I

103D CONGRESS

1ST SESSION H. R. 1965

To amend the Internal Revenue Code of 1986 to allow individuals a deduction

from gross income for contributions to health services savings account;

to amend the Social Security Act to provide for universal coverage

of basic health needs for all Americans; to expand Medicare to include

preventive and long-term care services; and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 4, 1993

Mr. REGULA introduced the following bill; which was referred jointly to the

Committees on Ways and Means, Energy and Commerce, and Education

and Labor

A BILL

To amend the Internal Revenue Code of 1986 to allow individuals a deduction from gross income for contributions

to health services savings account; to amend the Social

Security Act to provide for universal coverage of basic

health needs for all Americans; to expand Medicare to

include preventive and long-term care services; and for

other purposes.

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

3 SECTION. 1. SHORT TITLE; REFERENCES

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

5 ‘‘Universal Coordinated Care Act of 1992.’’
2

HR 1965 IH

1 (b) REFERENCES.—Except as otherwise provided,

2 any reference to Secretary within this Act shall refer to

3 the Secretary of Health and Human Services.

4 (c) TABLE OF CONTENTS.—the table of contents of

5 this Act is as follows:

Sec. 1. Short title; references.

Sec. 2. Deductions for contributions to health services account.

(a) In general.

‘‘Sec. 223. Health service account contributions.

‘‘(a) Allowance of tax credit.

‘‘(b) Limitations.

‘‘(c) Health services account defined.

‘‘(d) Qualified health expenses defined.

‘‘(e) Establishment of health services supplemental policies.

‘‘(f) Tax treatment on distribution.

‘‘(g) Tax treatment of accounts.

‘‘(h) Additional definitions and special rules.

(b) Tax on excess contributions.

(c) Tax on prohibited transactions.

(d) Failure to provide reports.

(e) Clerical amendments.

Sec. 3. Coverage of home care benefits.

(a) In general.

(b) Definition of benefits.

(c) Conditions on payments for services.

(d) Limitations upon payment.

(e) Assurances of minimum standards in home care services.

‘‘TITLE XXI—HOME CARE SERVICES.

‘‘Sec. 2101. Funding home care services.

‘‘Sec. 2102. Survey of home health agencies.

‘‘Sec. 2103. Sanctions.

‘‘Sec. 2104. Licensing policies.

‘‘Sec. 2105. Definitions.

‘‘Sec. 2106. Authorization of appropriations.

(f) Effective date.

Sec. 4. National care vouchers.

(a) In general.

‘‘TITLE XXII—NATIONAL CARE VOUCHERS.

‘‘Sec. 2201. Eligibility.

‘‘Sec. 2202. Description of benefit.

‘‘Sec. 2203. National care vouchers in general.

‘‘Sec. 2204. Small employer health insurance reform in general.

Sec. 5. Deduction for national care vouchers for small employers.

Sec. 6. Equity tax.
3

HR 1965 IH

1 SEC. 2. DEDUCTIONS FOR CONTRIBUTIONS TO HEALTH

2 SERVICES ACCOUNT.

3 (a) IN GENERAL.—Part VII of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1954 (relating to

5 additional itemized deductions for individuals) is amended

6 by redesignating section 223 as section 224 and by insert7 ing after section 222 the following section:

8 ‘‘SEC. 223. HEALTH SERVICE ACCOUNT CONTRIBUTIONS.

9 ‘‘(a) ALLOWANCE OF TAX CREDIT.—In the case of

10 an individual, there shall be allowed as a credit any

11 amount paid in cash for the taxable year made by or on

12 behalf of said individual to a health services account.

13 ‘‘(b) LIMITATIONS.—

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

15 credit under subsection (a) to any individual for any

16 taxable year shall not exceed $1500.

17 ‘‘(2) DOLLAR LIMITATION.—No credit shall be

18 permitted unless an amount equal to, or greater

19 than, the claimed credit was used to purchase cer20 tified health services supplemental policies and, or,

21 qualified health expenses.

22 ‘‘(3) CERTAIN OTHER RULES TO APPLY.—Rules

23 similar to rules of paragraphs (3), (4), (5), and (6)

24 of section 219(f) shall apply for purposes of this sec25 tion.
4

HR 1965 IH

1 ‘‘(c) HEALTH SERVICES ACCOUNT DEFINED.—For

2 the purposes of this section, the term ‘health services ac3 count’ (hereafter referred to as the Account) means a

4 trust created or organized in the United States exclusively

5 to pay qualified health expenses of the distributee, but

6 only if the written governing instrument creating the trust

7 meets the following requirements:

8 ‘‘(1) No contribution will be accepted unless it

9 is in cash, and the contributions will not be accepted

10 for the taxable year in excess of $3,000 on behalf of

11 any individual.

12 ‘‘(2) The trustee is a bank (as defined in sec13 tion 408(n) or such other person who demonstrates

14 to the satisfaction of the Secretary that the manner

15 in which such other person will administer the trust

16 will be consistent with the requirements of this sec17 tion.

18 ‘‘(3) The interest of an individual in the bal19 ance of his account is nonforfeitable.

20 ‘‘(4) The assets of the trust will not be commin21 gled with other property except in a common trust

22 fund or a common investment fund.

23 ‘‘(d) QUALIFIED HEALTH EXPENSES DEFINED.—

24 The term ‘qualified health expense’ means any amount

25 paid for—
5

HR 1965 IH

1 ‘‘(1) care of the distributee at a skilled nursing

2 facility (as defined in section 1861(j) of the Social

3 Security Act (42 U.S.C. 1395x(j));

4 ‘‘(2) care of the distributee at an intermediate

5 care facility (as defined in section 1905(c) of such

6 Act (42 U.S.C. 1396(c));

7 ‘‘(3) care at any other long-term facility, li8 censed by the State, which provides nursing or cus9 todial care,

10 ‘‘(4) home health care of the distributee pre11 scribed by, and under the supervision of, a qualified

12 physician that is provided by a home health care

13 agency, licensed by the State;

14 ‘‘(5) medicare supplemental policies for the dis15 tributee (as defined in section 1882(g)(1) of the So16 cial Security Act) which have been certified by the

17 Secretary under the authority of section 1882 of the

18 Social Security Act; or

19 ‘‘(6) health services supplemental policies for

20 the distributee (as established under subsection (e)).

21 An amount may be taken into account under this sub22 section only if such amount constitutes medical care (as

23 defined by section 213(d)).

24 ‘‘(e) ESTABLISHMENT OF HEALTH SERVICES SUP25 PLEMENTAL POLICIES.—
6

HR 1965 IH

1 ‘‘(1) HEALTH SERVICES SUPPLEMENTAL POLI2 CIES DEFINED.—For purposes of this section, a

3 ‘health services supplemental policy’ is a health in4 surance policy or other health benefit plan offered by

5 a private entity to an individual which provided re6 imbursement for expenses incurred, or services, for

7 catastrophic and long-term care which is certified by

8 the Secretary under paragraph (2) of this sub9 section; including any such policy or plan of one or

10 more employers of labor organizations, or of the

11 trustees of a fund established by one or more em12 ployers or labor organization (or combination there13 of), for employees or former employees (or combina14 tion thereof) of the labor organizations.

15 ‘‘(2) CERTIFICATION OF HEALTH SERVICES

16 SUPPLEMENTAL POLICIES.—

17 ‘‘(A) The Secretary shall establish mini18 mum standards and requirements for the cer19 tification of health services supplemental poli20 cies.

