24 made to and payment adjustments under paragraph 

25 (4) shall apply to such qualifying organizations. 


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1 ‘‘(2) ELIGIBLE PROFESSIONAL DESCRIBED.— 

2 With respect to a qualifying MA organization, an eli3 gible professional described in this paragraph is an 

4 eligible professional (as defined for purposes of sec5 tion 1848(o)) who— 

6 ‘‘(A)(i) is employed by the organization; or 

7 ‘‘(ii)(I) is employed by, or is a partner of, 

8 an entity that through contract with the organi9 zation furnishes at least 80 percent of the enti10 ty’s patient care services to enrollees of such or11 ganization; and 

12 ‘‘(II) furnishes at least 75 percent of the 

13 professional services of the eligible professional 

14 to enrollees of the organization; and 

15 ‘‘(B) furnishes, on average, at least 20 

16 hours per week of patient care services. 

17 ‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY18 MENTS.— 

19 ‘‘(A) IN GENERAL.—In applying section 

20 1848(o) under paragraph (1), instead of the ad21 ditional payment amount under section 

22 1848(o)(1)(A) and subject to subparagraph 

23 (B), the Secretary may substitute an amount 

24 determined by the Secretary to the extent fea25 sible and practical to be similar to the estiVerDate Nov 24 2008 21:32 Jan 30, 2009 Jkt 079200 PO 00000 Frm 00265 Fmt 6652 Sfmt 6201 E:\BILLS\S350.PCS S350

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1 mated amount in the aggregate that would be 

2 payable if payment for services furnished by 

3 such professionals was payable under part B in4 stead of this part. 

5 ‘‘(B) AVOIDING DUPLICATION OF PAY6 MENTS.— 

7 ‘‘(i) IN GENERAL.—If an eligible pro8 fessional described in paragraph (2) is eli9 gible for the maximum incentive payment 

10 under section 1848(o)(1)(A) for the same 

11 payment period, the payment incentive 

12 shall be made only under such section and 

13 not under this subsection. 

14 ‘‘(ii) METHODS.—In the case of an el15 igible professional described in paragraph 

16 (2) who is eligible for an incentive payment 

17 under section 1848(o)(1)(A) but is not de18 scribed in clause (i) for the same payment 

19 period, the Secretary shall develop a proc20 ess— 

21 ‘‘(I) to ensure that duplicate pay22 ments are not made with respect to 

23 an eligible professional both under 

24 this subsection and under section 

25 1848(o)(1)(A); and 


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1 ‘‘(II) to collect data from Medi2 care Advantage organizations to en3 sure against such duplicate payments. 

4 ‘‘(C) FIXED SCHEDULE FOR APPLICATION

5 OF LIMITATION ON INCENTIVE PAYMENTS FOR

6 ALL ELIGIBLE PROFESSIONALS.—In applying 

7 section 1848(o)(1)(B)(ii) under subparagraph 

8 (A), in accordance with rules specified by the 

9 Secretary, a qualifying MA organization shall 

10 specify a year (not earlier than 2011) that shall 

11 be treated as the first payment year for all eli12 gible professionals with respect to such organi13 zation. 

14 ‘‘(D) CAP FOR ECONOMIES OF SCALE.—In 

15 no case may an incentive payment be made 

16 under this subsection, including under subpara17 graph (A), to a qualifying MA organization with 

18 respect to more than 5,000 eligible profes19 sionals of the organization. 

20 ‘‘(4) PAYMENT ADJUSTMENT.— 

21 ‘‘(A) IN GENERAL.—In applying section 

22 1848(a)(7) under paragraph (1), instead of the 

23 payment adjustment being an applicable per24 cent of the fee schedule amount for a year 

25 under such section, subject to subparagraph 


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1 (D), the payment adjustment under paragraph 

2 (1) shall be equal to the percent specified in 

3 subparagraph (B) for such year of the payment 

4 amount otherwise provided under this section 

5 for such year. 

6 ‘‘(B) SPECIFIED PERCENT.—The percent 

7 specified under this subparagraph for a year is 

8 100 percent minus a number of percentage 

9 points equal to the product of— 

10 ‘‘(i) a percentage equal to 100 percent 

11 reduced by the applicable percent (under 

12 section 1848(a)(7)(A)(ii)) for the year; and 

13 ‘‘(ii) a percentage equal to the Sec14 retary’s estimate of the proportion for the 

15 year, of the expenditures under parts A 

16 and B that are not attributable to this 

17 part, that are attributable to expenditures 

18 for physicians’ services. 

19 ‘‘(C) APPLICATION OF PAYMENT ADJUST20 MENT.—In the case that a qualifying MA orga21 nization attests that not all eligible profes22 sionals of the organization are meaningful EHR 

23 users with respect to a year, the Secretary shall 

24 apply the payment adjustment under this para25 graph based on the proportion of all eligible 


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1 professionals of the organization that are not 

2 meaningful EHR users for such year. If the 

3 number of eligible professionals of the organiza4 tion that are not meaningful EHR users for 

5 such year exceeds 5,000, such number shall be 

6 reduced to 5,000 for purposes of determining 

7 the proportion under the preceding sentence. 

8 ‘‘(5) QUALIFYING MA ORGANIZATION DE9 FINED.—In this subsection and subsection (m), the 

10 term ‘qualifying MA organization’ means a Medicare 

11 Advantage organization that is organized as a health 

12 maintenance organization (as defined in section 

13 2791(b)(3) of the Public Health Service Act). 

14 ‘‘(6) MEANINGFUL EHR USER ATTESTATION.— 

15 For purposes of this subsection and subsection (m), 

16 a qualifying MA organization shall submit an attes17 tation, in a form and manner specified by the Sec18 retary which may include the submission of such at19 testation as part of submission of the initial bid 

20 under section 1854(a)(1)(A)(iv), identifying— 

21 ‘‘(A) whether each eligible professional de22 scribed in paragraph (2), with respect to such 

23 organization is a meaningful EHR user (as de24 fined in section 1848(o)(2)) for a year specified 

25 by the Secretary; and 


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1 ‘‘(B) whether each eligible hospital de2 scribed in subsection (m)(1), with respect to 

3 such organization, is a meaningful EHR user 

4 (as defined in section 1886(n)(3)) for an appli5 cable period specified by the Secretary. 

6 ‘‘(7) POSTING ON WEBSITE.—The Secretary 

7 shall post on the Internet website of the Centers for 

8 Medicare & Medicaid Services, in an easily under9 standable format, a list of the names, business ad10 dresses, and business phone numbers of— 

11 ‘‘(A) each qualifying MA organization re12 ceiving an incentive payment under this sub13 section for eligible professionals of the organiza14 tion; and 

15 ‘‘(B) the eligible professionals of such or16 ganization for which such incentive payment is 

17 based.’’. 

18 (d) CONFORMING AMENDMENTS.—Section 1853 of 

19 the Social Security Act (42 U.S.C. 1395w–23) is amend20 ed— 

21 (1) in subsection (a)(1)(A), by striking ‘‘and 

22 (i)’’ and inserting ‘‘(i), and (l)’’; 

23 (2) in subsection (c)— 


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1 (A) in paragraph (1)(D)(i), by striking 

2 ‘‘section 1886(h)’’ and inserting ‘‘sections 

3 1848(o) and 1886(h)’’; and 

4 (B) in paragraph (6)(A), by inserting after 

5 ‘‘under part B,’’ the following: ‘‘excluding ex6 penditures attributable to subsections (a)(7) 

7 and (o) of section 1848,’’; and 

8 (3) in subsection (f), by inserting ‘‘and for pay9 ments under subsection (l)’’ after ‘‘with the organi10 zation’’. 

11 (e) CONFORMING AMENDMENTS TO E-PRE12 SCRIBING.— 

13 (1) Section 1848(a)(5)(A) of the Social Security 

14 Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 

15 (A) in clause (i), by striking ‘‘or any sub16 sequent year’’ and inserting ‘‘, 2013, or 2014’’; 

17 and 

18 (B) in clause (ii), by striking ‘‘and each 

19 subsequent year’’. 

20 (2) Section 1848(m)(2) of such Act (42 U.S.C. 

21 1395w–4(m)(2)) is amended— 

22 (A) in subparagraph (A), by striking ‘‘For 

23 2009’’ and inserting ‘‘Subject to subparagraph 

24 (D), for 2009’’; and 


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

2 subparagraph: 

3 ‘‘(D) LIMITATION WITH RESPECT TO EHR

4 INCENTIVE PAYMENTS.—The provisions of this 

5 paragraph shall not apply to an eligible profes6 sional (or, in the case of a group practice under 

7 paragraph (3)(C), to the group practice) if, for 

8 the reporting period the eligible professional (or 

9 group practice) receives an incentive payment 

10 under subsection (o)(1)(A) with respect to a 

11 certified EHR technology (as defined in sub12 section (o)(4)) that has the capability of elec13 tronic prescribing.’’. 

14 (f) PROVIDING ASSISTANCE TO ELIGIBLE PROFES15 SIONALS AND CERTAIN HOSPITALS.— 

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

17 Human Services shall provide assistance to eligible 

18 professionals (as defined in section 1848(o)(5), as 

19 added by subsection (a)), Medicaid providers (as de20 fined in section 1903(t)(2) of such Act, as added by 

21 section 4211(a)), and eligible hospitals (as defined in 

22 section 1886(n)(6)(A) of such Act, as added by sec23 tion 4202(a)) located in rural or other medically un24 derserved areas to successfully choose, implement, 

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1 tion 1848(o)(4) of the Social Security Act, as added 

2 by section 4201(a)). 

3 (2) USE OF ENTITIES WITH EXPERTISE.—To 

4 the extent practicable, the Secretary shall provide 

5 such assistance through entities that have expertise 

6 in the choice, implementation, and use of such cer7 tified EHR technology. 

