I 
115TH CONGRESS 
1ST SESSION H. R. 1275 
To eliminate the individual and employer health coverage mandates under 
the Patient Protection and Affordable Care Act, to expand beyond that 
Act the choices in obtaining and financing affordable health insurance 
coverage, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 1, 2017 
Mr. SESSIONS introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, and Education and the Workforce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
of such provisions as fall within the jurisdiction of the committee con-
cerned 
A BILL 
To eliminate the individual and employer health coverage 
mandates under the Patient Protection and Affordable 
Care Act, to expand beyond that Act the choices in 
obtaining and financing affordable health insurance cov-
erage, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; PURPOSES; TABLE OF CON-
TENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘World’s Greatest Healthcare Plan of 2017’’. 
(b) PURPOSES.—The purposes of this Act are as fol-
lows: 
(1) ELIMINATION
OF
INDIVIDUAL
AND
EM-
PLOYER MANDATES UNDER ACA.—To eliminate man-
dates on individuals and employers, and other tax 
requirements, imposed under Patient Protection and 
Affordable Care Act. 
(2) PROVIDING
STATES
WITH
ALTERNATIVE, 
AFFORDABLE
COVERAGE
OPTIONS.—To 
provide 
greater flexibility in providing States with options in 
making affordable health insurance coverage avail-
able by eliminating certain mandates under PPACA, 
while retaining essential consumer protections, by 
promoting health savings accounts to pay for such 
coverage and long-term care coverage, while permit-
ting States to continue coverage as provided under 
PPACA. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; purposes; table of contents. 
Sec. 2. Definitions. 
TITLE I—REVISIONS OF PPACA 
Subtitle A—Elimination of Individual and Employer Mandates 
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Sec. 101. Repeal of individual health insurance mandate. 
Sec. 102. Repeal of employer health insurance mandate. 
Sec. 103. Clarifying employer’s ability to reimburse employee premiums for 
purchase of individual health insurance coverage. 
Subtitle B—Limitation on Application of PPACA Plan Requirements 
Sec. 121. Limiting application of requirements to consumer protections. 
Sec. 122. Offering of basic health insurance; protection of assets from liability 
or attachment or seizure. 
Subtitle C—Health Insurance Tax Benefit 
Sec. 131. Health insurance tax benefit. 
Sec. 132. Application of portion of unused tax credits by States for indigent 
health care. 
Sec. 133. Medicaid option of enrollment under private plan and contribution to 
an HSA. 
TITLE II—IMPROVING HEALTH SAVINGS ACCOUNTS TO PROMOTE 
ACCOUNTABILITY 
Sec. 201. Transition to non-deductible HSAs. 
Sec. 202. Elimination of medical expense deduction. 
Sec. 203. Treatment of HSA after death of account beneficiary. 
Sec. 204. Treatment of concierge medicine. 
TITLE III—STATE FLEXIBILITY IN REGULATION OF HEALTH 
INSURANCE COVERAGE 
Sec. 301. State flexibility in regulation of health insurance coverage. 
TITLE IV—MEDICAID PAYMENT REFORM 
Sec. 401. Medicaid payment reform. 
TITLE V—INCREASING PRICE TRANSPARENCY AND FREEDOM OF 
PRACTICE 
Sec. 501. Ensuring access to emergency services without excessive charges for 
out-of-network services. 
Sec. 502. Publishing of cash price for care paid through health savings ac-
counts. 
Sec. 503. Liberating the local practice of health care. 
SEC. 2. DEFINITIONS. 
Except as otherwise provided, in this Act: 
(1) BASIC
HEALTH
INSURANCE.—The term 
‘‘basic health insurance’’ is defined in section 
122(a). 
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(2) 
DEFAULT
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘‘default health insurance cov-
erage’’ is defined in section 121(b)(4)(B). 
(3) EXCHANGE.—The term ‘‘Exchange’’ means 
an Exchange established under title I of PPACA. 