21 ‘‘(B) The Secretary shall establish a proce22 dure whereby health services supplemental poli23 cies may be certified by the Secretary. Such

24 procedure shall provide an opportunity for any

25 insurer to submit any such policy, and such ad-
7

HR 1965 IH

1 ditional data as the Secretary finds necessary,

2 to the Secretary for his examination and for his

3 certification thereof as meeting the standards

4 and requirements set forth in subparagraph

5 (A). Such certification shall remain in effect if

6 the insurer files a notarized statement with the

7 Secretary no later than June 30 of each year

8 stating that the policy continues to meet such

9 standards and requirements if the insurer sub10 mits such additional data as the Secretary finds

11 necessary to independently verify the accuracy

12 of such notarized statement. Where the Sec13 retary determines such a policy meets (or con14 tinues to meet) such standards and require15 ments, he shall authorize the insurer to have

16 printed on such policy (but only in accordance

17 with such requirements and conditions as the

18 Secretary may prescribe) an emblem which the

19 Secretary shall cause to be designed for use as

20 an indication that policy has received the Sec21 retary’s certification. The Secretary shall pro22 vide each State commissioner or superintendent

23 of insurance with a list of all the policies which

24 have received his certification.

25 ‘‘(f) TAX TREATMENT ON DISTRIBUTION.—
8

HR 1965 IH

1 ‘‘(1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, any amount distributed out

3 of an Account shall be included in taxable income by

4 the distributee for the taxable year in which the dis5 tribution is received. Notwithstanding any other pro6 vision of this title (including chapter 11 and 12), the

7 basis of any persons in such an account is zero.

8 ‘‘(2) PENALTY FOR DISTRIBUTIONS OTHER

9 THAN FOR PAYMENT OF QUALIFIED HEALTH EX10 PENSES.—If any distribution for an Account is not

11 used exclusively to pay qualified health expenses of

12 the distributee, the distributee’s tax under this chap13 ter for the taxable year in which such distribution is

14 received shall be increased by an amount equal to 10

15 percent of the amount of such distribution which is

16 not used exclusively to pay for qualified health ex17 penses.

18 ‘‘(3) RULES RELATING TO EXCESS CONTRIBU19 TIONS.—Rules similar to the rules of paragraphs

20 (4), (5), and (6) of section 408(d) shall apply for

21 purposes of this section.

22 ‘‘(g) TAX TREATMENT OF ACCOUNTS.—

23 ‘‘(1) IN GENERAL.—Any Account shall be ex24 empt from taxation under this subtitle unless the ac-
9

HR 1965 IH

1 count ceases to be an Account by reason of para2 graphs (2) or (3).

3 ‘‘(2) LOSS OF EXEMPTION OF ACCOUNT WHERE

4 DISTRIBUTEE ENGAGES IN PROHIBITED TRANS5 ACTION.—If, during any taxable year of the distribu6 tee, the distributee engages in any transaction pro7 hibited by section 4975 with respect to such ac8 count—

9 ‘‘(A) such Account shall cease to be an Ac10 count as of the first of such taxable year, and

11 ‘‘(B) subsection (f) shall be applied as if

12 there were a distribution on such first day in an

13 amount equal to the fair market value (on such

14 first day) of all assets in the account (on such

15 first day).

16 ‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU17 RITY.—If, during any taxable year of the distributee,

18 the distributee uses any portion of the account as se19 curity for a loan, such portion shall be treated as

20 distributed to the distributee.

21 ‘‘(4) TERMINATION OF ACCOUNT ON DEATH OF

22 DISTRIBUTEE.—

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

24 death of the distributee—
10

HR 1965 IH

1 ‘‘(i) any Account of the distributee

2 shall cease to be treated as such an ac3 count on the termination date, and

4 ‘‘(ii) subsection (f) (other than para5 graph (2)) shall be applied as if there were

6 a distribution on such date in an accunt

7 equal to the fair market value (on such

8 date) of all assets in the account (on such

9 date).

10 ‘‘(B) TERMINATION DATE.—For purposes

11 of subparagraph (A), the term ‘termination

12 date’ means the later of—

13 ‘‘(i) the last day of the taxable year in

14 which the distributee dies, or

15 ‘‘(ii) the date is six months after the

16 date of death of the distributee.

17 ‘‘(h) ADDITIONAL DEFINITIONS AND SPECIAL

18 RULES.—For purposes of this section—

19 ‘‘(1) DISTRIBUTEE.—The term ‘distributee’

20 means the individual on whose behalf the Account is

21 established.

22 ‘‘(2) DISTRIBUTED.—The term ‘distributed’ in23 cludes paid.
11

HR 1965 IH

1 ‘‘(3) OTHER RULES.—Rules similar to the rules

2 of subsections (h) and (i) of section 408 shall

3 apply.’’.

4 (b) TAX ON EXCESS CONTRIBUTIONS.—

5 (1) IN GENERAL.—Subsection (a) of section

6 4973 of such Code (relating to tax on excess con7 tributions to individuals retirement accounts, certain

8 section 403(b) contracts, and certain individuals re9 tirement annuities) is amended by striking out ‘‘or’’

10 at the end of paragraph (1), by redesignating para11 graph (2) as paragraph (3), and by inserting after

12 paragraph (1) the following new paragraph:

13 ‘‘(2) a health services account (within the

14 meaning of section 223(c)), or’’.

15 (2) TECHNICAL AMENDMENTS.—

16 (A) Subsection (b) of section 4973 of such

17 Code is amended by adding at the end thereof

18 the following: ‘‘In the case of a health services

19 account, rules similar to the rules of the preced20 ing provisions of this subsection shall apply in

21 determining excess contributions.’’.

22 (B) Subsection (C) of section 4973 of such

23 Code is amended by striking out ‘‘subsection

24 (a)(2)’’ and inserting in lieu thereof ‘‘subsection

25 (a)(3)’’.
12

HR 1965 IH

1 (C) The section heading for section 4973

2 of such Code is amended by inserting

3 ‘‘HEALTH SERVICES ACCOUNTS,’’

4 after ‘‘INDIVIDUAL RETIREMENT AC5 COUNTS,’’.

6 (D) The table of sections for subchapter C

7 of chapter 42 of such Code is amended in the

8 item relating to section 4973 by inserting

9 ‘‘health services accounts,’’ after ‘‘individual re10 tirement accounts,’’.

11 (c) TAX ON PROHIBITED TRANSACTIONS.—

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

13 4975(e) of such Code (relating to definitions) is

14 amended by inserting ‘‘, a health services account

15 described in section 223(c),’’ after ‘‘described in sec16 tion 408(a)’’.

17 (2) SPECIAL RULE.—Subsection (c) of section

18 4975 of such Code (defining prohibited transaction)

19 is amended by adding at the end thereof the follow20 ing new paragraph:

21 ‘‘(4) SPECIAL RULES FOR HEALTH SERVICES

22 ACCOUNTS.—An individual for whose benefit a

23 health services account is established shall be exempt

24 from the tax imposed by this section with respect to

25 any transaction concerning such account (which
13

HR 1965 IH

1 would otherwise be taxable under this section) if,

2 with respect to such transaction, the account ceases

3 to be a health services account by reason of the ap4 plication of section 223(g)(2) or if section 223(g)(3)

5 applies to such Account.’’.

6 (d) FAILURE TO PROVIDE REPORTS.—

7 (1) IN GENERAL.—Subsection (a) of section

8 6693 of such Code (relating to failure to provide re9 ports on individual retirement accounts or annuities)

10 is amended by inserting ‘‘, or by subsection (h)(3)

11 of section 223 to file a report regarding a health

12 services account,’’ after ‘‘retirement annuity’’.

13 (2) CLERICAL AMENDMENTS.—

14 (A) The section heading for section 6693

15 of such Code is amended by inserting ‘‘OR

16 HEALTH SERVICES ACCOUNTS’’

17 after ‘‘ANNUITIES’’.

18 (B) The table of sections for subchapter B

19 of chapter 68 of such Code is amended in the

20 item relating to section 6693 by inserting ‘‘or

21 health services accounts’’ after ‘‘annuities’’.

22 (e) CLERICAL AMENDMENTS.—The table of sections

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

24 is amended by striking out the item relating to section

25 223 and inserting in lieu thereof the following:

‘‘Sec. 223. Health services account contributions.
14

HR 1965 IH

‘‘Sec. 224. Cross references.’’.