8 SEC. 4202. INCENTIVES FOR HOSPITALS. 

9 (a) INCENTIVE PAYMENT.—Section 1886 of the So10 cial Security Act (42 U.S.C. 1395ww) is amended by add11 ing at the end the following new subsection: 

12 ‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL

13 USE OF CERTIFIED EHR TECHNOLOGY.— 

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

15 provisions of this subsection, with respect to inpa16 tient hospital services furnished by an eligible hos17 pital during a payment year (as defined in para18 graph (2)(G)), if the eligible hospital is a meaningful 

19 EHR user (as determined under paragraph (3)) for 

20 the reporting period with respect to such year, in ad21 dition to the amount otherwise paid under this sec22 tion, there also shall be paid to the eligible hospital, 

23 from the Federal Hospital Insurance Trust Fund es24 tablished under section 1817, an amount equal to 


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1 the applicable amount specified in paragraph (2)(A) 

2 for the hospital for such payment year. 

3 ‘‘(2) PAYMENT AMOUNT.— 

4 ‘‘(A) IN GENERAL.—Subject to the suc5 ceeding subparagraphs of this paragraph, the 

6 applicable amount specified in this subpara7 graph for an eligible hospital for a payment 

8 year is equal to the product of the following: 

9 ‘‘(i) INITIAL AMOUNT.—The sum of— 

10 ‘‘(I) the base amount specified in 

11 subparagraph (B); plus 

12 ‘‘(II) the discharge related 

13 amount specified in subparagraph (C) 

14 for a 12-month period selected by the 

15 Secretary with respect to such pay16 ment year. 

17 ‘‘(ii) MEDICARE SHARE.—The Medi18 care share as specified in subparagraph 

19 (D) for the hospital for a period selected 

20 by the Secretary with respect to such pay21 ment year. 

22 ‘‘(iii) TRANSITION FACTOR.—The 

23 transition factor specified in subparagraph 

24 (E) for the hospital for the payment year. 


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1 ‘‘(B) BASE AMOUNT.—The base amount 

2 specified in this subparagraph is $2,000,000. 

3 ‘‘(C) DISCHARGE RELATED AMOUNT.—The 

4 discharge related amount specified in this sub5 paragraph for a 12-month period selected by 

6 the Secretary shall be determined as the sum of 

7 the amount, based upon total discharges (re8 gardless of any source of payment) for the pe9 riod, for each discharge up to the 23,000th dis10 charge as follows: 

11 ‘‘(i) For the 1,150th through the 

12 9,200th discharge, $200. 

13 ‘‘(ii) For the 9,201st through the 

14 13,800th discharge, 50 percent of the 

15 amount specified in clause (i). 

16 ‘‘(iii) For the 13,801st through the 

17 23,000th discharge, 30 percent of the 

18 amount specified in clause (i). 

19 ‘‘(D) MEDICARE SHARE.—The Medicare 

20 share specified under this subparagraph for a 

21 hospital for a period selected by the Secretary 

22 for a payment year is equal to the fraction— 

23 ‘‘(i) the numerator of which is the 

24 sum (for such period and with respect to 

25 the hospital) of— 


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1 ‘‘(I) the number of inpatient-bed2 days (as established by the Secretary) 

3 which are attributable to individuals 

4 with respect to whom payment may be 

5 made under part A; and 

6 ‘‘(II) the number of inpatient7 bed-days (as so established) which are 

8 attributable to individuals who are en9 rolled with a Medicare Advantage or10 ganization under part C; and 

11 ‘‘(ii) the denominator of which is the 

12 product of— 

13 ‘‘(I) the total number of inpa14 tient-bed-days with respect to the hos15 pital during such period; and 

16 ‘‘(II) the total amount of the hos17 pital’s charges during such period, not 

18 including any charges that are attrib19 utable to charity care (as such term is 

20 used for purposes of hospital cost re21 porting under this title), divided by 

22 the total amount of the hospital’s 

23 charges during such period. 

24 Insofar as the Secretary determines that data 

25 are not available on charity care necessary to 


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1 calculate the portion of the formula specified in 

2 clause (ii)(II), the Secretary shall use data on 

3 uncompensated care and may adjust such data 

4 so as to be an appropriate proxy for charity 

5 care including a downward adjustment to elimi6 nate bad debt data from uncompensated care 

7 data. In the absence of the data necessary, with 

8 respect to a hospital, for the Secretary to com9 pute the amount described in clause (ii)(II), the 

10 amount under such clause shall be deemed to 

11 be 1. In the absence of data, with respect to a 

12 hospital, necessary to compute the amount de13 scribed in clause (i)(II), the amount under such 

14 clause shall be deemed to be 0. 

15 ‘‘(E) TRANSITION FACTOR SPECIFIED.— 

16 ‘‘(i) IN GENERAL.—Subject to clause 

17 (ii), the transition factor specified in this 

18 subparagraph for an eligible hospital for a 

19 payment year is as follows: 

20 ‘‘(I) For the first payment year 

21 for such hospital, 1. 

22 ‘‘(II) For the second payment 

year for such hospital, 3 23 ⁄4. 

24 ‘‘(III) For the third payment 

year for such hospital, 1 25 ⁄2. 


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1 ‘‘(IV) For the fourth payment 

year for such hospital, 1 2 ⁄4. 

3 ‘‘(V) For any succeeding pay4 ment year for such hospital, 0. 

5 ‘‘(ii) PHASE DOWN FOR ELIGIBLE

6 HOSPITALS FIRST ADOPTING EHR AFTER

7 2013.—If the first payment year for an eli8 gible hospital is after 2013, then the tran9 sition factor specified in this subparagraph 

10 for a payment year for such hospital is the 

11 same as the amount specified in clause (i) 

12 for such payment year for an eligible hos13 pital for which the first payment year is 

14 2013. If the first payment year for an eli15 gible hospital is after 2015 then the transi16 tion factor specified in this subparagraph 

17 for such hospital and for such year and 

18 any subsequent year shall be 0. 

19 ‘‘(F) FORM OF PAYMENT.—The payment 

20 under this subsection for a payment year may 

21 be in the form of a single consolidated payment 

22 or in the form of such periodic installments as 

23 the Secretary may specify. 

24 ‘‘(G) PAYMENT YEAR DEFINED.— 


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1 ‘‘(i) IN GENERAL.—For purposes of 

2 this subsection, the term ‘payment year’ 

3 means a fiscal year beginning with fiscal 

4 year 2011. 

5 ‘‘(ii) FIRST, SECOND, ETC. PAYMENT

6 YEAR.—The term ‘first payment year’ 

7 means, with respect to inpatient hospital 

8 services furnished by an eligible hospital, 

9 the first fiscal year for which an incentive 

10 payment is made for such services under 

11 this subsection. The terms ‘second pay12 ment year’, ‘third payment year’, and 

13 ‘fourth payment year’ mean, with respect 

14 to an eligible hospital, each successive year 

15 immediately following the first payment 

16 year for that hospital. 

17 ‘‘(3) MEANINGFUL EHR USER.— 

18 ‘‘(A) IN GENERAL.—For purposes of para19 graph (1), an eligible hospital shall be treated 

20 as a meaningful EHR user for a reporting pe21 riod for a payment year (or, for purposes of 

22 subsection (b)(3)(B)(ix), for a reporting period 

23 under such subsection for a fiscal year) if each 

24 of the following requirements are met: 


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1 ‘‘(i) MEANINGFUL USE OF CERTIFIED

2 EHR TECHNOLOGY.—The eligible hospital 

3 demonstrates to the satisfaction of the Sec4 retary, in accordance with subparagraph 

5 (C)(i), that during such period the hospital 

6 is using certified EHR technology in a 

7 meaningful manner. 

8 ‘‘(ii) INFORMATION EXCHANGE.—The 

9 eligible hospital demonstrates to the satis10 faction of the Secretary, in accordance 

11 with subparagraph (C)(i), that during such 

12 period such certified EHR technology is 

13 connected in a manner that provides, in 

14 accordance with law and standards appli15 cable to the exchange of information, for 

16 the electronic exchange of health informa17 tion to improve the quality of health care, 

18 such as promoting care coordination. 

19 ‘‘(iii) REPORTING ON MEASURES

20 USING EHR.—Subject to subparagraph 

21 (B)(ii) and using such certified EHR tech22 nology, the eligible hospital submits infor23 mation for such period, in a form and 

24 manner specified by the Secretary, on such 

25 clinical quality measures and such other 


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1 measures as selected by the Secretary 

2 under subparagraph (B)(i). 

3 The Secretary shall seek to improve the use of 

4 electronic health records and health care quality 

5 over time by requiring more stringent measures 

6 of meaningful use selected under this para7 graph. 

8 ‘‘(B) REPORTING ON MEASURES.— 

9 ‘‘(i) SELECTION.—The Secretary shall 

10 select measures for purposes of subpara11 graph (A)(iii) but only consistent with the 

12 following: 

13 ‘‘(I) The Secretary shall provide 

14 preference to clinical quality measures 

15 that have been selected for purposes 

16 of applying subsection (b)(3)(B)(viii) 

17 or that have been endorsed by the en18 tity with a contract with the Secretary 

19 under section 1890(a). 

20 ‘‘(II) Prior to any measure (other 

21 than a clinical quality measure that 

22 has been selected for purposes of ap23 plying subsection (b)(3)(B)(viii)) 

24 being selected under this subpara25 graph, the Secretary shall publish in 


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1 the Federal Register such measure 

2 and provide for a period of public 

3 comment on such measure. 

4 ‘‘(ii) LIMITATIONS.—The Secretary 

5 may not require the electronic reporting of 

6 information on clinical quality measures 

7 under subparagraph (A)(iii) unless the 

8 Secretary has the capacity to accept the in9 formation electronically, which may be on 

10 a pilot basis. 

11 ‘‘(iii) COORDINATION OF REPORTING

12 OF INFORMATION.—In selecting such 

13 measures, and in establishing the form and 

14 manner for reporting measures under sub15 paragraph (A)(iii), the Secretary shall seek 

16 to avoid redundant or duplicative reporting 

17 with reporting otherwise required, includ18 ing reporting under subsection 

19 (b)(3)(B)(viii). 