(4) HEALTH
INSURANCE
COVERAGE; GROUP 
HEALTH PLAN, ETC.—The terms defined in section 
2791 of the Public Health Service Act, including 
‘‘health insurance coverage’’, ‘‘group health plan’’ 
‘‘individual market’’, shall apply. 
(5) LIMITED BENEFIT INSURANCE.—The term 
‘‘limited benefit insurance’’ is defined in section 
122(b). 
(6) PPACA.—The term ‘‘PPACA’’ means the 
Patient Protection and Affordable Care Act (Public 
Law 111–148). 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(8) STATE.—The term ‘‘State’’ includes the 
District of Columbia, Puerto Rico, the United States 
Virgin Islands, American Samoa, Guam, and the 
Northern Mariana Islands. 
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TITLE I—REVISIONS OF PPACA 
Subtitle A—Elimination of 
Individual and Employer Mandates 
SEC. 101. REPEAL OF INDIVIDUAL HEALTH INSURANCE 
MANDATE. 
Section 5000A of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sub-
section: 
‘‘(h) TERMINATION.—This section shall not apply 
with respect to any month beginning more than 30 days 
after the date of the enactment of the World’s Greatest 
Healthcare Plan of 2017.’’. 
SEC. 102. REPEAL OF EMPLOYER HEALTH INSURANCE MAN-
DATE. 
(a) IN GENERAL.—Chapter 43 of the Internal Rev-
enue Code of 1986 is amended— 
(1) by striking section 4980H; and 
(2) by striking the item relating to section 
4980H from the table of sections for such chapter. 
(b) REPEAL
OF RELATED REPORTING REQUIRE-
MENTS.—Subpart D of part III of subchapter A of chap-
ter 61 of such Code is amended by striking section 6056 
and by striking the item relating to section 6056 in the 
table of sections for such subpart. 
(c) CONFORMING AMENDMENTS.— 
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(1) Section 6724(d)(1)(B) of such Code is 
amended— 
(A) by inserting ‘‘or’’ at the end of clause 
(xxiii); 
(B) by striking ‘‘, or’’ at the end of clause 
(xxiv) and inserting a period; and 
(C) by striking clause (xxv). 
(2) Section 6724(d)(2) of such Code is amend-
ed by inserting ‘‘or’’ at the end of subparagraph 
(FF), by striking ‘‘, or’’ at the end of subparagraph 
(GG) and inserting a period, and by striking sub-
paragraph (HH). 
(3) Section 1513 of the Patient Protection and 
Affordable Care Act is amended by striking sub-
section (c). 
(d) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to months and other periods 
beginning more than 30 days after the date of the 
enactment of this Act. 
(2) REPEAL
OF
STUDY
AND
REPORT.—The 
amendment made by subsection (c)(3) shall take ef-
fect on the date of the enactment of this Act. 
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SEC. 103. CLARIFYING EMPLOYER’S ABILITY TO REIM-
BURSE 
EMPLOYEE 
PREMIUMS 
FOR 
PUR-
CHASE OF INDIVIDUAL HEALTH INSURANCE 
COVERAGE. 
An employer health care arrangement, such as a 
health or medical reimbursement arrangement (HRA) or 
other employment plans, under which an employer reim-
burses an employee for the premiums for the purchase of 
individual health insurance coverage does not constitute 
a group health plan for any purposes, including for pur-
poses of applying any of the following: 
(1) The Public Health Service Act (including 
sections 2711 and 2714 of such Act, 42 U.S.C. 
300gg–11, 300gg–14). 
(2) The Patient Protection and Affordable Care 
Act. 
(3) The Internal Revenue Code of 1986. 
(4) The Employee Retirement Income Security 
Act of 1974. 
(5) The HIPAA privacy regulations (as defined 
in section 1180(b)(3) of the Social Security Act, 42 
U.S.C. 1320d–9(b)(3)). 
(6) The Health Insurance Portability and Ac-
countability Act of 1996. 