1 (f) REPORT TO CONGRESS ON MINIMUM STANDARDS

2 FOR HEALTH SERVICES SUPPLEMENTAL POLICIES.—Not

3 later than one year after the date of enactment of this

4 Act, a report shall be issued by the Secretary in consulta5 tion with, but not limited to, representatives of consumer

6 groups, insurance companies, long-term care facilities,

7 hospitals and home-health care agency representatives.

8 The report shall contain a regulatory program that pro9 vides for the application of minimum standards with re10 spect to health services supplemental policies. In addition,

11 the report should contain an analysis and evaluation of

12 the various catastrophic and long-term care insurance

13 policies available to an individual, as well as any other

14 areas of examination deemed appropriate by the Sec15 retary.

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

17 this section shall apply to taxable years beginning on or

18 after the first day of the first calendar year which begins

19 more than one year after the date of the enactment of

20 this Act.

21 SEC. 3. COVERAGE OF HOME CARE BENEFITS.

22 (a) IN GENERAL.—Section 1812(a) (42 U.S.C.

23 1395d(a)) is amended—

24 (1) by striking ‘‘and’’ at the end of paragraph

25 (3);
15

HR 1965 IH

1 (2) by striking the period at the end of para2 graph (4) and inserting ‘‘; and’’, and

3 (3) by adding at the end the following:

4 ‘‘(5) home care services to the qualified pa5 tient.’’.

6 (b) DEFINITION OF BENEFITS.—Section 1861 (42

7 U.S.C. 1395x) is amended by adding at the end the follow8 ing subsection:

9 ‘‘Home Care Services

10 ‘‘(ff)(1) The term ‘home care services’ means

11 services or supplies provided to an individual by a

12 home health agency or another acting under the au13 thority of such agency, under a written plan of care

14 established and periodically reviewed by a physician,

15 which are provided in the place of residence of such

16 individual’s home—

17 ‘‘(A) nursing care provided by or under the

18 supervision of a registered professional nurse;

19 ‘‘(B) medical social services under the di20 rection of a physician;

21 ‘‘(C) services of a homemaker/home health

22 aide who has met training and credentialing re23 quirement approved by the Secretary;

24 ‘‘(D) physical, occupational, speech, res25 piratory therapy, or rehabilitative services to
16

HR 1965 IH

1 preserve, restore, or prevent the deterioration of

2 the individual’s functional capabilities;

3 ‘‘(E) medical supplies (other than drugs

4 and biological);

5 ‘‘(F) services received under a program of

6 managed care.

7 ‘‘(2) For the purposes of this section the term

8 ‘qualified patient’ means an individual who—

9 ‘‘(A) has been certified by a physician as

10 requiring home care benefits based upon the in11 dividual’s impairment and inability to perform

12 at least three basic functions of normal activity

13 as set forth in paragraph (3); and

14 ‘‘(B) is participating in a program of man15 aged care;

16 ‘‘(C) is described in section 226(a).

17 ‘‘(3) For purposes of paragraph (2), each of the

18 following is a function of normal activity:

19 ‘‘(A) BATHING.—The overall complex be20 havior of getting water and cleansing the whole

21 body, including turning on the water for a bath,

22 shower, or sponge bath, getting to, in, and out

23 of a tub or shower, and washing and drying

24 oneself.
17

HR 1965 IH

1 ‘‘(B) EATING.—The process of getting

2 food from a plate or its equivalent into the

3 mouth.

4 ‘‘(C) TOILETING.—The act of going to the

5 toilet room for bowel and bladder function,

6 transferring on and off the toilet, cleaning after

7 elimination, and arranging clothes.

8 ‘‘(D) DRESSING.—The overall complex be9 havior of getting clothes from closets and draw10 ers and then getting dressed including putting

11 on braces or other assistive devices, fastening

12 buttons, zippers, snaps, or other closures.

13 ‘‘(E) TRANSFER.—The process of moving

14 in and out of bed and in and out of a chair or

15 wheelchair.

16 ‘‘(4) The term ‘program of managed care’

17 means an established and formal program conducted

18 by a managed care organization (as described in

19 paragraph (5)) for the oversight of providing home

20 care services to a qualified patient to ensure effective

21 and coordinated delivery of services, such as develop22 ment and periodic revision of individual plans of

23 care, arranging for necessary care and services, and

24 follow-up and on-going monitoring of patient and

25 services delivery.
18

HR 1965 IH

1 ‘‘(5) The term ‘managed care organization’

2 means any organization which—

3 ‘‘(A) is a corporation established pursuant

4 to and regulated by State law but not limited

5 to being incorporated within the State in which

6 the home care services are furnished; and

7 ‘‘(B) develops standards for reasonable lev8 els of care for the community in which the serv9 ices are being furnished, sufficient to meet

10 standards as established by the Secretary in

11 regulations, to be used as guidelines for the de12 livery of services by home health agencies; and

13 ‘‘(C) supervises home health agencies pro14 viding services to qualified patients, under their

15 oversight, in accordance with regulations pro16 mulgated by the Secretary; and

17 ‘‘(D) establishes processes which include—

18 ‘‘(i) a plan of care which states rea19 sonable and measurable objectives for the

20 individual and home care services to be

21 furnished to meet those objectives;

22 ‘‘(ii) methods for periodic review of

23 the plan of care for the qualified patient
19

HR 1965 IH

1 ‘‘(iii) a statement of criteria and pro2 cedures for discharge or transfer to an3 other agency, program, or service; and

4 ‘‘(E) shall make such reports, in such form

5 and containing such information, as the Sec6 retary may from time to time require, and com7 ply with such provisions as the Secretary may

8 from time to time find necessary to assure the

9 correctness and verification of such reports.’’.

10 (c) CONDITIONS ON PAYMENTS FOR SERVICES.—(1)

11 Section 1814(a) (42 U.S.C. 1395f(a)) is amended—

12 (A) by striking ‘‘and’’ at the end of para13 graph (6),

14 (B) by striking the period at the end of

15 paragraph (7) and inserting ‘‘; and’’, and

16 (C) by inserting after paragraph (7) the

17 following new paragraph:

18 ‘‘(8) in the case of home care services provided

19 to an individual, the individual is a qualified pa20 tient.’’.

21 (2) Section 1862(a) (42 U.S.C. 1395y(a)) is

22 amended—

23 (A) in paragraph (1)—

24 (i) in subparagraph (a), by striking

25 ‘‘subparagraphs (B), (C), (D) and insert-
20

HR 1965 IH

1 ing ‘‘a succeeding subparagraph of this

2 paragraph’’,

3 (ii) by striking ‘‘and’’ at the end of

4 subparagraph (D).

5 (iii) by adding ‘‘and’’ at the end of

6 subparagraph (E); and

7 (iv) by adding at the end the following

8 new subparagraph:

9 ‘‘(F) with respect to home care services,

10 which is not a reasonable cost as defined in sec11 tion 1861ff(6) of this Act’’; and

12 (B) in paragraph (6), by inserting ‘‘and

13 except, in the case of home care services, as is

14 otherwise permitted under paragraph (1)(F)’’

15 and ‘‘paragraph (a)(C)’’.

16 (d) LIMITATIONS UPON PAYMENT.—Section 1814

17 (42 U.S.C. 1395f) is amended by adding at the end the

18 following new subsection:

19 ‘‘Limit on Payment for Home Care Services

20 ‘‘(1) The maximum amount of payment that

21 may be made with respect to home care services pro22 vided a qualified patient (described in section

23 1861ff(2)) residing in a State in a month is an

24 amount that the Secretary estimates is equal to 75

25 percent of the average amount payable under the
21

HR 1965 IH

1 plan of the State approved under title XIX (or, in

2 the absence of such a plan, the average amount pay3 able under all such plans under such title) during

4 the month for skilled nursing facility services in the

5 State.

6 ‘‘(2)(A) The amount payable for home care

7 services furnished an individual shall be reduced by

8 a deduction equal to the home care deductible or, if

9 less, the charges imposed with respect to such indi10 vidual for such services, except that, if the cus11 tomary charges for such services are greater than

12 the charges so imposed, such customary charges

13 shall be considered to be the charges so imposed.