20 ‘‘(C) DEMONSTRATION OF MEANINGFUL

21 USE OF CERTIFIED EHR TECHNOLOGY AND IN22 FORMATION EXCHANGE.— 

23 ‘‘(i) IN GENERAL.—A hospital may 

24 satisfy the demonstration requirement of 

25 clauses (i) and (ii) of subparagraph (A) 


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1 through means specified by the Secretary, 

2 which may include— 

3 ‘‘(I) an attestation; 

4 ‘‘(II) the submission of claims 

5 with appropriate coding (such as a 

6 code indicating that inpatient care 

7 was documented using certified EHR 

8 technology); 

9 ‘‘(III) a survey response; 

10 ‘‘(IV) reporting under subpara11 graph (A)(iii); and 

12 ‘‘(V) other means specified by the 

13 Secretary. 

14 ‘‘(ii) USE OF PART D DATA.—Not15 withstanding sections 1860D–15(d)(2)(B) 

16 and 1860D–15(f)(2), the Secretary may 

17 use data regarding drug claims submitted 

18 for purposes of section 1860D–15 that are 

19 necessary for purposes of subparagraph 

20 (A). 

21 ‘‘(4) APPLICATION.— 

22 ‘‘(A) LIMITATIONS ON REVIEW.—There 

23 shall be no administrative or judicial review 

24 under section 1869, section 1878, or otherwise 

25 of the determination of any incentive payment 


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1 under this subsection and the payment adjust2 ment under subsection (b)(3)(B)(ix), including 

3 the determination of a meaningful EHR user 

4 under paragraph (3), determination of meas5 ures applicable to services furnished by eligible 

6 hospitals under this subsection, and the excep7 tion under subsection (b)(3)(B)(ix)(II). 

8 ‘‘(B) POSTING ON WEBSITE.—The Sec9 retary shall post on the Internet website of the 

10 Centers for Medicare & Medicaid Services, in an 

11 easily understandable format, a list of the 

12 names of the eligible hospitals that are mean13 ingful EHR users under this subsection or sub14 section (b)(3)(B)(ix) and other relevant data as 

15 determined appropriate by the Secretary. The 

16 Secretary shall ensure that a hospital has the 

17 opportunity to review the other relevant data 

18 that are to be made public with respect to the 

19 hospital prior to such data being made public. 

20 ‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 

21 The term ‘certified EHR technology’ has the mean22 ing given such term in section 1848(o)(4). 

23 ‘‘(6) DEFINITIONS.—For purposes of this sub24 section: 


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1 ‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eli2 gible hospital’ means— 

3 ‘‘(i) a subsection (d) hospital; and 

4 ‘‘(ii) a critical access hospital (as de5 fined in section 1861(mm)(1)). 

6 ‘‘(B) REPORTING PERIOD.—The term ‘re7 porting period’ means any period (or periods), 

8 with respect to a payment year, as specified by 

9 the Secretary.’’. 

10 (b) INCENTIVE MARKET BASKET ADJUSTMENT.— 

11 (1) IN GENERAL.—Section 1886(b)(3)(B) of 

12 the Social Security Act (42 U.S.C. 

13 1395ww(b)(3)(B)) is amended— 

14 (A) in clause (viii)(I), by inserting ‘‘(or, 

15 beginning with fiscal year 2016, by one-quar16 ter)’’ after ‘‘2.0 percentage points’’; and 

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

18 clause: 

19 ‘‘(ix)(I) For purposes of clause (i) for fiscal year 

20 2015 and each subsequent fiscal year, in the case of an 

21 eligible hospital (as defined in subsection (n)(6)(A)) that 

22 is not a meaningful EHR user (as defined in subsection 

23 (n)(3)) for the reporting period for such fiscal year, three24 quarters of the applicable percentage increase otherwise 

25 applicable under clause (i) for such fiscal year shall be 


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reduced by 331⁄3 percent for fiscal year 2015, 662 1 ⁄3 per2 cent for fiscal year 2016, and 100 percent for fiscal year 

3 2017 and each subsequent fiscal year. Such reduction 

4 shall apply only with respect to the fiscal year involved 

5 and the Secretary shall not take into account such reduc6 tion in computing the applicable percentage increase under 

7 clause (i) for a subsequent fiscal year. 

8 ‘‘(II) The Secretary may, on a case-by-case basis, ex9 empt a subsection (d) hospital from the application of sub10 clause (I) with respect to a fiscal year if the Secretary 

11 determines, subject to annual renewal, that requiring such 

12 hospital to be a meaningful EHR user during such fiscal 

13 year would result in a significant hardship, such as in the 

14 case of a hospital in a rural area without sufficient Inter15 net access. In no case may a hospital be granted an ex16 emption under this subclause for more than 5 years. 

17 ‘‘(III) For fiscal year 2015 and each subsequent fis18 cal year, a State in which hospitals are paid for services 

19 under section 1814(b)(3) shall adjust the payments to 

20 each subsection (d) hospital in the State that is not a 

21 meaningful EHR user (as defined in subsection (n)(3)) 

22 in a manner that is designed to result in an aggregate 

23 reduction in payments to hospitals in the State that is 

24 equivalent to the aggregate reduction that would have oc25 curred if payments had been reduced to each subsection 


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1 (d) hospital in the State in a manner comparable to the 

2 reduction under the previous provisions of this clause. The 

3 State shall report to the Secretary the methodology it will 

4 use to make the payment adjustment under the previous 

5 sentence. 

6 ‘‘(IV) For purposes of this clause, the term ‘reporting 

7 period’ means, with respect to a fiscal year, any period 

8 (or periods), with respect to the fiscal year, as specified 

9 by the Secretary.’’. 

10 (2) CRITICAL ACCESS HOSPITALS.—Section 

11 1814(l) of the Social Security Act (42 U.S.C. 

12 1395f(l)) is amended— 

13 (A) in subparagraph (1), by striking 

14 ‘‘paragraph (2)’’ and inserting ‘‘paragraphs (2) 

15 and (3)’’; and 

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

17 paragraph: 

18 ‘‘(3)(A) Subject to subparagraph (B), for fiscal year 

19 2015 and each subsequent fiscal year, in the case of a 

20 critical access hospital that is not a meaningful EHR user 

21 (as defined in section 1886(n)(3)) for the reporting period 

22 for such fiscal year, paragraph (1) shall be applied by sub23 stituting the applicable percent under subparagraph (C) 

24 for the percent described in such paragraph (1). 


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1 ‘‘(B) The Secretary may, on a case-by-case basis, ex2 empt a critical access hospital from the application of sub3 paragraph (A) with respect to a fiscal year if the Secretary 

4 determines, subject to annual renewal, that requiring such 

5 hospital to be a meaningful EHR user during such fiscal 

6 year would result in a significant hardship, such as in the 

7 case of a hospital in a rural area without sufficient Inter8 net access. In no case may a hospital be granted an ex9 emption under this subparagraph for more than 5 years. 

10 ‘‘(C) The percent described in this subparagraph is— 

11 ‘‘(i) for fiscal year 2015, 100.66 percent; 

12 ‘‘(ii) for fiscal year 2016, 100.33 percent; and 

13 ‘‘(iii) for fiscal year 2017 and each subsequent 

14 fiscal year, 100 percent.’’. 

15 (c) APPLICATION TO CERTAIN MA-AFFILIATED ELI16 GIBLE HOSPITALS.—Section 1853 of the Social Security 

17 Act (42 U.S.C. 1395w–23), as amended by section 

18 4201(c), is further amended by adding at the end the fol19 lowing new subsection: 

20 ‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN21 TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION

22 AND MEANINGFUL USE OF CERTIFIED EHR TECH23 NOLOGY.— 

24 ‘‘(1) APPLICATION.—Subject to paragraphs (3) 

25 and (4), in the case of a qualifying MA organization, 


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1 the provisions of sections 1814(l)(3), 1886(n), and 

2 1886(b)(3)(B)(ix) shall apply with respect to eligible 

3 hospitals described in paragraph (2) of the organiza4 tion which the organization attests under subsection 

5 (l)(6) to be meaningful EHR users in a similar man6 ner as they apply to eligible hospitals under such 

7 sections. Incentive payments under paragraph (3) 

8 shall be made to and payment adjustments under 

9 paragraph (4) shall apply to such qualifying organi10 zations. 

11 ‘‘(2) ELIGIBLE HOSPITAL DESCRIBED.—With 

12 respect to a qualifying MA organization, an eligible 

13 hospital described in this paragraph is an eligible 

14 hospital (as defined in section 1886(n)(6)(A)) that is 

15 under common corporate governance with such orga16 nization and serves individuals enrolled under an 

17 MA plan offered by such organization. 

18 ‘‘(3) ELIGIBLE HOSPITAL INCENTIVE PAY19 MENTS.— 

20 ‘‘(A) IN GENERAL.—In applying section 

21 1886(n)(2) under paragraph (1), instead of the 

22 additional payment amount under section 

23 1886(n)(2), there shall be substituted an 

24 amount determined by the Secretary to be simi25 lar to the estimated amount in the aggregate 


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1 that would be payable if payment for services 

2 furnished by such hospitals was payable under 

3 part A instead of this part. In implementing the 

4 previous sentence, the Secretary— 

5 ‘‘(i) shall, insofar as data to deter6 mine the discharge related amount under 

7 section 1886(n)(2)(C) for an eligible hos8 pital are not available to the Secretary, use 

9 such alternative data and methodology to 

10 estimate such discharge related amount as 

11 the Secretary determines appropriate; and 

12 ‘‘(ii) shall, insofar as data to deter13 mine the medicare share described in sec14 tion 1886(n)(2)(D) for an eligible hospital 

15 are not available to the Secretary, use such 

16 alternative data and methodology to esti17 mate such share, which data and method18 ology may include use of the inpatient bed 

19 days (or discharges) with respect to an eli20 gible hospital during the appropriate pe21 riod which are attributable to both individ22 uals for whom payment may be made 

23 under part A or individuals enrolled in an 

24 MA plan under a Medicare Advantage or25 ganization under this part as a proportion 


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1 of the total number of patient-bed-days (or 

2 discharges) with respect to such hospital 

3 during such period. 

4 ‘‘(B) AVOIDING DUPLICATION OF PAY5 MENTS.— 

6 ‘‘(i) IN GENERAL.—In the case of a 

7 hospital that for a payment year is an eli8 gible hospital described in paragraph (2) 

9 and for which at least one-third of their 

10 discharges (or bed-days) of Medicare pa11 tients for the year are covered under part 

12 A, payment for the payment year shall be 

13 made only under section 1886(n) and not 

14 under this subsection. 