(7) COBRA continuation coverage under title 
XXII of the Public Health Service Act (42 U.S.C. 
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300bb–1 et seq.), section 4980B of the Internal Rev-
enue Code of 1986, or title VI of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 
1161 et seq.). 
Subtitle B—Limitation on Applica-
tion of PPACA Plan Require-
ments 
SEC. 121. LIMITING APPLICATION OF REQUIREMENTS TO 
CONSUMER PROTECTIONS. 
(a) REMOVAL
OF PPACA PLAN REQUIREMENTS, 
OTHER THAN CERTAIN CONSUMER PROTECTIONS.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, with respect to group health plans 
and health insurance coverage whether or not of-
fered through an Exchange, except as provided in 
paragraphs (2) and (3), the provisions of title 
XXVII of the Public Health Service Act (42 U.S.C. 
300gg et seq.) as in effect on the day before the date 
of the enactment of PPACA shall apply instead of 
the provisions of such title as in effect after such 
date. 
(2) PPACA CONSUMER
PROTECTIONS
CON-
TINUING TO BE APPLIED.—The following sections of 
the Public Health Service Act, that were added or 
amended by subtitles A and C of title I of PPACA, 
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shall continue to apply to group health plans and to 
health insurance coverage offered in the individual 
and group market: 
(A) NO LIFETIME OR ANNUAL LIMITS.— 
Section 2711 (42 U.S.C. 300gg–11; relating to 
no lifetime or annual limits), except in the case 
of limited benefit insurance (as defined in sec-
tion 122(b)). 
(B) DEPENDENT
COVERAGE
THROUGH 
AGE 26.—Section 2714 (42 U.S.C. 300bb–14; 
relating to extension of dependent coverage). 
(C) 
MODIFIED
GUARANTEED
AVAIL-
ABILITY.—Section 2702 (42 U.S.C. 300gg–1; 
relating to guaranteed availability of coverage), 
subject to paragraph (3) and subsection (c). 
(D) GUARANTEED
RENEWABILITY.—Sec-
tion 2703 (42 U.S.C. 300gg–2; relating to 
guaranteed renewability of coverage). 
(E) PROHIBITING
PRE-EXISTING
CONDI-
TION EXCLUSIONS.—Section 2704 (42 U.S.C. 
300gg–3; relating to prohibition on preexisting 
conditions). 
(F) PROHIBITING DISCRIMINATION BASED 
ON HEALTH STATUS.—Section 2705 (42 U.S.C. 
300gg–4; relating to prohibiting discrimination 
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against individual participants and beneficiaries 
based on health status), subject to subsection 
(c). 
(G) 
NON-DISCRIMINATION
IN
HEALTH 
CARE.—Section 2706 (42 U.S.C. 300gg–5; re-
lating to non-discrimination in health care). 
(3) APPLICATION
OF
A
LATE
ENROLLMENT 
PENALTY FOR THOSE WITHOUT CONTINUOUS COV-
ERAGE.— 
(A) IN GENERAL.—In the case of an indi-
vidual who seeks to enroll in health insurance 
coverage and who, as of the effective date of 
such enrollment, does not have a continuous pe-
riod of at least 12 months of creditable cov-
erage, there shall be imposed a late enrollment 
penalty in the form of an increase in the 
monthly premiums for coverage of under the 
plan of 20 percent of the monthly premium oth-
erwise determined for each consecutive full 12- 
month period (ending before such effective 
date) in which the individual was not enrolled 
in creditable coverage. Such increase shall apply 
during a period, to be specified under regula-
tions of the Secretary but in no case longer 
than 3 times the length of the most recent pe-
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riod in which the individual did not have contin-
uous coverage. 
(B) STATE WAIVER.—A State may apply 
to the Secretary for a waiver of the provisions 
of subparagraph (A) and the application of al-
ternative provisions providing incentives for 
State residents to enroll in creditable coverage 
and maintain continuous creditable coverage. 