14 ‘‘(B) The Secretary shall, between July 1 and

15 October 1 of 1993, and of each year thereafter, de16 termine and promulgate the home care deductible

17 which shall be applicable for the purposes of sub18 section (5)(A) in the case of any home care services

19 furnished during the succeeding calendar year. Such

20 home care deductible shall be equal to $45 multi21 plied by the ratio of (i) the current average per diem

22 rate for home care services for the calendar year

23 preceding the promulgation, to (ii) the current aver24 age per diem rate for such services for 1992. Any

25 amount determined under the preceding multiple of
22

HR 1965 IH

1 $4 shall be rounded to the nearest next higher mul2 tiple.

3 ‘‘(3)(A) The reasonable cost of any services

4 shall be the cost actually incurred, excluding there5 from any part of incurred cost found to be unneces6 sary in the efficient delivery of needed services, and

7 shall be determined in accordance with regulation es8 tablishing the methods to be used, and the items to

9 be included, in determining such costs for home care

10 benefits as provided by a home health agency (as de11 fined in Section 1861(o) of the Social Security Act).

12 In prescribing the regulations referred to in the pre13 ceding sentence, the Secretary shall consider, among

14 other things, the principles generally applied by na15 tional organizations or established prepayment orga16 nizations in computing the amount of payment, to

17 be made by persons other than the recipients of

18 services, to providers of home care benefits on ac19 count of services provided to such recipients by such

20 home care agencies. Such regulations may provide

21 for determination of the costs of services on a per

22 diem, per unit, per capita, or other basis, may pro23 vide for using different methods in different cir24 cumstances, may provide for the use of estimates of

25 costs of particular items or services, may provide for
23

HR 1965 IH

1 the establishment of limits on the direct or indirect

2 overall incurred costs of incurred costs of specific

3 items or services or groups of items or services to be

4 recognized as reasonable based on estimates of the

5 costs necessary in the efficient delivery of needed

6 services to individuals covered by this subsection,

7 and may provide for the use of charges or a percent8 age of charges where this method reasonably reflects

9 the costs. Such regulation shall—

10 ‘‘(i) take into account both direct and indi11 rect costs of home care agencies in order that,

12 under the methods of determining costs, the

13 necessary costs of efficiently delivering covered

14 services to individuals eligible under this sub15 section will not be borne by individuals not so

16 covered, and the costs with respect to individ17 uals not so covered will not be borne by the pro18 gram under this subsection; and

19 ‘‘(ii) provide for the making of suitable ret20 roactive corrective adjustments where, for a

21 home care agency for any fiscal period, the ag22 gregate reimbursement produced by the meth23 ods of determining costs proves to be either in24 adequate or excessive.
24

HR 1965 IH

1 ‘‘(B) Such regulations shall require each home

2 care agency to make reports to the Secretary of in3 formation described in section 1121(a) in accordance

4 with the uniform reporting system.

5 ‘‘(4) There shall be paid from the Federal Sup6 plementary Medical Insurance Trust Fund, in the

7 case of each individual who is covered under the pro8 gram established by this subsection and incurs ex9 penses for home care services with respect to which

10 benefits are payable under this subsection, amounts

11 equal to 80 percent of the reasonable cost of the

12 service to the provider of said services.’’.

13 (e) ASSURANCES OF MINIMUM STANDARDS IN HOME

14 CARE SERVICES.—The Social Security Act (42 U.S.C.

15 301 et seq.) is amended by adding at the end thereof, the

16 following:

17 ‘‘TITLE XXI—HOME CARE SERVICES

18 ‘‘FUNDING HOME CARE SERVICES

19 ‘‘SEC. 2101. (a) The Secretary shall promulgate reg20 ulations requiring that to receive funding for the provision

21 of home care services under this subsection, a home health

22 agency must within six months after the date of the publi23 cation of such regulations—

24 ‘‘(1) meet the requirements of a home health

25 agency as described in section 1861(o); and
25

HR 1965 IH

1 ‘‘(2) implement procedures for reviewing griev2 ances of qualified patients receiving home care serv3 ices; and

4 ‘‘(3) provide to each qualified patient, or their

5 representative, a written statement of the services to

6 be provided to said individual and the schedule for

7 provision of such services, as agreed upon by the

8 qualified patient, or their representative; and

9 ‘‘(4) ensure that any provider of home care

10 services employed by or under contract with the

11 home health agency receives training which meets

12 requirements established by the Secretary in regula13 tions to be appropriate in nature and scope of the

14 services provided.

15 ‘‘(5) conduct annual evaluations of providers of

16 home care services employed or under contract to

17 the home health agency; and

18 ‘‘(6) enter into a cooperative agreement with

19 the managed care organization who has oversight (as

20 described in Section 1861ff) of a qualified patient

21 receiving home care services from said health care

22 agency to provide for the coordination and delivery

23 of services to such individual.
26

HR 1965 IH

1 ‘‘SURVEY OF HOME HEALTH AGENCIES

2 ‘‘SEC. 2102. (a) The Secretary shall promulgate reg3 ulations that establish procedures for surveying home

4 health agencies concerning compliance with the require5 ments of this section.

6 ‘‘(1) Regulations shall include, but not be lim7 ited thereto, surveys regarding the facility that—

8 ‘‘(A) shall not be announced in advance;

9 ‘‘(B) shall be conducted by a multidisci10 plinary team of professionals who have passed

11 a standardized competency examination ap12 proved by the Secretary;

13 ‘‘(C) shall focus on the quality of care pro14 vided to patients;

15 ‘‘(D) shall include a private meeting be16 tween patients, or their representatives, and

17 survey personnel to discuss patients’ experi18 ences with the home health agency with respect

19 to type of care received and compliance with the

20 standards applicable to the agency under this

21 title;

22 ‘‘(E) shall be conducted, with respect to

23 each agency, between 9 and 15 months after

24 the previous survey for the agency, with such
27

HR 1965 IH

1 surveys being conducted, on a Statewide aver2 age, 12 months apart; and

3 ‘‘(F) may be conducted less often than an4 nually with respect to an agency only if the

5 agency is fully in compliance with the require6 ments of this title.

7 ‘‘(2) The Secretary may make an agreement

8 with any State which is able and willing to do so

9 under which the services of the State health agency

10 or other appropriate State agency will be utilized by

11 him for the purpose of determining whether a home

12 health agency therein meets the requirements as es13 tablished under this title. Said State shall conduct

14 surveys of compliance with the requirements of this

15 title and provide for the annual transmittal to the

16 Secretary of the results of such surveys.

17 ‘‘(3) The Secretary shall develop procedures for

18 validating survey of home health agencies performed

19 by States under paragraph (2). Such procedures

20 shall provide for the review of surveys—

21 ‘‘(A) not less than every 15 months; or

22 ‘‘(B) not less than every 9 months if 10

23 percent of the total number of the State’s home

24 health care agencies, as reported by the

25 overseeing managed care organizations, have
28

HR 1965 IH

1 committed serious or chronic violations of pro2 fessionally recognized standards of care; and

3 ‘‘(C) based on a representative sample of

4 home health agencies which have been surveyed

5 under paragraph (2).

6 ‘‘SANCTIONS

7 ‘‘SEC. 2103. (a) Where the Secretary determines that

8 a home health care agency no longer meets the require9 ments of this title he shall promulgate regulations which

10 impose sanctions on home health agencies which shall—

11 ‘‘(1) include civil penalties;

12 ‘‘(2) include intermediate sanctions, including a

13 ban on admissions, receivership, fines, and emer14 gency authority to close home health agencies;

15 ‘‘(3) require any sanction to be imposed to be

16 done so immediately following the determination

17 that the home health agency is no longer in compli18 ance with this title;

19 ‘‘(4) provide for a plan and schedule for correc20 tive action by home health agencies determined to be

21 out of compliance with this title; and

22 ‘‘(5) require public disclosure of failures to

23 comply with this title by home health agencies and

24 sanctions imposed on such agencies.
29

HR 1965 IH

1 ‘‘(b)(1) The Secretary shall develop incentives to en2 courage high quality care and compliance by home health

3 agencies with the requirements of participation, including

4 annual publication of a directory of home health agencies,

5 listed alphabetically and by geographic area, which have

6 a consistent record of compliance with such requirements.