15 ‘‘(ii) METHODS.—In the case of a 

16 hospital that is an eligible hospital de17 scribed in paragraph (2) and also is eligi18 ble for an incentive payment under section 

19 1886(n) but is not described in clause (i) 

20 for the same payment period, the Secretary 

21 shall develop a process— 

22 ‘‘(I) to ensure that duplicate pay23 ments are not made with respect to 

24 an eligible hospital both under this 


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1 subsection and under section 1886(n); 

2 and 

3 ‘‘(II) to collect data from Medi4 care Advantage organizations to en5 sure against such duplicate payments. 

6 ‘‘(4) PAYMENT ADJUSTMENT.— 

7 ‘‘(A) Subject to paragraph (3), in the case 

8 of a qualifying MA organization (as defined in 

9 section 1853(l)(5)), if, according to the attesta10 tion of the organization submitted under sub11 section (l)(6) for an applicable period, one or 

12 more eligible hospitals (as defined in section 

13 1886(n)(6)(A)) that are under common cor14 porate governance with such organization and 

15 that serve individuals enrolled under a plan of16 fered by such organization are not meaningful 

17 EHR users (as defined in section 1886(n)(3)) 

18 with respect to a period, the payment amount 

19 payable under this section for such organization 

20 for such period shall be the percent specified in 

21 subparagraph (B) for such period of the pay22 ment amount otherwise provided under this sec23 tion for such period. 

24 ‘‘(B) SPECIFIED PERCENT.—The percent 

25 specified under this subparagraph for a year is 


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1 100 percent minus a number of percentage 

2 points equal to the product of— 

3 ‘‘(i) the number of the percentage 

4 point reduction effected under section 

5 1886(b)(3)(B)(ix)(I) for the period; and 

6 ‘‘(ii) the Medicare hospital expendi7 ture proportion specified in subparagraph 

8 (C) for the year. 

9 ‘‘(C) MEDICARE HOSPITAL EXPENDITURE

10 PROPORTION.—The Medicare hospital expendi11 ture proportion under this subparagraph for a 

12 year is the Secretary’s estimate of the propor13 tion, of the expenditures under parts A and B 

14 that are not attributable to this part, that are 

15 attributable to expenditures for inpatient hos16 pital services. 

17 ‘‘(D) APPLICATION OF PAYMENT ADJUST18 MENT.—In the case that a qualifying MA orga19 nization attests that not all eligible hospitals 

20 are meaningful EHR users with respect to an 

21 applicable period, the Secretary shall apply the 

22 payment adjustment under this paragraph 

23 based on a methodology specified by the Sec24 retary, taking into account the proportion of 

25 such eligible hospitals, or discharges from such 


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1 hospitals, that are not meaningful EHR users 

2 for such period. 

3 ‘‘(5) POSTING ON WEBSITE.—The Secretary 

4 shall post on the Internet website of the Centers for 

5 Medicare & Medicaid Services, in an easily under6 standable format, — 

7 ‘‘(A) a list of the names, business address8 es, and business phone numbers of each quali9 fying MA organization receiving an incentive 

10 payment under this subsection for eligible hos11 pitals described in paragraph (2); and 

12 ‘‘(B) a list of the names of the eligible hos13 pitals for which such incentive payment is 

14 based.’’. 

15 (d) CONFORMING AMENDMENTS.— 

16 (1) Section 1814(b) of the Social Security Act 

17 (42 U.S.C. 1395f(b)) is amended— 

18 (A) in paragraph (3), in the matter pre19 ceding subparagraph (A), by inserting ‘‘, sub20 ject to section 1886(d)(3)(B)(ix)(III),’’ after 

21 ‘‘then’’; and 

22 (B) by adding at the end the following: 

23 ‘‘For purposes of applying paragraph (3), there 

24 shall be taken into account incentive payments, 


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1 and payment adjustments under subsection 

2 (b)(3)(B)(ix) or (n) of section 1886.’’. 

3 (2) Section 1851(i)(1) of the Social Security 

4 Act (42 U.S.C. 1395w–21(i)(1)) is amended by 

5 striking ‘‘and 1886(h)(3)(D)’’ and inserting 

6 ‘‘1886(h)(3)(D), and 1853(m)’’. 

7 (3) Section 1853 of the Social Security Act (42 

8 U.S.C. 1395w–23), as amended by section 

9 4311(d)(1), is amended— 

10 (A) in subsection (c)— 

11 (i) in paragraph (1)(D)(i), by striking 

12 ‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 

13 1886(n)’’; and 

14 (ii) in paragraph (6)(A), by inserting 

15 ‘‘and subsections (b)(3)(B)(ix) and (n) of 

16 section 1886’’ after ‘‘section 1848’’; and 

17 (B) in subsection (f), by inserting ‘‘and 

18 subsection (m)’’ after ‘‘under subsection (l)’’. 

19 SEC. 4203. PREMIUM HOLD HARMLESS AND IMPLEMENTA20 TION FUNDING. 

21 (a) PREMIUM HOLD HARMLESS.— 

22 (1) IN GENERAL.—Section 1839(a)(1) of the 

23 Social Security Act (42 U.S.C. 1395r(a)(1)) is 

24 amended by adding at the end the following: ‘‘In ap25 plying this paragraph there shall not be taken into 


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1 account additional payments under section 1848(o) 

2 and section 1853(l)(3) and the Government con3 tribution under section 1844(a)(3).’’. 

4 (2) PAYMENT.—Section 1844(a) of such Act 

5 (42 U.S.C. 1395w(a)) is amended— 

6 (A) in paragraph (2), by striking the pe7 riod at the end and inserting ‘‘; plus’’; and 

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

9 paragraph: 

10 ‘‘(3) a Government contribution equal to the 

11 amount of payment incentives payable under sec12 tions 1848(o) and 1853(l)(3).’’. 

13 (b) IMPLEMENTATION FUNDING.—In addition to 

14 funds otherwise available, out of any funds in the Treas15 ury not otherwise appropriated, there are appropriated to 

16 the Secretary of Health and Human Services for the Cen17 ter for Medicare & Medicaid Services Program Manage18 ment Account, $100,000,000 for each of fiscal years 2009 

19 through 2015 and $45,000,000 for each succeeding fiscal 

20 year through fiscal year 2018, which shall be available for 

21 purposes of carrying out the provisions of (and amend22 ments made by) this part. Amounts appropriated under 

23 this subsection for a fiscal year shall be available until ex24 pended. 


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1 SEC. 4204. NON-APPLICATION OF PHASED-OUT INDIRECT 

2 MEDICAL EDUCATION (IME) ADJUSTMENT 

3 FACTOR FOR FISCAL YEAR 2009. 

4 (a) IN GENERAL.—Section 412.322 of title 42, Code 

5 of Federal Regulations, shall be applied without regard to 

6 paragraph (c) of such section, and the Secretary of Health 

7 and Human Services shall recompute payments for dis8 charges occurring on or after October 1, 2008, as if such 

9 paragraph had never been in effect. 

10 (b) NO EFFECT ON SUBSEQUENT YEARS.—Nothing 

11 in subsection (a) shall be construed as having any effect 

12 on the application of paragraph (d) of section 412.322 of 

13 title 42, Code of Federal Regulations. 

14 SEC. 4205. STUDY ON APPLICATION OF EHR PAYMENT IN15 CENTIVES FOR PROVIDERS NOT RECEIVING 

16 OTHER INCENTIVE PAYMENTS. 

17 (a) STUDY.— 

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

19 Human Services shall conduct a study to determine 

20 the extent to which and manner in which payment 

21 incentives (such as under title XVIII or XIX of the 

22 Social Security Act) and other funding for purposes 

23 of implementing and using certified EHR technology 

24 (as defined in section 1848(o)(4) of the Social Secu25 rity Act, as added by section 4311(a)) should be 

26 made available to health care providers who are reVerDate Nov 24 2008 21:32 Jan 30, 2009 Jkt 079200 PO 00000 Frm 00297 Fmt 6652 Sfmt 6201 E:\BILLS\S350.PCS S350

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1 ceiving minimal or no payment incentives or other 

2 funding under this Act, under title XVIII or XIX of 

3 such Act, or otherwise, for such purposes. 

4 (2) DETAILS OF STUDY.—Such study shall in5 clude an examination of— 

6 (A) the adoption rates of certified EHR 

7 technology (as so defined) by such health care 

8 providers; 

9 (B) the clinical utility of such technology 

10 by such health care providers; 

11 (C) whether the services furnished by such 

12 health care providers are appropriate for or 

13 would benefit from the use of such technology; 

14 (D) the extent to which such health care 

15 providers work in settings that might otherwise 

16 receive an incentive payment or other funding 

17 under this Act, title XVIII or XIX of the Social 

18 Security Act, or otherwise; 

19 (E) the potential costs and the potential 

20 benefits of making payment incentives and 

21 other funding available to such health care pro22 viders; and 

23 (F) any other issues the Secretary deems 

24 to be appropriate. 


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1 (b) REPORT.—Not later than June 30, 2010, the 

2 Secretary shall submit to Congress a report on the find3 ings and conclusions of the study conducted under sub4 section (a). 

5 SEC. 4206. STUDY ON AVAILABILITY OF OPEN SOURCE 

6 HEALTH INFORMATION TECHNOLOGY SYS7 TEMS. 

8 (a) IN GENERAL.— 

9 (1) STUDY.—The Secretary of Health and 

10 Human Services shall, in consultation with the 

11 Under Secretary for Health of the Veterans Health 

12 Administration, the Director of the Indian Health 

13 Service, the Secretary of Defense, the Director of 

14 the Agency for Healthcare Research and Quality, 

15 the Administrator of the Health Resources and Serv16 ices Administration, and the Chairman of the Fed17 eral Communications Commission, conduct a study 

18 on— 

19 (A) the current availability of open source 

20 health information technology systems to Fed21 eral safety net providers (including small, rural 

22 providers); 

23 (B) the total cost of ownership of such sys24 tems in comparison to the cost of proprietary 

25 commercial products available; 


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1 (C) the ability of such systems to respond 

2 to the needs of, and be applied to, various pop3 ulations (including children and disabled indi4 viduals); and 

5 (D) the capacity of such systems to facili6 tate interoperability. 