The Secretary shall approve such waiver if the 
Secretary determines that the alternative provi-
sions provide similar or greater incentives for 
such enrollment than the incentives otherwise 
applicable. 
(4) COORDINATING IMPLEMENTATION OF PRE- 
PPACA
PHSA
PROVISIONS
WITH
PPACA
CONSUMER 
PROTECTIONS.— 
(A) IN GENERAL.—In applying this sub-
section, the provisions described in paragraph 
(2) shall be treated as if they were included in 
title XXVII of the Public Health Service Act, 
as in effect before the date of enactment of 
PPACA, and, with respect to group health 
plans and health insurance coverage offered in 
connection with such plans, in part 7 of subtitle 
B of title I of the Employee Retirement and In-
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come Security Act of 1974 (29 U.S.C. 1181 et 
seq.), and, with respect to group health plans, 
in chapter 100 of the Internal Revenue Code of 
1986 as follows: 
(i) LIFETIME
LIMITS; 
DEPENDENT 
COVERAGE.—The provisions described in 
paragraphs (2)(A) and (2)(B) shall be 
treated as included— 
(I) with respect to group health 
plans (and health insurance coverage 
offered with respect to such plans), 
under subpart 2 of part A of title 
XXVII of the Public Health Service 
Act (42 U.S.C. 300gg–11 et seq.) and 
subpart B of part 7 of subtitle B of 
title I of the Employee Retirement 
and Income Security Act of 1974 (29 
U.S.C. 1181 et seq.); 
(II) also with respect to group 
health plans, under subchapter B of 
chapter 100 of the Internal Revenue 
Code of 1986; and 
(III) with respect to individual 
health insurance coverage, under sub-
part 2 of part B of title XXVII of the 
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Public Health Service Act (42 U.S.C. 
300gg–15 et seq.). 
(ii) 
REMAINING
PROVISIONS.—The 
provision described in paragraph (2) (other 
than in subparagraph (A) or (B) of such 
paragraph) shall be treated as included— 
(I) with respect to group health 
plans (and health insurance coverage 
offered with respect to such plans), 
under subpart 1 of part A of title 
XXVII of the Public Health Service 
Act (42 U.S.C. 300gg et seq.) and 
subpart A of part 7 of subtitle B of 
title I of the Employee Retirement 
and Income Security Act of 1974 (29 
U.S.C. 1181 et seq.); 
(II) also with respect to group 
health plans, under subchapter A of 
chapter 100 of the Internal Revenue 
Code of 1986; and 
(III) with respect to individual 
health insurance coverage, under sub-
part 1 of part B of title XXVII of the 
Public Health Service Act (42 U.S.C. 
300gg–41 et seq.). 
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(B) CONFLICTING
PROVISIONS.—In the 
case described in paragraph (1) where there is 
a conflict between a provision described in para-
graph (2) and a provision of law described in 
paragraph (1), the provision described in para-
graph (2) shall control and the Secretary, in 
consultation with the Secretary of the Treasury 
and the Secretary of Labor, shall establish such 
rules as may be necessary to carry out this sub-
paragraph. 
(5) CONFORMING AMENDMENTS.— 
(A) ERISA.—Section 715 of the Employee 
Retirement Income Security Act of 1974 (29 
U.S.C. 1185d) is amended— 
(i) in subsection (a), by striking ‘‘sub-
section (b)’’ and inserting ‘‘subsections (b) 
and (c)’’; and 
(ii) by adding at the end the following 
new subsection: 
‘‘(c) ADDITIONAL EXCEPTION.—Pursuant to section 
121 of the World’s Greatest Healthcare Plan of 2017, the 
provisions of part A of title XXVII of the Public Health 
Service Act referred to in subsection (a), other than those 
provisions specified in section 121(a)(2) of the World’s 
Greatest Healthcare Plan of 2017, shall not apply to plans 
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and coverage described in subsection (a), whether or not 
the plans or coverage are offered through an Exchange 
established under the Patient Protection and Affordable 
Care Act.’’. 