7 ‘‘(2) The directory published under paragraph (b)(1)

8 shall be made available to managed care organizations,

9 area agencies on aging, state ombudsman programs, and

10 the public.

11 ‘‘(c) The Secretary shall file an annual report with

12 the Congress on January 1 of each year regarding the

13 availability, adequacy, and use of sanctions to correct fail14 ures of home health agencies and home care providers to

15 meet professionally recognized standards of care.

16 ‘‘LICENSING POLICIES

17 ‘‘SEC. 2104. The Secretary shall encourage States to

18 develop policies and procedures for the licensing of home

19 health agencies and gather information concerning the ef20 fectiveness of such efforts. He shall issue a biannual re21 port which summarizes information gathered under this

22 section.

23 ‘‘DEFINITIONS

24 ‘‘SEC. 2105. For the purposes of this title—
30

HR 1965 IH

1 ‘‘(1) The term ‘home health agency’ has the

2 meaning given it in section 1861(o).

3 ‘‘(2) The term ‘home care services’ has the

4 meaning given such term in section 1861ff(1).

5 ‘‘(3) The term ‘managed care organization’ has

6 the meaning given it under section 1861ff(5).

7 ‘‘(4) The term ‘qualified patient’ has the mean8 ing as set forth in section 1861ff(2).

9 ‘‘(5) The term ‘provider of home care services’

10 means any individual or entity who has contracted

11 with a home health agency, or is an agent of such

12 an agency, providing home care services to a quali13 fied patient.

14 ‘‘AUTHORIZATION OF APPROPRIATIONS

15 ‘‘SEC. 2106. There are authorized to be appropriated

16 from the Federal Hospital Insurance Trust Fund such

17 sums as may be necessary to carry out this title.’’.

18 (f) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to home care services furnished

20 on and after October 1, 1993.

21 SEC. 4. NATIONAL CARE VOUCHERS

22 (a) IN GENERAL.—The Social Security Act (42

23 U.S.C. 301 et seq.) is amended by adding at the end there24 of, the following:
31

HR 1965 IH

1 ‘‘TITLE XXII—NATIONAL CARE VOUCHERS

2 ‘‘ELIGIBILITY

3 ‘‘SEC. 2201.(a) Except as provided in subparagraph

4 (b), each of the following individuals is eligible for benefits

5 under the national care voucher program:

6 ‘‘(1) Each citizen or national of the United

7 States.

8 ‘‘(2) Each alien lawfully admitted for perma9 nent residence or other permanently residing in the

10 United States under color of law, including aliens

11 lawfully admitted for temporary residence under sec12 tion 210 or 245A of the Immigration and National13 ity Act.

14 ‘‘(3) Each alien admitted to the United States

15 as an officer or employee (or member of the imme16 diate family of such officer or employee)—

17 ‘‘(A) of a foreign government or an instru18 mentality of a foreign government, or

19 ‘‘(B) of an international organization (as

20 such term is defined in the International Orga21 nizations Immunities Act),

22 if the government or organization, respectively, has

23 entered into an agreement described in subsection

24 (d)(1) with the United States.
32

HR 1965 IH

1 ‘‘(b) Individuals who are entitled to health insurance

2 benefits under Title XVIII of the Social Security Act (re3 lating to Medicare and Medicaid) are not entitled to bene4 fits under this title.

5 ‘‘DESCRIPTION OF BENEFIT

6 ‘‘SEC. 2202. (a) The benefit coverage obtained from

7 the purchase of insurance through a national care voucher

8 must consist of entitlement to have payment made on his

9 behalf for the following:

10 ‘‘(1) inpatient hospital services;

11 ‘‘(2) medical and other health services;

12 ‘‘(3) comprehensive outpatient rehabilitation fa13 cility services and home intravenous therapy serv14 ices;

15 ‘‘(4) alcohol and drug abuse rehabilitation serv16 ices (as defined by the Secretary in regulations);

17 ‘‘(5) outpatient mental health services furnished

18 in a community mental health center or by a physi19 cian, clinical psychologist, clinical social worker, or

20 psychiatric nurse specialist (or other qualified pro21 vider who is legally authorized to perform under

22 State law, or the State regulatory mechanism pro23 vided by State law) and would otherwise be covered

24 if furnished by a physician or as an incident to a

25 physician’s service; and
33

HR 1965 IH

1 ‘‘(6) the following preventive services:

2 ‘‘(A) prenatal care (including home visita3 tion services);

4 ‘‘(B) well-child care (including appropriate

5 immunizations according to age and health his6 tory;

7 ‘‘(C) screening mammography (as defined

8 in subsection (jj));

9 ‘‘(D) screening pap smear (as defined in

10 subsection (nn));

11 ‘‘(E) colorectal cancer screening (as de12 fined in regulations by the Secretary); and

13 ‘‘(F) nutritional screening (as defined in

14 regulations by the Secretary).

15 ‘‘NATIONAL CARE VOUCHERS

16 ‘‘SEC. 2203. (a) IN GENERAL.—Subject to the provi17 sions of this Act, a full cash payment is to be made by

18 the United States, to each beneficiary eligible to partici19 pate in the national care voucher program, except as

20 amended by paragraph (d) of this section, to purchase cer21 tified health care insurance.

22 ‘‘(b) ESTABLISHMENT OF VOUCHER ACCOUNTS.—

23 The United States shall establish an account for each ben24 eficiary eligible to participate in the national care voucher

25 program (except as modified by paragraph (b)) which is
34

HR 1965 IH

1 created or organized in the United States exclusively to

2 purchase certified health care insurance which meets the

3 following requirements:

4 ‘‘(1) The trustee is a bank (as defined in sec5 tion 408(n)) or such other entity who demonstrates

6 to the satisfaction of the Secretary that the manner

7 in which such other entity will administer the trust

8 will be consistent with the requirements of this sec9 tion.

10 ‘‘(2) The assets of the trust will not be commin11 gled with other property except in a common trust

12 fund or a common investment fund.

13 ‘‘(3) The assets of the trust may be distributed

14 solely for the purchase of certified health care insur15 ance, except that after the purchase of said insur16 ance the remaining assets are to be distributed to

17 the beneficiary at his election without penalty.

18 ‘‘(4) Any assets remaining in a voucher account

19 at the end of the taxable calender year must be dis20 tributed to the beneficiary of the account, except

21 that in cases where no purchase of certified health

22 insurance was made by the account for that taxable

23 year such monies shall be returned to the Treasury

24 of the United States.
35

HR 1965 IH

1 ‘‘(5) The Secretary, in consultation with the

2 Secretary of the Treasury, shall select trustees to

3 administer individual voucher accounts, or groups of

4 accounts, in a manner prescribed by regulation. The

5 selection of the trustee shall—

6 ‘‘(A) in the case of a voucher account,

7 being funded by an employer voucher payment

8 (in part or whole), be an individual or entity se9 lected by the Secretary after consultation with

10 the employer making the deposit to the account;

11 and

12 ‘‘(B) in the case of all other voucher ac13 counts, be an individual or entity selected by

14 the Secretary based upon the preference of the

15 individual for which the account is being estab16 lished and the availability of qualified trustees

17 in the locality or State of said individual.

18 ‘‘(6) A charge may be made to the account, by

19 the trustee of the account, to pay for reasonable and

20 customary costs of administration.