7 (2) CONSIDERATIONS.—In conducting the study 

8 under paragraph (1), the Secretary of Health and 

9 Human Services shall take into account the cir10 cumstances of smaller health care providers, health 

11 care providers located in rural or other medically un12 derserved areas, and safety net providers that deliver 

13 a significant level of health care to uninsured indi14 viduals, Medicaid beneficiaries, SCHIP beneficiaries, 

15 and other vulnerable individuals. 

16 (b) REPORT.—Not later than October 1, 2010, the 

17 Secretary of Health and Human Services shall submit to 

18 Congress a report on the findings and the conclusions of 

19 the study conducted under subsection (a), together with 

20 recommendations for such legislation and administrative 

21 action as the Secretary determines appropriate. 


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1 PART II—MEDICAID FUNDING 

2 SEC. 4211. MEDICAID PROVIDER EHR ADOPTION AND OPER3 ATION PAYMENTS; IMPLEMENTATION FUND4 ING. 

5 (a) IN GENERAL.—Section 1903 of the Social Secu6 rity Act (42 U.S.C. 1396b) is amended— 

7 (1) in subsection (a)(3)— 

8 (A) by striking ‘‘and’’ at the end of sub9 paragraph (D); 

10 (B) by striking ‘‘plus’’ at the end of sub11 paragraph (E) and inserting ‘‘and’’; and 

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

13 subparagraph: 

14 ‘‘(F)(i) 100 percent of so much of the 

15 sums expended during such quarter as are at16 tributable to payments for certified EHR tech17 nology (and support services including mainte18 nance and training that is for, or is necessary 

19 for the adoption and operation of, such tech20 nology) by Medicaid providers described in sub21 section (t)(1); and 

22 ‘‘(ii) 90 percent of so much of the sums ex23 pended during such quarter as are attributable 

24 to payments for reasonable administrative ex25 penses related to the administration of pay26 ments described in clause (i) if the State meets 


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1 the condition described in subsection (t)(9); 

2 plus’’; and 

3 (2) by inserting after subsection (s) the fol4 lowing new subsection: 

5 ‘‘(t)(1)(A) For purposes of subsection (a)(3)(F), the 

6 payments for certified EHR technology (and support serv7 ices including maintenance that is for, or is necessary for 

8 the operation of, such technology) by Medicaid providers 

9 described in this paragraph are payments made by the 

10 State in accordance with this subsection of the applicable 

11 percent of the net allowable costs of Medicaid providers 

12 (as defined in paragraph (2)) for such technology (and 

13 support services). 

14 ‘‘(B) For purposes of subparagraph (A), the term 

15 ‘applicable percent’ means— 

16 ‘‘(i) in the case of a Medicaid provider de17 scribed in paragraph (2)(A), 85 percent; 

18 ‘‘(ii) in the case of a Medicaid provider de19 scribed in clause (i) or (ii) of paragraph (2)(B), 100 

20 percent; and 

21 ‘‘(iii) in the case of a Medicaid provider de22 scribed in clause (iii) of paragraph (2)(B), a percent 

23 specified by the Secretary, but not less than 85 per24 cent. 


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1 ‘‘(2) In this subsection and subsection (a)(3)(F), the 

2 term ‘Medicaid provider’ means— 

3 ‘‘(A) an eligible professional (as defined in 

4 paragraph (3)(B)) who is not hospital-based and has 

5 at least 30 percent of the professional’s patient vol6 ume (as estimated in accordance with standards es7 tablished by the Secretary) attributable to individ8 uals who are receiving medical assistance under this 

9 title; and 

10 ‘‘(B)(i) a children’s hospital, 

11 ‘‘(ii) an acute-care hospital that is not described in 

12 clause (i) and that has at least 10 percent of the hospital’s 

13 patient volume (as estimated in accordance with standards 

14 established by the Secretary) attributable to individuals 

15 who are receiving medical assistance under this title, or 

16 ‘‘(iii) Federally-qualified health center or rural health 

17 clinic that has at least 30 percent of the center’s or clinic’s 

18 patient volume (as estimated in accordance with standards 

19 established by the Secretary) attributable to individuals 

20 who are receiving medical assistance under this title. 

21 An eligible professional shall not qualify as a Medicaid 

22 provider under this subsection unless the professional has 

23 waived, in a manner specified by the Secretary, any right 

24 to payment under section 1848(o) with respect to the 

25 adoption or support of certified EHR technology by the 


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1 eligible professional. In applying clauses (ii) and (iii) of 

2 subparagraph (B), the standards established by the Sec3 retary for patient volume shall include individuals enrolled 

4 in a Medicaid managed care plan (under section 1903(m) 

5 or section 1932). 

6 ‘‘(3) In this subsection and subsection (a)(3)(F): 

7 ‘‘(A) The term ‘certified EHR technology’ 

8 means a qualified electronic health record (as de9 fined in 3000(13) of the Public Health Service Act) 

10 that is certified pursuant to section 3001(c)(5) of 

11 such Act as meeting standards adopted under sec12 tion 3004 of such Act that are applicable to the type 

13 of record involved (as determined by the Secretary, 

14 such as an ambulatory electronic health record for 

15 office-based physicians or an inpatient hospital elec16 tronic health record for hospitals). 

17 ‘‘(B) The term ‘eligible professional’ means a 

18 physician as defined in paragraphs (1) and (2) of 

19 section 1861(r), and includes a nurse mid-wife and 

20 a nurse practitioner. 

21 ‘‘(C) The term ‘hospital-based’ means, with re22 spect to an eligible professional, a professional (such 

23 as a pathologist, anesthesiologist, or emergency phy24 sician) who furnishes substantially all of the individ25 ual’s professional services in a hospital setting 


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1 (whether inpatient or outpatient) and through the 

2 use of the facilities and equipment, including quali3 fied electronic health records, of the hospital. 

4 ‘‘(4)(A) The term ‘allowable costs’ means, with re5 spect to certified EHR technology of a Medicaid provider, 

6 costs of such technology (and support services including 

7 maintenance and training that is for, or is necessary for 

8 the adoption and operation of, such technology) as deter9 mined by the Secretary to be reasonable. 

10 ‘‘(B) The term ‘net allowable costs’ means allowable 

11 costs reduced by any payment that is made to the Med12 icaid provider involved from any other source that is di13 rectly attributable to payment for certified EHR tech14 nology or services described in subparagraph (A). 

15 ‘‘(C) In no case shall— 

16 ‘‘(i) the aggregate allowable costs under this 

17 subsection (covering one or more years) with respect 

18 to a Medicaid provider described in paragraph 

19 (2)(A) for purchase and initial implementation of 

20 certified EHR technology (and services described in 

21 subparagraph (A)) exceed $25,000 or include costs 

22 over a period of longer than 5 years; 

23 ‘‘(ii) for costs not described in clause (i) relat24 ing to the operation, maintenance, or use of certified 

25 EHR technology, the annual allowable costs under 


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1 this subsection with respect to such a Medicaid pro2 vider for costs not described in clause (i) for any 

3 year exceed $10,000; 

4 ‘‘(iii) payment described in paragraph (1) for 

5 costs described in clause (ii) be made with respect 

6 to such a Medicaid provider over a period of more 

7 than 5 years; 

8 ‘‘(iv) the aggregate allowable costs under this 

9 subsection with respect to such a Medicaid provider 

10 for all costs exceed $75,000; or 

11 ‘‘(v) the allowable costs, whether for purchase 

12 and initial implementation, maintenance, or other13 wise, for a Medicaid provider described in paragraph 

14 (2)(B)(iii) exceed such aggregate or annual limita15 tion as the Secretary shall establish, based on an 

16 amount determined by the Secretary as being ade17 quate to adopt and maintain certified EHR tech18 nology, consistent with paragraph (6). 

19 ‘‘(5) Payments described in paragraph (1) are not in 

20 accordance with this subsection unless the following re21 quirements are met: 

22 ‘‘(A) The State provides assurances satisfactory 

23 to the Secretary that amounts received under sub24 section (a)(3)(F) with respect to costs of a Medicaid 


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1 provider are paid directly to such provider without 

2 any deduction or rebate. 

3 ‘‘(B) Such Medicaid provider is responsible for 

4 payment of the costs described in such paragraph 

5 that are not provided under this title. 

6 ‘‘(C) With respect to payments to such Med7 icaid provider for costs other than costs related to 

8 the initial adoption of certified EHR technology, the 

9 Medicaid provider demonstrates meaningful use of 

10 certified EHR technology through a means that is 

11 approved by the State and acceptable to the Sec12 retary, and that may be based upon the methodolo13 gies applied under section 1848(o) or 1886(n). In 

14 establishing such means, which may include the re15 porting of clinical quality measures to the State, the 

16 State shall ensure that populations with unique 

17 needs, such as children, are appropriately addressed. 

18 ‘‘(D) To the extent specified by the Secretary, 

19 the certified EHR technology is compatible with 

20 State or Federal administrative management sys21 tems. 

22 ‘‘(6)(A) In no case shall the payments described in 

23 paragraph (1), with respect to a hospital, exceed in the 

24 aggregate the product of— 


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1 ‘‘(i) the overall hospital EHR amount for the 

2 hospital computed under subparagraph (B); and 

3 ‘‘(ii) the Medicaid share for such hospital com4 puted under subparagraph (C). 

5 ‘‘(B) For purposes of this paragraph, the overall hos6 pital EHR amount, with respect to a hospital, is the sum 

7 of the applicable amounts specified in section 

8 1886(n)(2)(A) for such hospital for the first 4 payment 

9 years (as estimated by the Secretary) determined as if the 

10 Medicare share specified in clause (ii) of such section were 

11 1. The Secretary shall publish in the Federal Register the 

12 overall hospital EHR amount for each hospital eligible for 

13 payments under this subsection. In computing amounts 

14 under clause (ii) for payment years after the first payment 

15 year, the Secretary shall assume that in subsequent pay16 ment years discharges increase at the average annual rate 

17 of growth of the most recent three years for which dis18 charge data are available. 