(B) IRC.—Section 9815 of the Internal 
Revenue Code of 1986 is amended— 
(i) in subsection (a), by striking ‘‘sub-
section (b)’’ and inserting ‘‘subsections (b) 
and (c)’’; and 
(ii) by adding at the end the following 
new subsection: 
‘‘(c) ADDITIONAL EXCEPTION.—Pursuant to section 
121 of the World’s Greatest Healthcare Plan of 2017, the 
provisions of part A of title XXVII of the Public Health 
Service Act referred to in subsection (a), other than those 
provisions specified in section 121(a)(2) of the World’s 
Greatest Healthcare Plan of 2017, shall not apply to plans 
described in subsection (a).’’. 
(b) STATE FLEXIBILITY
IN ENSURING ORDERLY 
HEALTH INSURANCE MARKET OUTSIDE
OF
AN EX-
CHANGE.— 
(1) IN GENERAL.—With respect to health insur-
ance coverage offered in a State, the State may, in 
consultation with the Secretary, take such steps, 
such as limiting the availability of general open en-
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rollment periods, imposing delays in the effectiveness 
for coverage, permitting differentials in premiums 
based on age and other factors, as the State deter-
mines necessary in order to ensure an orderly mar-
ket for health insurance coverage in the State that 
is not offered through an Exchange. Such steps may 
include the establishment of such initial open enroll-
ment period during which qualified residents may 
enroll in health insurance coverage without the im-
position of any underwriting as the State determines 
to be appropriate in ensuring initial access to such 
coverage. 
(2) FLEXIBILITY IN IMPOSING ADDITIONAL RE-
QUIREMENTS.—Subject to paragraph (5), nothing in 
this section shall be construed as preventing a State 
from continuing to apply, to health insurance cov-
erage issued in the State, requirements under the 
provisions of title XXVII of the Public Health Serv-
ice Act (as amended by subtitles A and C of title I 
of PPACA) that are not continued under subsection 
(a). 
(3) STATE FLEXIBILITY WITH RESPECT TO EX-
CHANGES.—A State may waive such provisions of 
part II of subtitle D of title I of PPACA (42 U.S.C. 
18031 et seq.), in relation to the establishment of an 
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Exchange in such State, as the State determines ap-
propriate in order for the State to implement and 
administer a market-based system for the avail-
ability of health insurance coverage throughout the 
State. 
(4) STATE DEFAULT ENROLLMENT OPTION.— 
(A) ENROLLMENT, 
SUBJECT
TO
INDI-
VIDUAL
OPT-OUT.—Subject to subparagraph 
(D), a State may elect to provide for the enroll-
ment of residents of the State who are unin-
sured in default health insurance coverage (as 
defined in subparagraph (B)) and establishing a 
Roth HSA for such residents who do not have 
a Roth HSA unless the resident has affirma-
tively elected not to be so enrolled and not to 
have such an account. respectively. If a State 
makes such an election, the State shall permit 
eligible residents to enroll in such coverage on 
a continuous basis. 
(B) DEFAULT
HEALTH
INSURANCE
COV-
ERAGE DEFINED.—In this paragraph, the term 
‘‘default health insurance coverage’’ means, 
with respect to a State, health insurance cov-
erage that— 
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(i) is a high deductible health plan 
(within the meaning of section 223(c)(2) of 
the Internal Revenue Code of 1986) with 
prescription drug coverage limited to ge-
neric drugs for a limited number of chronic 
conditions (commonly referred to as tier I 
pharmacy benefit); 
(ii) meets such requirements as may 
apply to qualify for the payment of plan 
premiums from a health savings account 
under section 223 of such Code (such as 
age-related premiums and limitation on 
imposition of preexisting condition exclu-
sions); 
(iii) has a provider network for cov-
ered benefits that is adequate (as deter-
mined consistent with guidelines issued by 
the Secretary) to ensure access to health 
benefits under such plan; 
(iv) provides for coverage of childhood 
immunizations without cost sharing re-
quirements to the extent such immuniza-
tions have in effect a recommendation 
from the Advisory Committee on Immuni-
zation Practices of the Centers for Disease 
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Control and Prevention with respect to the 
individual involved; and 
(v) meets such other requirements as 
the State may specify. 