21 ‘‘(c) EMPLOYER DONATIONS TO VOUCHERS.—

22 ‘‘(1) IN GENERAL.—Except as provided in this

23 section, each employer shall, in accordance with this

24 title, deposit an amount equal to the annual voucher

25 deposit premium into the individual employee’s na-
36

HR 1965 IH

1 tional voucher account for each of its full-time em2 ployees no later than the 1st day of the eleventh

3 month preceding the calendar year in which the pay4 ment will be used to purchase a certified health care

5 insurance policy, except that—

6 ‘‘(A) with respect to each part-time em7 ployee each employer shall, in accordance with

8 this title, deposit a payment into the individual

9 employee’s national voucher account in an

10 amount equal to the annual voucher deposit

11 premium as modified by the ratio of the individ12 ual employee’s gross pay to the gross pay of a

13 full-time employee (with similar work experience

14 or credentials) who performs same or similar

15 work; and

16 ‘‘(B) no deposit for a part-time employee

17 shall be in an amount less than 50% of the an18 nual voucher deposit premium for a full-time

19 employee in the same taxable year.

20 ‘‘(2) APPLICATION TO SEASONAL AND TEM21 PORARY EMPLOYEES.—In the case of an employee

22 designated as a seasonal or temporary employee,

23 whether a part-time or full-time employee, the em24 ployer shall deposit a payment in an employee’s na25 tional voucher account in an amount equal to the
37

HR 1965 IH

1 annual voucher deposit premium as modified by the

2 ratio of the individual employee’s cumulated gross

3 pay to the estimated cumulated gross pay of an em4 ployee employed by the employer through the taxable

5 year (with similar work experience or credentials)

6 who performs same or similar work. Each employer

7 shall designate, at the time of initial employment

8 and in a manner specified by the Secretary, whether

9 the individual is to be treated under this title as a

10 seasonal or temporary employee.

11 ‘‘(3) TREATMENT OF EMPLOYEE’S IMMEDIATE

12 FAMILY.—In the case of a full-time employee or

13 part-time employee, an employer shall deposit a pay14 ment in the individual voucher accounts of the em15 ployee’s immediate family equal to the amount de16 posited in said employee’s account. The employer is

17 not required to provide deposits in the voucher ac18 counts of a seasonal or temporary employee’s imme19 diate family.

20 ‘‘(4) CAP ON EMPLOYER’S DEPOSIT TO VOUCH21 ER.—No deposit shall be made, by an employer, to

22 an employee’s voucher account or the voucher ac23 counts of the employee’s immediate family in an

24 amount greater than the annual voucher deposit pre25 mium.
38

HR 1965 IH

1 ‘‘(5) APPLICATION TO EMPLOYERS OF DIF2 FERENT SIZES.—

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

4 this title shall apply to—

5 ‘‘(i) large employers employing over

6 100 full-time equivalent employees; and

7 ‘‘(ii) medium employers employing 11

8 to 100 full-time equivalent employees, as

9 adjusted by paragraph (C) of this section.

10 ‘‘(B) EXEMPTIONS.—The requirements of

11 this title shall not apply to—

12 ‘‘(i) employers employing 10 or less

13 full-time equivalent employees; or

14 ‘‘(ii) employers employing 100 or less

15 full-time equivalent employees if they are a

16 participant in a small employer health plan

17 under Section 2204 of this title that pro18 vides such coverage to all full-time, part19 time, or seasonal or temporary employees

20 of the employer.

21 ‘‘(C) GRADUATED SCALE FOR MEDIUM EM22 PLOYERS.—The requirements of this title shall

23 apply to medium employers. Contributions to

24 employees’ voucher accounts by a medium em25 ployer under the annual voucher deposit pre-
39

HR 1965 IH

1 mium shall be calculated as required by this

2 title but then shall be further adjusted by mul3 tiplying such adjusted contribution by the me4 dium employer ratio (MER) to obtain the final

5 adjusted annual voucher deposit premium re6 quired to be contributed by the medium em7 ployer, under the following graduated scale—

Employer employing

full-time equivalent Medium employer

employees ratio (MER)

11 to 20 ..................................................... .10

21 to 30 ..................................................... .20

31 to 40 ..................................................... .30

41 to 50 ..................................................... .40

51 to 60 ..................................................... .50

61 to 70 ..................................................... .60

71 to 80 ..................................................... .70

81 to 90 ..................................................... .80

91 to 100 ................................................... .90

8 ‘‘(D) CALCULATION OF MEDIUM EM9 PLOYER RATIO.—In the calculation of full-time

10 equivalent employees in determining the me11 dium employer ratio any decimal values shall be

12 rounded up to the next whole number.

13 ‘‘(E) FIVE YEAR RETENTION OF EXISTING

14 SMALL EMPLOYER PLANS.—Any employer em15 ploying 10 or less full-time equivalent employees

16 and who provides health care insurance or bene17 fits to their employees (on the date of enact18 ment of this Act) shall maintain such coverage,

19 or coverage of equal value, until December 31,

20 1998. Any employer who discontinues or re-
40

HR 1965 IH

1 duces such coverage before that date shall be

2 treated as a large employer for the purposes of

3 this title and become subject to the require4 ments of this title through December 31, 1998.

5 The Secretary may grant a waiver to this re6 quirement, on a case by case basis, based on

7 the establishment by the petitioning employer

8 that continuation of the coverage is an—

9 ‘‘(i) undue hardship to the employer;

10 and

11 ‘‘(ii) will be a primary cause in the

12 discontinuation of the employer’s business

13 if the coverage is not terminated or modi14 fied.

15 ‘‘(E) EFFECTIVE DATE.—For the purposes

16 of this title, the requirements of this section

17 shall become effective—

18 ‘‘(i) for large employers as of January

19 1 of the 2nd year beginning after the date

20 of enactment;

21 ‘‘(ii) for medium employers, as of

22 January 1 of the 3rd year beginning after

23 the date of enactment.

24 ‘‘(d) FEDERAL DEPOSIT TO VOUCHER ACCOUNTS.—

25 It shall be the duty of the Secretary of the Treasury, in
41

HR 1965 IH

1 consultation with the Secretary of Health and Human

2 Services—

3 ‘‘(1) to make withdrawals from the General

4 Fund of the United States Treasury, to provide a

5 deposit to every voucher account in an amount equal

6 to the annual voucher deposit premium except that

7 in the case where an employer is required to make

8 a deposit to the voucher account under subpara9 graph (c) then the Secretary of the Treasury shall

10 make no additional deposit except that necessary to

11 cause the amount within the account to equal the

12 annual voucher deposit premium;

13 ‘‘(2) to provide the deposit to every voucher ac14 count no later than the 1st day of the eleventh

15 month preceding the calendar year in which the pay16 ment will be used to purchase a certified health care

17 insurance policy;

18 ‘‘(3) to immediately terminate any account

19 which is unused due to the death or ineligibility of

20 the individual and return all unused funds, less

21 those amounts necessary to pay for the reasonable

22 and customary costs of the prior administration of

23 the account, to the General Fund of the United

24 States Treasury; and
42

HR 1965 IH

1 ‘‘(4) set forth such other regulations, by either

2 Secretary, as necessary to ensure the effective ad3 ministration of each national voucher account.

4 ‘‘(e) CERTIFICATION OF HEALTH CARE INSURANCE

5 POLICIES.—

6 ‘‘(1) The Secretary shall establish minimum

7 standards and requirements, for the certification of

8 health care insurance policies eligible to be pur9 chased under this section.

10 ‘‘(2) The Secretary shall establish a procedure

11 whereby health care insurance policies may be cer12 tified by the Secretary. Such procedure shall provide

13 an opportunity for any insurer to submit any such

14 policy, and such additional data as the Secretary

15 finds necessary, to the Secretary for his examination

16 and for his certification thereof as meeting the

17 standard and requirements set forth in subpara18 graph (1). Such certification shall remain in effect

19 if the insurer files a notarized statement with the

20 Secretary no later than June 30 of each year stating

21 that the policy continues to meet such standards and

22 requirements and if the insurer submits such addi23 tional data as the Secretary finds necessary to inde24 pendently verify the accuracy of such notarized

25 statement. Where the Secretary determines such a
43

HR 1965 IH

1 policy meets (or continues to meet) such standards

2 and requirements, he shall authorize the insurer to

3 have printed on such policy (but only in accordance

4 with such requirements and conditions as the Sec5 retary may prescribe) an emblem which the Sec6 retary shall cause to be designed for use as an indi7 cation that a policy has received the Secretary’s cer8 tifications. The Secretary shall provide each State

9 commissioner or superintendent of insurance with a

10 list of all the policies which have received his certifi11 cation.