19 ‘‘(C) The Medicaid share computed under this sub20 paragraph, for a hospital for a period specified by the Sec21 retary, shall be calculated in the same manner as the 

22 Medicare share under section 1886(n)(2)(D) for such a 

23 hospital and period, except that there shall be substituted 

24 for the numerator under clause (i) of such section the 

25 amount that is equal to the number of inpatient-bed-days 


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1 (as established by the Secretary) which are attributable 

2 to individuals who are receiving medical assistance under 

3 this title and who are not described in section 

4 1886(n)(2)(D)(i). In computing inpatient-bed-days under 

5 the previous sentence, the Secretary shall take into ac6 count inpatient-bed-days attributable to inpatient-bed7 days that are paid for individuals enrolled in a Medicaid 

8 managed care plan (under section 1903(m) or section 

9 1932). 

10 ‘‘(7) With respect to health care providers other than 

11 hospitals, the Secretary shall establish and implement a 

12 detailed process to ensure coordination of the different 

13 programs for payment of such health care providers for 

14 adoption or use of health information technology (includ15 ing certified EHR technology), as well as payments for 

16 such health care providers provided under this title or title 

17 XVIII, to assure no duplication of funding. The Secretary 

18 shall promulgate regulations to carry out the preceding 

19 sentence. 

20 ‘‘(8) In carrying out paragraph (5)(C), the State and 

21 Secretary shall seek, to the maximum extent practicable, 

22 to avoid duplicative requirements from Federal and State 

23 Governments to demonstrate meaningful use of certified 

24 EHR technology under this title and title XVIII. In doing 

25 so, the Secretary may deem satisfaction of requirements 


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1 for such meaningful use for a payment year under title 

2 XVIII to be sufficient to qualify as meaningful use under 

3 this subsection. The Secretary may also specify the report4 ing periods under this subsection in order to carry out this 

5 paragraph. 

6 ‘‘(9) In order to be provided Federal financial partici7 pation under subsection (a)(3)(F)(ii), a State must dem8 onstrate to the satisfaction of the Secretary, that the 

9 State— 

10 ‘‘(A) is using the funds provided for the pur11 poses of administering payments under this sub12 section, including tracking of meaningful use by 

13 Medicaid providers; 

14 ‘‘(B) is conducting adequate oversight of the 

15 program under this subsection, including routine 

16 tracking of meaningful use attestations and report17 ing mechanisms; and 

18 ‘‘(C) is pursuing initiatives to encourage the 

19 adoption of certified EHR technology to promote 

20 health care quality and the exchange of health care 

21 information under this title, subject to applicable 

22 laws and regulations governing such exchange. 

23 ‘‘(10) The Secretary shall periodically submit reports 

24 to the Committee on Energy and Commerce of the House 

25 of Representatives and the Committee on Finance of the 


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1 Senate on status, progress, and oversight of payments 

2 under paragraph (1).’’. 

3 (b) IMPLEMENTATION FUNDING.—In addition to 

4 funds otherwise available, out of any funds in the Treas5 ury not otherwise appropriated, there are appropriated to 

6 the Secretary of Health and Human Services for the Cen7 ter for Medicare & Medicaid Services Program Manage8 ment Account, $40,000,000 for each of fiscal years 2009 

9 through 2015 and $20,000,000 for each succeeding fiscal 

10 year through fiscal year 2018, which shall be available for 

11 purposes of carrying out the provisions of (and the amend12 ments made by) this part. Amounts appropriated under 

13 this subsection for a fiscal year shall be available until ex14 pended. 

15 (c) HHS REPORT ON IMPLEMENTATION OF DE16 TAILED PROCESS TO ASSURE NO DUPLICATION OF

17 FUNDING.—Not later than July 1, 2012, the Secretary 

18 of Health and Human Services shall submit to Congress 

19 a report on the establishment and implementation of the 

20 detailed process under section 1903(t)(7) of the Social Se21 curity Act, as added by subsection (a), together with rec22 ommendations for such legislation and administrative ac23 tion as the Secretary determines appropriate. 


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1 TITLE V—STATE FISCAL RELIEF 

2 SEC. 5000. PURPOSES; TABLE OF CONTENTS. 

3 (a) PURPOSES.—The purposes of this title are as fol4 lows: 

5 (1) To provide fiscal relief to States in a period 

6 of economic downturn. 

7 (2) To protect and maintain State Medicaid 

8 programs during a period of economic downturn, in9 cluding by helping to avert cuts to provider payment 

10 rates and benefits or services, and to prevent con11 strictions of income eligibility requirements for such 

12 programs, but not to promote increases in such re13 quirements. 

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

15 this title is as follows: 

TITLE V—STATE FISCAL RELIEF 

Sec. 5000. Purposes; table of contents. 

Sec. 5001. Temporary increase of Medicaid FMAP. 

Sec. 5002. Extension and update of special rule for increase of Medicaid DSH 

allotments for low DSH States. 

Sec. 5003. Payment of Medicare liability to States as a result of the Special 

Disability Workload Project. 

Sec. 5004. Funding for the Department of Health and Human Services Office 

of the Inspector General. 

Sec. 5005. GAO study and report regarding State needs during periods of national economic downturn. 

16 SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP. 

17 (a) PERMITTING MAINTENANCE OF FMAP.—Subject 

18 to subsections (e), (f), and (g), if the FMAP determined 

19 without regard to this section for a State for— 


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1 (1) fiscal year 2009 is less than the FMAP as 

2 so determined for fiscal year 2008, the FMAP for 

3 the State for fiscal year 2008 shall be substituted 

4 for the State’s FMAP for fiscal year 2009, before 

5 the application of this section; 

6 (2) fiscal year 2010 is less than the FMAP as 

7 so determined for fiscal year 2008 or fiscal year 

8 2009 (after the application of paragraph (1)), the 

9 greater of such FMAP for the State for fiscal year 

10 2008 or fiscal year 2009 shall be substituted for the 

11 State’s FMAP for fiscal year 2010, before the appli12 cation of this section; and 

13 (3) fiscal year 2011 is less than the FMAP as 

14 so determined for fiscal year 2008, fiscal year 2009 

15 (after the application of paragraph (1)), or fiscal 

16 year 2010 (after the application of paragraph (2)), 

17 the greatest of such FMAP for the State for fiscal 

18 year 2008, fiscal year 2009, or fiscal year 2010 shall 

19 be substituted for the State’s FMAP for fiscal year 

20 2011, before the application of this section, but only 

21 for the first calendar quarter in fiscal year 2011. 

22 (b) GENERAL 7.6 PERCENTAGE POINT INCREASE.— 

23 Subject to subsections (e), (f), and (g), for each State for 

24 calendar quarters during the recession adjustment period 

25 (as defined in subsection (h)(2)), the FMAP (after the apVerDate Nov 24 2008 21:32 Jan 30, 2009 Jkt 079200 PO 00000 Frm 00313 Fmt 6652 Sfmt 6201 E:\BILLS\S350.PCS S350

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1 plication of subsection (a)) shall be increased (without re2 gard to any limitation otherwise specified in section 

3 1905(b) of the Social Security Act) by 7.6 percentage 

4 points. 

5 (c) ADDITIONAL RELIEF BASED ON INCREASE IN

6 UNEMPLOYMENT.— 

7 (1) IN GENERAL.—Subject to subsections (e), 

8 (f), and (g), if a State is a qualifying State under 

9 paragraph (2) for a calendar quarter occurring dur10 ing the recession adjustment period, the FMAP for 

11 the State shall be further increased by the number 

12 of percentage points equal to the product of the 

13 State percentage applicable for the State under sec14 tion 1905(b) of the Social Security Act (42 U.S.C. 

15 1396d(b)) after the application of subsections (a) 

16 and (b) and the applicable percent determined in 

17 paragraph (3) for the calendar quarter (or, if great18 er, for a previous such calendar quarter, subject to 

19 paragraph (4)) . 

20 (2) QUALIFYING CRITERIA.— 

21 (A) IN GENERAL.—For purposes of para22 graph (1), a State qualifies for additional relief 

23 under this subsection for a calendar quarter oc24 curring during the recession adjustment period 

25 if the State is 1 of the 50 States or the District 


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1 of Columbia and the State satisfies any of the 

2 following criteria for the quarter: 

3 (i) An increase of at least 1.5 percent4 age points, but less than 2.5 percentage 

5 points, in the average monthly unemploy6 ment rate, seasonally adjusted, for the 

7 State or District, as determined by com8 paring months in the most recent previous 

9 3-consecutive-month period for which data 

10 are available for the State or District to 

11 the lowest average monthly unemployment 

12 rate, seasonally adjusted, for the State or 

13 District for any 3-consecutive-month pe14 riod preceding that period and beginning 

15 on or after January 1, 2006 (based on the 

16 most recently available monthly publica17 tions of the Bureau of Labor Statistics of 

18 the Department of Labor). 

19 (ii) An increase of at least 2.5 per20 centage points, but less than 3.5 percent21 age points, in the average monthly unem22 ployment rate, seasonally adjusted, for the 

23 State or District (as so determined). 

24 (iii) An increase of at least 3.5 per25 centage points for the State or District, in 


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1 the average monthly unemployment rate, 

2 seasonally adjusted, for the State or Dis3 trict (as so determined). 

4 (B) MAINTENANCE OF STATUS.—If a 

5 State qualifies for additional relief under this 

6 subsection for a calendar quarter, it shall be 

7 deemed to have qualified for such relief for each 

8 subsequent calendar quarter ending before July 

9 1, 2010. 

10 (3) APPLICABLE PERCENT.—For purposes of 

11 paragraph (1), the applicable percent is— 

12 (A) 2.5 percent, if the State satisfies the 

13 criteria described in paragraph (2)(A)(i) for the 

14 calendar quarter; 

15 (B) 4.5 percent if the State satisfies the 

16 criteria described in paragraph (2)(A)(ii) for 

17 the calendar quarter; and 

18 (C) 6.5 percent if the State satisfies the 

19 criteria described in paragraph (2)(A)(iii) for 

20 the calendar quarter. 