(C) ROTH
HSA.—In this paragraph, the 
term ‘‘Roth HSA’’ shall have the meaning given 
such term by section 530A(c) of the Internal 
Revenue Code of 1986, as added by section 
201(a) of this Act. 
(D) SIMPLE PROCESS FOR INDIVIDUALS TO 
OPT-OUT.—As a condition of a State providing 
for the enrollment function described in sub-
paragraph (A), the State must establish an 
easy-to-use and transparent means by which in-
dividuals may elect not to be enrolled in default 
health insurance coverage or to have a Roth 
HSA established on the individual’s behalf, or 
both. 
(5) MINIMUM AGE VARIATION PERMITTED FOR 
PREMIUM RATES.—With respect to the premium rate 
charged by a health insurance issuer for health in-
surance coverage offered in the individual or small 
group market, a State may not limit the variation by 
age in such rate with respect to a particular plan or 
coverage involved by less than a factor of 5 to 1 for 
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adults. The previous sentence shall be treated as if 
it were included in subpart I of part A of title 
XXVII of the Public Health Service Act (42 U.S.C. 
300gg et seq.). 
(c) INAPPLICABILITY
OF
REQUIRED
ESSENTIAL 
HEALTH BENEFITS.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, no health benefits plan shall be re-
quired by reason of Federal law to comply with the 
requirements of sections 1301(a)(1)(B) and 1302 of 
PPACA (42 U.S.C. 18021(a)(1)(B), 18022). 
(2) STATE FLEXIBILITY.—Nothing in this sub-
section shall be construed as preventing a State 
from applying, at its option with respect to health 
insurance coverage offered through an Exchange or 
otherwise in the State, the requirements referred to 
in paragraph (1). 
(d) EFFECTIVE DATE; TRANSITION.— 
(1) IN GENERAL.—Subsection (a), (b), and (c) 
shall apply to plan years beginning after the date of 
the enactment of this Act. 
(2) SUNSETTING REQUIRED CONTRIBUTION FOR 
ACA REINSURANCE PROGRAM.—No contribution shall 
be required under section 1341 of PPACA (42 
U.S.C. 18061) from any group health plan or health 
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insurance issuer for portions of plans years occur-
ring in months beginning more than 30 days after 
the date of the enactment of this Act. 
(e) SECRETARIAL
GUIDANCE.—The Secretary of 
Health and Human Services, in coordination with the Sec-
retary of Labor and the Secretary of the Treasury, shall 
provide such guidance as may be necessary for the coordi-
nated implementation of this section on a timely basis. 
(f) TRANSFERRING HEALTH PLAN RECORDS UPON 
CHANGING PLANS.— 
(1) IN GENERAL.—In the case of an individual 
who is covered under health insurance coverage or as 
a beneficiary or participant in a group health plan 
(as such terms are defined in section 2791 of the 
Public Health Service Act, 42 U.S.C. 300gg–91), if 
such coverage is ended and the individual obtains 
other health insurance coverage, group health plan 
coverage, or other creditable coverage (as defined for 
purposes of title XXVII of such Act), the issuer of 
the prior coverage or administrator of the prior plan 
shall forward information respecting such prior cov-
erage to the issuer of the new coverage or adminis-
trator of the new plan or coverage, as the case may 
be, subject to such rules as the Secretary establishes 
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regarding the right of the beneficiary or participant 
to object to such forwarding of information. 