12 ‘‘(3) No health care insurance policy may be

13 certified unless—

14 ‘‘(A) the plan provides for benefits for all

15 required health services (as defined in section

16 2102(a)) of the Social Security Act;

17 ‘‘(B) the plan does not impose cost-sharing

18 with respect to required health services in ex19 cess of the deductibles and coinsurance per20 mitted under part A of title XVIII with respect

21 to such services (not taking into account any

22 low-income assistance under part C of such

23 title);

24 ‘‘(C) the plan does not deny, limit, or con25 dition the coverage under (or benefits of) the
44

HR 1965 IH

1 plan with respect to required health services

2 based on the health status, claims experience,

3 receipt of health care, medical history, or lack

4 of evidence of insurability, of an individual, and

5 may not exclude coverage with respect to serv6 ices related to treatment of a preexisting condi7 tion; and

8 ‘‘(D) a plan may be certified and include

9 such additional items and services as the in10 surer can demonstrate to the satisfaction of the

11 Secretary that inclusion of such items and serv12 ices will facilitate appropriate hospital dis13 charges or avoid unnecessary hospitalization.

14 ‘‘(4) A self-insured plan or the plan of a health

15 maintenance organization may receive certification

16 under this section as a certified health care insur17 ance policy.

18 ‘‘(f) PROCEDURES FOR HEALTH INSURANCE EN19 ROLLMENT.—

20 ‘‘(1) ELECTION OF COVERAGE BY INDIVID21 UAL.—

22 ‘‘(A) OPEN ENROLLMENT PERIOD.—

23 ‘‘(i) Beginning the 1st day of the elev24 enth month preceding the calendar year in

25 which the health coverage is to be pur-
45

HR 1965 IH

1 chased and ending the last day of such

2 month, the individual, for whom the ac3 count is established, shall through the elec4 tion of a specific certified health care in5 surance policy cause the trustee of their in6 dividual voucher account to distribute a

7 lump sum, or enter into a binding agree8 ment to distribute funds on a regular basis

9 (not to exceed the calendar year for which

10 the insurance policy is limited), for the

11 purchase of such coverage for the upcom12 ing calendar year.

13 ‘‘(ii) If the individual fails to elect the

14 purchase of a specific insurance policy

15 under subparagraph (i) then the election of

16 the policy shall be made by the employer or

17 Secretary under subparagraph (f)(2) of

18 this part.

19 ‘‘(2) ELECTION OF COVERAGE BY EMPLOYER

20 OR FEDERAL GOVERNMENT.—Upon failure of the in21 dividual, for whom the account is established, to

22 make an election, the employer (in the case of full23 time and part-time employees) shall make such an

24 election, or the Secretary in all other cases shall
46

HR 1965 IH

1 make such an election, no later than 15 days after

2 the failure of the individual to make an election.

3 ‘‘(3) DUTIES OF TRUSTEE.—

4 ‘‘(A) TRUSTEE AS PURCHASER.—Under

5 the authority of this Title the elector (as deter6 mined under paragraph (f)(1) or (2)) shall pro7 vide written notification to the trustee of his

8 election of a specific certified insurance policy.

9 Within 10 days of the date of receipt of the no10 tification of the election, the trustee shall verify

11 the certification of said policy through reason12 able and customary means after which the

13 trustee shall promptly distribute funds to the

14 insurance carrier for the purchase of said pol15 icy. Multiple policies may be purchased if the

16 coverage is not redundant.

17 ‘‘(B) FIDUCIARY DUTY OF TRUSTEE.—As

18 trustee of the voucher account the trustee shall

19 make available to the individual (for whom the

20 account is established) such information as may

21 be reasonably possible regarding the process of

22 election and return of the account’s remainder

23 to said individual.

24 ‘‘(C) TRUSTEE AS REPORTER.—The trust25 ee of any voucher account shall report, no later
47

HR 1965 IH

1 than 30 days after the date of receipt of the no2 tification of the election, to the Secretary of the

3 elector’s election of a specific certified insurance

4 policy. Such report shall include, but not lim5 ited thereto, the—

6 ‘‘(i) description of the insurance policy

7 and insurer;

8 ‘‘(ii) cost of policy and date of pay9 ment;

10 ‘‘(iii) designation of which elector

11 made the election; and

12 ‘‘(iv) such other information as pre13 scribed by regulation.

14 ‘‘(g) DEFINITIONS.—For the purposes of this title:

15 ‘‘(1) EMPLOYEE, EMPLOYER, EMPLOYMENT.—

16 Except as otherwise provided in this section, the

17 terms ‘employer’, ‘employee’, and ‘employment’ have

18 the same meanings as such terms have for purposes

19 of chapter 21 of the Internal Revenue Code of 1986.

20 ‘‘(2) FULL-TIME EMPLOYEE.—The term ‘full21 time employee’ means, with respect to an employer,

22 an employee who normally performs on a monthly

23 basis at least 20 hours of service per week for that

24 employer.
48

HR 1965 IH

1 ‘‘(3) PART-TIME EMPLOYEE.—The term ‘part2 time employee’ means, with respect to an employer,

3 an employee who is not a full-time employee.

4 ‘‘(4) SEASONAL OR TEMPORARY EMPLOYEE.—

5 The term ‘seasonal or temporary employee’ means,

6 with respect to an employer, an employee who is em7 ployed by the employer for not more than 4 months

8 in any 12 month period; except that the Secretary

9 may extend such period for up to 6 months in any

10 12 month period in the case of employment that is

11 sporadic, irregular, and seasonal in nature.

12 ‘‘(5) EMPLOYEE’S IMMEDIATE FAMILY.—

13 ‘‘(A) IN GENERAL.—Except as provide in

14 paragraph (2), the term ‘employee’s immediate

15 family’ means the individual’s spouse, and in16 cludes all the individual’s children

17 ‘‘(B) SPOUSE.—The term ‘spouse’ means,

18 with respect to an individual, the individual to

19 which the individual is married. Marital status

20 shall be determined in accordance with section

21 7703 of the Internal Revenue Code of 1986.

22 ‘‘(C) CHILD.—The term ‘child’ means,

23 with respect to a person who is not a child, an

24 individual—

25 ‘‘(i) who is—
49

HR 1965 IH

1 ‘‘(I) unmarried and under 18

2 years of age; or

3 ‘‘(II) unmarried and under 23

4 years of age and a full-time student;

5 or

6 ‘‘(III) an unmarried, dependent

7 child, regardless of age, who is incapa8 ble of self-support because of mental

9 or physical disability; and

10 ‘‘(ii)(I) who is the child of the individ11 ual or the individual’s spouse; or

12 ‘‘(II) who is the legal ward of the in13 dividual or the individual’s spouse; and

14 ‘‘(iii) who is not in the legal custody

15 of another individual.

16 The Secretary shall establish, by regulation,

17 such rules as are appropriate with respect to

18 the treatment of foster children, emancipated

19 minors, children in the process of adoption, and

20 other unmarried individuals under 23 years of

21 age under similar circumstances as children for

22 purposes of this title.

23 ‘‘(6) FULL-TIME EQUIVALENT EMPLOYEES.—

24 The term ‘full-time equivalent employees’, with re25 spect to an employer, means a number equal to the
50

HR 1965 IH

1 total man hours of service for which an employer

2 has provided compensation in a calendar year di3 vided by the sum of 2080.

4 ‘‘(7) ANNUAL VOUCHER DEPOSIT PREMIUM.—

5 The term ‘annual voucher deposit premium’ means

6 an amount equal to $3200 for the taxable year

7 1993. In the case of any taxable year beginning

8 after 1993, the annual voucher deposit premium

9 shall be the premium (which would be in effect

10 under this title for the taxable year beginning in the

11 preceding calendar year) increased by an amount no

12 less than an amount equal to the prior year’s pre13 mium multiplied by the percentage increase in the

14 CPI for the previous 12 month period. In no year

15 shall the premium be less than 103% of the preced16 ing year’s annual voucher deposit premium.