21 (4) MAINTENANCE OF HIGHER PERCENTAGE

22 REDUCTION FOR PERIOD AFTER LOWER PERCENT23 AGE DEDUCTION WOULD OTHERWISE TAKE EF24 FECT.— 


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1 (A) HOLD HARMLESS PERIOD.—If the per2 centage reduction applied to a State under 

3 paragraph (3) for any calendar quarter in the 

4 recession adjustment period beginning on or 

5 after January 1, 2009, and ending before July 

6 1, 2010, (determined without regard to this 

7 paragraph) is less than the percentage reduc8 tion applied for the preceding quarter (as so de9 termined), the higher percentage reduction shall 

10 continue in effect for each subsequent calendar 

11 quarter ending before July 1, 2010. 

12 (B) NOTICE OF DECREASE IN PERCENT13 AGE REDUCTION.—The Secretary shall notify a 

14 State at least 3 months prior to applying any 

15 lower percentage reduction to the State under 

16 paragraph (3). 

17 (d) INCREASE IN CAP ON MEDICAID PAYMENTS TO

18 TERRITORIES.—Subject to subsections (f) and (g), with 

19 respect to entire fiscal years occurring during the reces20 sion adjustment period and with respect to fiscal years 

21 only a portion of which occurs during such period (and 

22 in proportion to the portion of the fiscal year that occurs 

23 during such period), the amounts otherwise determined for 

24 Puerto Rico, the Virgin Islands, Guam, the Northern Mar25 iana Islands, and American Samoa under subsections (f) 


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1 and (g) of section 1108 of the Social Security Act (42 

2 6 U.S.C. 1308) shall each be increased by 15.2 percent. 

3 (e) SCOPE OF APPLICATION.—The increases in the 

4 FMAP for a State under this section shall apply for pur5 poses of title XIX of the Social Security Act and shall 

6 not apply with respect to— 

7 (1) disproportionate share hospital payments 

8 described in section 1923 of such Act (42 U.S.C. 

9 1396r–4); 

10 (2) payments under title IV of such Act (42 

11 U.S.C. 601 et seq.) (except that the increases under 

12 subsections (a) and (b) shall apply to payments 

13 under part E of title IV of such Act (42 U.S.C. 670 

14 et seq.)); 

15 (3) payments under title XXI of such Act (42 

16 U.S.C. 1397aa et seq.); 

17 (4) any payments under title XIX of such Act 

18 that are based on the enhanced FMAP described in 

19 section 2105(b) of such Act (42 U.S.C. 1397ee(b)); 

20 or 

21 (5) any payments under title XIX of such Act 

22 that are attributable to expenditures for medical as23 sistance provided to individuals made eligible under 

24 a State plan under title XIX of the Social Security 

25 Act (including under any waiver under such title or 


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1 under section 1115 of such Act (42 U.S.C. 1315)) 

2 because of income standards (expressed as a per3 centage of the poverty line) for eligibility for medical 

4 assistance that are higher than the income stand5 ards (as so expressed) for such eligibility as in effect 

6 on July 1, 2008. 

7 (f) STATE INELIGIBILITY.— 

8 (1) MAINTENANCE OF ELIGIBILITY REQUIRE9 MENTS.— 

10 (A) IN GENERAL.—Subject to subpara11 graphs (B) and (C), a State is not eligible for 

12 an increase in its FMAP under subsection (a), 

13 (b), or (c), or an increase in a cap amount 

14 under subsection (d), if eligibility standards, 

15 methodologies, or procedures under its State 

16 plan under title XIX of the Social Security Act 

17 (including any waiver under such title or under 

18 section 1115 of such Act (42 U.S.C. 1315)) are 

19 more restrictive than the eligibility standards, 

20 methodologies, or procedures, respectively, 

21 under such plan (or waiver) as in effect on July 

22 1, 2008. 

23 (B) STATE REINSTATEMENT OF ELIGI24 BILITY PERMITTED.—Subject to subparagraph 

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1 ards, methodologies, or procedures under its 

2 State plan under title XIX of the Social Secu3 rity Act (including any waiver under such title 

4 or under section 1115 of such Act (42 U.S.C. 

5 1315)) after July 1, 2008, is no longer ineli6 gible under subparagraph (A) beginning with 

7 the first calendar quarter in which the State 

8 has reinstated eligibility standards, methodolo9 gies, or procedures that are no more restrictive 

10 than the eligibility standards, methodologies, or 

11 procedures, respectively, under such plan (or 

12 waiver) as in effect on July 1, 2008. 

13 (C) SPECIAL RULES.—A State shall not be 

14 ineligible under subparagraph (A)— 

15 (i) for the calendar quarters before 

16 July 1, 2009, on the basis of a restriction 

17 that was applied after July 1, 2008, and 

18 before the date of the enactment of this 

19 Act, if the State prior to July 1, 2009, has 

20 reinstated eligibility standards, methodolo21 gies, or procedures that are no more re22 strictive than the eligibility standards, 

23 methodologies, or procedures, respectively, 

24 under such plan (or waiver) as in effect on 

25 July 1, 2008; or 


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1 (ii) on the basis of a restriction that 

2 was directed to be made under State law 

3 as of July 1, 2008, and would have been 

4 in effect as of such date, but for a delay 

5 in the request for, and approval of, a waiv6 er under section 1115 of such Act with re7 spect to such restriction. 

8 (2) COMPLIANCE WITH PROMPT PAY REQUIRE9 MENTS.—No State shall be eligible for an increased 

10 FMAP rate as provided under this section for any 

11 claim submitted by a provider subject to the terms 

12 of section 1902(a)(37)(A) of the Social Security Act 

13 (42 U.S.C. 1396a(a)(37)(A)) during any period in 

14 which that State has failed to pay claims in accord15 ance with section 1902(a)(37)(A) of such Act. Each 

16 State shall report to the Secretary, no later than 30 

17 days following the 1st day of the month, its compli18 ance with the requirements of section 

19 1902(a)(37)(A) of the Social Security Act as they 

20 pertain to claims made for covered services during 

21 the preceding month. 

22 (3) NO WAIVER AUTHORITY.—The Secretary 

23 may not waive the application of this subsection or 

24 subsection (g) under section 1115 of the Social Se25 curity Act or otherwise. 


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1 (g) REQUIREMENTS.— 

2 (1) IN GENERAL.—A State may not deposit or 

3 credit the additional Federal funds paid to the State 

4 as a result of this section to any reserve or rainy day 

5 fund maintained by the State. 

6 (2) STATE REPORTS.—Each State that is paid 

7 additional Federal funds as a result of this section 

8 shall, not later than September 30, 2011, submit a 

9 report to the Secretary, in such form and such man10 ner as the Secretary shall determine, regarding how 

11 the additional Federal funds were expended. 

12 (3) ADDITIONAL REQUIREMENT FOR CERTAIN

13 STATES.—In the case of a State that requires polit14 ical subdivisions within the State to contribute to15 ward the non-Federal share of expenditures under 

16 the State Medicaid plan required under section 

17 1902(a)(2) of the Social Security Act (42 U.S.C. 

18 1396a(a)(2)), the State is not eligible for an in19 crease in its FMAP under subsection (b) or (c), or 

20 an increase in a cap amount under subsection (d), 

21 if it requires that such political subdivisions pay for 

22 quarters during the recession adjustment period a 

23 greater percentage of the non-Federal share of such 

24 expenditures, or a greater percentage of the non25 Federal share of payments under section 1923, than 


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1 the respective percentage that would have been re2 quired by the State under such plan on September 

3 30, 2008, prior to application of this section. 

4 (h) DEFINITIONS.—In this section, except as other5 wise provided: 

6 (1) FMAP.—The term ‘‘FMAP’’ means the 

7 Federal medical assistance percentage, as defined in 

8 section 1905(b) of the Social Security Act (42 

9 U.S.C. 1396d(b)), as determined without regard to 

10 this section except as otherwise specified. 

11 (2) POVERTY LINE.—The term ‘‘poverty line’’ 

12 has the meaning given such term in section 673(2) 

13 of the Community Services Block Grant Act (42 

14 U.S.C. 9902(2)), including any revision required by 

15 such section. 

16 (3) RECESSION ADJUSTMENT PERIOD.—The 

17 term ‘‘recession adjustment period’’ means the pe18 riod beginning on October 1, 2008, and ending on 

19 December 31, 2010. 

20 (4) SECRETARY.—The term ‘‘Secretary’’ means 

21 the Secretary of Health and Human Services. 

22 (5) STATE.—The term ‘‘State’’ has the mean23 ing given such term for purposes of title XIX of the 

24 Social Security Act (42 U.S.C. 1396 et seq.). 


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1 (i) SUNSET.—This section shall not apply to items 

2 and services furnished after the end of the recession ad3 justment period. 

4 SEC. 5002. EXTENSION AND UPDATE OF SPECIAL RULE FOR 

5 INCREASE OF MEDICAID DSH ALLOTMENTS 

6 FOR LOW DSH STATES. 

7 Section 1923(f)(5) of the Social Security Act (42 

8 U.S.C. 1396r–4(f)(5)) is amended— 

9 (1) in subparagraph (B)— 

10 (A) in the subparagraph heading, by strik11 ing ‘‘YEAR 2004 AND SUBSEQUENT FISCAL

12 YEARS’’ and inserting ‘‘YEARS 2004 THROUGH

13 2008’’; 

14 (B) in clause (i), by inserting ‘‘and’’ after 

15 the semicolon; 

16 (C) in clause (ii), by striking ‘‘; and’’ and 

17 inserting a period; and 

18 (D) by striking clause (iii); and 

19 (2) by adding at the end the following subpara20 graph: 

21 ‘‘(C) FOR FISCAL YEAR 2009 AND SUBSE22 QUENT FISCAL YEARS.—In the case of a State 

23 in which the total expenditures under the State 

24 plan (including Federal and State shares) for 

25 disproportionate share hospital adjustments 


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1 under this section for fiscal year 2006, as re2 ported to the Administrator of the Centers for 

3 Medicare & Medicaid Services as of August 31, 

4 2009, is greater than 0 but less than 3 percent 

5 of the State’s total amount of expenditures 

6 under the State plan for medical assistance 

7 during the fiscal year, the DSH allotment for 

8 the State with respect to— 

9 ‘‘(i) fiscal year 2009, shall be the 

10 DSH allotment for the State for fiscal year 

11 2008 increased by 16 percent; 

12 ‘‘(ii) fiscal year 2010, shall be the 

13 DSH allotment for the State for fiscal year 

14 2009 increased by 16 percent; 

15 ‘‘(iii) fiscal year 2011 for the period 

ending on December 31, 2010, shall be 1 16 ⁄4

17 of the DSH allotment for the State for fis18 cal year 2010 increased by 16 percent; 

19 ‘‘(iv) fiscal year 2011 for the period 

20 beginning on January 1, 2011, and ending 

on September 30, 2011, shall be 3 21 ⁄4 of the 

22 DSH allotment that would have been de23 termined under this subsection for the 

24 State for fiscal year 2010 if this subpara25 graph had not been enacted; 


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1 ‘‘(v) fiscal year 2012, shall be the 

2 DSH allotment that would have been de3 termined under this subsection for the 

4 State for fiscal year 2010 if this subpara5 graph had not been enacted; and 

6 ‘‘(vi) fiscal year 2013 and any subse7 quent fiscal year, shall be the DSH allot8 ment for the State for the previous fiscal 

9 year subject to an increase for inflation as 

10 provided in paragraph (3)(A).’’. 