(2) 
TREATMENT
AS
PLAN
REQUIREMENT 
UNDER
PHSA, ERISA, IRC.—The requirement of 
paragraph (1) shall apply as if it were a section 
under part A of title XXVII of the Public Health 
Service Act, including for purposes of applying sec-
tion 715 of the Employee Retirement Income Secu-
rity Act of 1976 (29 U.S.C. 1185d) and section 
9815 of the Internal Revenue Code of 1986. 
(g) APPLICATION OF RISK ADJUSTMENT.— 
(1) IN GENERAL.—Any issuer that offers health 
insurance coverage in the individual market in any 
of the 50 States or the District of Columbia shall 
participate in a risk adjustment mechanism under 
this subsection with respect to any health insurance 
coverage it so offers in such market, whether or not 
such coverage is offered through an Exchange. 
(2) FORM AND DESIGN OF RISK ADJUSTMENT 
MECHANISM.—The Secretary shall, in consultation 
with the National Association of Insurance Commis-
sioners and other interested parties, develop a mech-
anism to permit the adjustment of risk among 
health insurance coverage offered in the individual 
market throughout the 50 States and the District of 
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Columbia. Such mechanism shall be designed to ef-
fect the same type of risk adjustment among such 
coverage that is applicable to risk adjustment of 
payments among Medicare Advantage organizations 
under part C of title XVIII of the Social Security 
Act (42 U.S.C. 1395w–21 et seq.). 
(3) TRANSITION
FOR
NEW
COVERAGE.—The 
mechanism developed under paragraph (2) shall pro-
vide for transitional protection, over a 3-year period, 
in the case of health insurance coverage that has not 
been previously marketed. 
(4) DEVELOPMENT OF FURTHER RISK ADJUST-
MENT MECHANISM.—The Secretary shall request the 
National Association of Insurance Commissioners to 
develop a permanent model for adjustment of risk 
among health insurance issuers with respect to 
health insurance coverage offered in the individual 
market, with the intention that such a model would 
substitute for the mechanism developed under para-
graph (2). 
(5) 
TREATMENT
AS
PLAN
REQUIREMENT 
UNDER
PHSA, ERISA, IRC.—The requirement of 
paragraph (1) shall apply as if it were a section 
under part A of title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.), including for 
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purposes of applying section 715 of the Employee 
Retirement Income Security Act of 1976 (29 U.S.C. 
1185d) and section 9815 of the Internal Revenue 
Code of 1986. 
SEC. 122. OFFERING OF BASIC HEALTH INSURANCE; PRO-
TECTION OF ASSETS FROM LIABILITY OR AT-
TACHMENT OR SEIZURE. 
(a) REQUIREMENT FOR EXCHANGES.— 
(1) IN GENERAL.—No tax credit shall be allow-
able under section 36B or 36C of the Internal Rev-
enue Code of 1986 for residents of a State unless 
any Exchange established in the State provides for 
the offering of basic health insurance in all areas of 
the State. 
(2) BASIC HEALTH INSURANCE DEFINED.—In 
this subsection, the term ‘‘basic health insurance’’ 
means, with respect to a State, such health insur-
ance coverage as the State may specify and includes 
limited benefit insurance (as defined in subsection 
(b)). 
(b) LIMITED BENEFIT INSURANCE DEFINED.— 
(1) IN GENERAL.—In this title, the term ‘‘lim-
ited benefit insurance’’ means individual health in-
surance coverage that, with respect to a plan year, 
imposes (consistent with paragraph (2)) an annual 
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limit on the amounts that may be payable under the 
coverage with respect to expenses incurred for items 
and services furnished in that plan year. 
(2) SPECIFICATION
OF
ANNUAL
LIMIT; VARI-
ATION IN LIMIT FOR INDIVIDUAL AND FAMILY COV-
ERAGE.—The Secretary shall specify, from year to 
year, the annual limit (or range of annual limits) 
that may be applied under paragraph (1). Such a 
limit may distinguish between coverage that is only 
provided for an individual and coverage that is pro-
vided also for family members of the individual. 