17 ‘‘(8) INSURANCE CARRIER.—The term ‘insur18 ance carrier’ means a private entity that offers cer19 tified health insurance (as defined by this title) to

20 an individual; including employers or labor organiza21 tions offering such policies, or the trustees of a fund

22 established by one or more employers or labor orga23 nization (or combination thereof) for employees or

24 former employees (or combination thereof) of the

25 labor organizations.
51

HR 1965 IH

1 ‘‘SMALL EMPLOYER HEALTH INSURANCE

2 REFORM

3 ‘‘SEC. 2204. (a) IN GENERAL.—

4 ‘‘(1) Each small employer carrier shall register

5 with the Secretary.

6 ‘‘(2) Nothing in paragraph (1) shall be con7 strued as preventing the applicable regulatory au8 thority in a State from requiring, in the case of car9 riers that are not self-insurance carriers, such addi10 tional information in conjunction with, or apart

11 from, the registration required under paragraph (1)

12 as the applicable regulatory authority may be au13 thorized to require under State law.

14 ‘‘(b) GUARANTEED OFFERING OF PLAN.—

15 ‘‘(1) A small employer carrier (hereafter re16 ferred to as carrier) that offers a health plan to

17 small employers located in a community must offer

18 the same plan to any other small employer located

19 in the community. Such requirement shall apply on

20 a continuous, year round basis.

21 ‘‘(2) A carrier may refuse to issue or renew or

22 terminate a plan only for—

23 ‘‘(A) nonpayment of premiums; and

24 ‘‘(B) fraud or misrepresentation.
52

HR 1965 IH

1 ‘‘(c) MINIMUM PLAN PERIOD.—A carrier may not

2 offer to, or issue with respect to, a small employer a small

3 employer health plan with a term of less than 12 months.

4 ‘‘(d) RENEWAL AND RATES.—

5 ‘‘(1) The small employer carrier of a small em6 ployer health plan shall provide for notice, at least

7 30 days before the date of expiration of the health

8 plan, of the terms for renewal of the plan. Except

9 with respect to rates and administrative changes, the

10 terms of renewal (including benefits) shall be the

11 same as the terms of issuance.

12 ‘‘(2) The carrier may change the terms of such

13 renewal, but the premium rates charged with respect

14 to such renewal shall be the same as that for a new

15 issue.

16 ‘‘(3) The period of renewal of each small em17 ployer health plan shall be for a period of not less

18 than 12 months.

19 ‘‘(e) DEFINITIONS.—

20 ‘‘(1) SMALL EMPLOYER HEALTH PLAN.—The

21 term ‘small employer health plan’ means an employ22 ment-related health plan insofar as it offers a basic

23 package of benefits, that equal or exceed the require24 ments of Section 2202 of this Title, with respect to

25 a small employer.
53

HR 1965 IH

1 ‘‘(2) SMALL EMPLOYER CARRIER.—The term

2 ‘small employer carrier’ means any carrier which of3 fers small employer health plans.

4 ‘‘(3) SMALL EMPLOYER.—For the purposes of

5 this section the term ‘small employer’ means any

6 employer employing 100 or less full-time equivalent

7 employees.’’.

8 SEC. 5. DEDUCTION FOR NATIONAL CARE VOUCHERS FOR

9 SMALL EMPLOYERS.

10 (a) IN GENERAL.—Section 162 of the Internal Reve11 nue Code of 1954 (relating to trade or business expense)

12 is amended by redesignating subsection (l) as subsection

13 (m) and by inserting the following new subsection:

14 ‘‘(1) DEDUCTION FOR SMALL EMPLOYERS.—

15 ‘‘(1) The expenses paid or incurred by a small

16 employer for a certified health care insurance policy

17 (as defined in section 2204 of title XXII of the So18 cial Security Act) shall be allowed as a deduction

19 under this section at the rate of 125 percent of the

20 amount paid or incurred by the small employer (as

21 defined by title XXII of the Social Security Act) in

22 the taxable year.

23 ‘‘(2) The deduction allowed to any small em24 ployer by reason of this subsection for any taxable
54

HR 1965 IH

1 year shall not exceed the portion of the taxable in2 come of such employer for such taxable year.’’

3 SEC. 6. EQUITY TAX.

4 (a) Section 310 of the Trade Act of 1974 (19 U.S.C.

5 2420) is amended by adding at the end the following new

6 subsection:

7 ‘‘(e) HIGH COST PRIORITY FOREIGN COUNTRY DES8 IGNATION.—

9 ‘‘(1) MANDATORY IDENTIFICATION.—For pur10 poses of this section, a country shall be identified by

11 the Trade Representative as a high cost priority for12 eign country with respect to the priority practices of

13 such foreign country, if—

14 ‘‘(A) the amount of the trade deficit be15 tween the United States and such country for

16 the calendar year for which a report under sec17 tion 181 is submitted exceeds 15 percent of the

18 amount of the total trade deficit of the United

19 States for such calendar year; and

20 ‘‘(B) such country has not entered into a

21 free trade agreement with the United States.

22 ‘‘(2) ANNUAL REVIEW.—Not later than the

23 30th day of January for each calendar year after the

24 date of enactment the Trade Representative shall

25 identify all high cost priority foreign countries and
55

HR 1965 IH

1 provide such designation to the United States Con2 gress, and the respected committees of jurisdiction.

3 This list shall be reviewed accordingly each year to

4 reflect changes in the trade deficit between the Unit5 ed States and the affected foreign country.

6 ‘‘(3) IMPOSITION OF EQUITY TAX.—

7 ‘‘(A) Entries of merchandise of a country

8 designated as a high cost priority foreign coun9 try shall be subject to the imposition of a 1 per10 cent tax to be levied upon the value of the mer11 chandise.

12 ‘‘(B) Merchandise subject to such tax

13 which is entered, or withdrawn from warehouse,

14 for consumption on or after the date of publica15 tion of the Trade Representative’s annual re16 view of high cost priority countries shall be sub17 ject to the imposition of the 1 percent tax to be

18 levied upon the value of the merchandise.

19 ‘‘(C) The administering authority shall

20 transfer any funds collected under the authority

21 of this section to the General Fund of the Unit22 ed States, no later than 30 days from the date

23 of collection.
56

HR 1965 IH

1 ‘‘(4) EFFECTIVE DATE.—This subsection shall

2 be effective upon date of enactment and shall remain

3 in effect for calendar years 1994 through 2005.’’.

4 (b) EQUITY HEALTH INSURANCE TRUST FUND.—

5 (1) IN GENERAL.—Subchapter A of chapter 98

6 of the Internal Revenue Code of 1986 (relating to

7 trust fund code) is amended by adding at the end

8 the following new section:

9 ‘‘SEC. 9511. EQUITY HEALTH INSURANCE TRUST FUND

10 ‘‘(a) CREATION OF TRUST FUND.—There is estab11 lished in the Treasury of the United States a trust fund

12 to be known as the ‘Equity Health Insurance Trust Fund’.

13 ‘‘(b) TRANSFERS.—There are hereby appropriated to

14 the Equity Health Insurance Trust Fund amounts equiva15 lent to the taxes received in the Treasury after December

16 31, 1993, under section 310(e) of the Trade Act of 1974

17 (relating to high cost priority countries and imposition of

18 equity tax).

19 ‘‘(c) EXPENDITURES.—Amounts in the Equity

20 Health Insurance Trust Fund shall be available to provide

21 payments to national voucher accounts under title XXII

22 of the Social Security Act.’’.

23 (2) CLERICAL AMENDMENT.—The table of sec24 tion for such subchapter A is amended by adding at

25 the end the following new item:

‘‘Sec. 9511. Equity Health Insurance Trust Fund.’’.
57

HR 1965 IH

1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to amounts received

3 after December 31, 1994.

Æ

HR 1965 IH——2

HR 1965 IH——3

HR 1965 IH——4