11 SEC. 5003. PAYMENT OF MEDICARE LIABILITY TO STATES 

12 AS A RESULT OF THE SPECIAL DISABILITY 

13 WORKLOAD PROJECT. 

14 (a) IN GENERAL.—The Secretary, in consultation 

15 with the Commissioner, shall work with each State to 

16 reach an agreement, not later than 3 months after the 

17 date of enactment of this Act, on the amount of a payment 

18 for the State related to the Medicare program liability as 

19 a result of the Special Disability Workload project, subject 

20 to the requirements of subsection (c). 

21 (b) PAYMENTS.— 

22 (1) DEADLINE FOR MAKING PAYMENTS.—Not 

23 later than 30 days after reaching an agreement with 

24 a State under subsection (a), the Secretary shall pay 


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1 the State, from the amounts appropriated under 

2 paragraph (2), the payment agreed to for the State. 

3 (2) APPROPRIATION.—Out of any money in the 

4 Treasury not otherwise appropriated, there is appro5 priated $3,000,000,000 for fiscal year 2009 for 

6 making payments to States under paragraph (1). 

7 (3) LIMITATIONS.—In no case may— 

8 (A) the aggregate amount of payments 

9 made by the Secretary to States under para10 graph (1) exceed $3,000,000,000; or 

11 (B) any payments be provided by the Sec12 retary under this section after the first day of 

13 the first month that begins 4 months after the 

14 date of enactment of this Act. 

15 (c) REQUIREMENTS.—The requirements of this sub16 section are the following: 

17 (1) FEDERAL DATA USED TO DETERMINE

18 AMOUNT OF PAYMENTS.—The amount of the pay19 ment under subsection (a) for each State is deter20 mined on the basis of the most recent Federal data 

21 available, including the use of proxies and reasonable 

22 estimates as necessary, for determining expeditiously 

23 the amount of the payment that shall be made to 

24 each State that enters into an agreement under this 


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1 section. The payment methodology shall consider the 

2 following factors: 

3 (A) The number of SDW cases found to 

4 have been eligible for benefits under the Medi5 care program and the month of the initial 

6 Medicare program eligibility for such cases. 

7 (B) The applicable non-Federal share of 

8 expenditures made by a State under the Med9 icaid program during the time period for SDW 

10 cases. 

11 (C) Such other factors as the Secretary 

12 and the Commissioner, in consultation with the 

13 States, determine appropriate. 

14 (2) CONDITIONS FOR PAYMENTS.—A State 

15 shall not receive a payment under this section unless 

16 the State— 

17 (A) waives the right to file a civil action 

18 (or to be a party to any action) in any Federal 

19 or State court in which the relief sought in20 cludes a payment from the United States to the 

21 State related to the Medicare liability under 

22 title XVIII of the Social Security Act (42 

23 U.S.C. 1395 et seq.) as a result of the Special 

24 Disability Workload project; and 


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1 (B) releases the United States from any 

2 further claims for reimbursement of State ex3 penditures as a result of the Special Disability 

4 Workload project. 

5 (3) NO INDIVIDUAL STATE CLAIMS DATA RE6 QUIRED.—No State shall be required to submit indi7 vidual claims evidencing payment under the Med8 icaid program as a condition for receiving a payment 

9 under this section. 

10 (4) INELIGIBLE STATES.—No State that is a 

11 party to a civil action in any Federal or State court 

12 in which the relief sought includes a payment from 

13 the United States to the State related to the Medi14 care liability under title XVIII of the Social Security 

15 Act (42 U.S.C. 1395 et seq.) as a result of the Spe16 cial Disability Workload project shall be eligible to 

17 receive a payment under this section while such an 

18 action is pending or if such an action is resolved in 

19 favor of the State. 

20 (d) DEFINITIONS.—In this section: 

21 (1) COMMISSIONER.—The term ‘‘Commis22 sioner’’ means the Commissioner of Social Security. 

23 (2) MEDICAID PROGRAM.—The term ‘‘Medicaid 

24 program’’ means the program of medical assistance 

25 established under title XIX of the Social Security 


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1 Act (42 U.S.C. 1396a et seq.) and includes medical 

2 assistance provided under any waiver of that pro3 gram approved under section 1115 or 1915 of such 

4 Act (42 U.S.C. 1315, 1396n) or otherwise. 

5 (3) MEDICARE PROGRAM.—The term ‘‘Medicare 

6 program’’ means the program established under title 

7 XVIII of the Social Security Act (42 U.S.C. 1395 et 

8 seq.). 

9 (4) SECRETARY.—The term ‘‘Secretary’’ means 

10 the Secretary of Health and Human Services. 

11 (5) SDW CASE.—The term ‘‘SDW case’’ means 

12 a case in the Special Disability Workload project in13 volving an individual determined by the Commis14 sioner to have been eligible for benefits under title 

15 II of the Social Security Act (42 U.S.C. 401 et seq.) 

16 for a period during which such benefits were not 

17 provided to the individual and who was, during all 

18 or part of such period, enrolled in a State Medicaid 

19 program. 

20 (6) SPECIAL DISABILITY WORKLOAD

21 PROJECT.—The term ‘‘Special Disability Workload 

22 project’’ means the project described in the 2008 

23 Annual Report of the Board of Trustees of the Fed24 eral Old-Age and Survivors Insurance and Federal 


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1 Disability Insurance Trust Funds, H.R. Doc. No. 

2 110–104, 110th Cong. (2008). 

3 (7) STATE.—The term ‘‘State’’ means each of 

4 the 50 States and the District of Columbia. 

5 SEC. 5004. FUNDING FOR THE DEPARTMENT OF HEALTH 

6 AND HUMAN SERVICES OFFICE OF THE IN7 SPECTOR GENERAL. 

8 For purposes of ensuring the proper expenditure of 

9 Federal funds under title XIX of the Social Security Act 

10 (42 U.S.C. 1396 et seq.), there is appropriated to the Of11 fice of the Inspector General of the Department of Health 

12 and Human Services, out of any money in the Treasury 

13 not otherwise appropriated and without further appropria14 tion, $31,250,000 for the recession adjustment period (as 

15 defined in section 5001(h)(3)). Amounts appropriated 

16 under this section shall remain available for expenditure 

17 until expended and shall be in addition to any other 

18 amounts appropriated or made available to such Office for 

19 such purposes. 

20 SEC. 5005. GAO STUDY AND REPORT REGARDING STATE 

21 NEEDS DURING PERIODS OF NATIONAL ECO22 NOMIC DOWNTURN. 

23 (a) IN GENERAL.—The Comptroller General of the 

24 United States shall study the period of national economic 

25 downturn in effect on the date of enactment of this Act, 


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1 as well as previous periods of national economic downturn 

2 since 1974, for the purpose of developing recommenda3 tions for addressing the needs of States during such peri4 ods. As part of such analysis, the Comptroller General 

5 shall study the past and projected effects of temporary in6 creases in the Federal medical assistance percentage 

7 under the Medicaid program with respect to such periods. 

8 (b) REPORT.—Not later than April 1, 2011, the 

9 Comptroller General of the United States shall submit a 

10 report to the appropriate committees of Congress on the 

11 results of the study conducted under paragraph (1). Such 

12 report shall include the following: 

13 (1) Such recommendations as the Comptroller 

14 General determines appropriate for modifying the 

15 national economic downturn assistance formula for 

16 temporary adjustment of the Federal medical assist17 ance percentage under Medicaid (also referred to as 

18 a ‘‘countercyclical FMAP’’) described in GAO report 

19 number GAO–07–97 to improve the effectiveness of 

20 the application of such percentage in addressing the 

21 needs of States during periods of national economic 

22 downturn, including recommendations for— 

23 (A) improvements to the factors that would 

24 begin and end the application of such percent25 age; 


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1 (B) how the determination of the amount 

2 of such percentage could be adjusted to address 

3 State and regional economic variations during 

4 such periods; and 

5 (C) how the determination of the amount 

6 of such percentage could be adjusted to be more 

7 responsive to actual Medicaid costs incurred by 

8 States during such periods. 

9 (2) An analysis of the impact on States during 

10 such periods of— 

11 (A) declines in private health benefits cov12 erage; 

13 (B) declines in State revenues; and 

14 (C) caseload maintenance and growth 

15 under Medicaid, the State Children’s Health In16 surance Program, or any other publicly funded 

17 programs to provide health benefits coverage 

18 for State residents. 

19 (3) Identification of, and recommendations for 

20 addressing, the effects on States of any other spe21 cific economic indicators that the Comptroller Gen22 eral determines appropriate. 


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Calendar No. 20 

111TH CONGRESS 

1ST SESSION S. 350 

A BILL 

To provide for a portion of the economic recovery 

ment, and health. package relating to revenue measures, unemployJANUARY 29, 2009 

Read twice and placed on the calendar 


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