(c) PROTECTION OF CERTAIN ASSETS IN CASE OF 
INDIVIDUALS COVERED UNDER LIMITED BENEFIT IN-
SURANCE.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, if an individual is covered under 
limited benefit insurance for a plan year and bene-
fits under such insurance have reached the annual 
limit under such insurance for items and services 
furnished in the plan year, the individual is not lia-
ble for debt incurred and arising from the provision 
of subsequently furnished items and services during 
the plan year, regardless of whether benefits are oth-
erwise covered for such items and services under 
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such policy, insofar as the liability attributable to 
such items and services exceeds— 
(A) the bankruptcy valuation of the indi-
vidual’s property at the time the debt is in-
curred; reduced by 
(B) such annual limit of benefits under the 
limited benefit insurance for the plan year. 
Property in the amount so protected from liability 
shall be exempt and immune from attachment or sei-
zure with respect to any judgment related to such 
debt. 
(2) BANKRUPTCY
VALUATION
DEFINED.—In 
this subsection, the term ‘‘bankruptcy valuation’’ 
means, with respect to property of an individual as 
of a date, the value of the property as of such date 
as determined as if the individual were a debtor in 
a bankruptcy case that could have been filed under 
title 11 of the United States Code and the property 
could not be exempt under section 522 of such title. 
(3) NO REQUIREMENT FOR PROVIDERS TO FUR-
NISH SUBSEQUENT SERVICES WITHOUT ENSURING 
PAYMENT.—Except as may be explicitly provided in 
other law (such as under section 1867 of the Social 
Security Act, 42 U.S.C. 1395dd; popularly known as 
EMTALA), a health care provider is not required to 
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furnish any items or services to an individual who 
has exhausted benefits under limited benefit insur-
ance for a plan year without the individual (or an-
other person on the individual’s behalf) providing for 
such advance or guarantee of payment for such 
items and services as may be arranged between the 
health care provider and the individual. 
Subtitle C—Health Insurance Tax 
Benefit 
SEC. 131. HEALTH INSURANCE TAX BENEFIT. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 36B the fol-
lowing new section: 
‘‘SEC. 36C. HEALTH INSURANCE TAX CREDIT. 
‘‘(a) IN GENERAL.—In the case of an individual who 
is a qualified resident, there shall be allowed as a credit 
against the tax imposed by this subtitle for any taxable 
year an amount equal to the health credit amount of the 
taxpayer for the taxable year. 
‘‘(b) HEALTH CREDIT AMOUNT.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘health credit 
amount’ means the sum of the amounts determined 
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under paragraph (2) with respect to all months of 
the taxpayer for the taxable year. 
‘‘(2) MONTHLY CREDIT AMOUNT.— 
‘‘(A) IN GENERAL.—Subject to paragraph 
(4), the amount determined under this para-
graph with respect to any month shall be an 
amount equal to the sum of— 
‘‘(i) 1⁄12 of $2,500 in the case of any 
month the first day of which the taxpayer 
is a qualified resident and is covered by 
creditable coverage (twice such amount in 
the case of a joint return if both spouses 
are so covered by creditable coverage and 
are qualified residents), plus 
‘‘(ii) 
1⁄12
of an amount equal to 
$1,500 multiplied by the number of quali-
fying children (within the meaning of sec-
tion 152) who are qualified residents 
and— 
‘‘(I) for whom the taxpayer is al-
lowed a deduction under section 151 
for the taxable year in which such 
month ends, and 
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‘‘(II) who are covered by cred-
itable coverage on the first day of 
such month. 
‘‘(B) CARRYFORWARD OF MONTHLY CRED-
IT AMOUNT IN CASE CREDIT AMOUNT EXCEEDS 
HSA
CONTRIBUTIONS
AND
PREMIUM
PAY-
MENTS.—In the case of any month for which 
the credit amount determined with respect to 
the taxpayer under subparagraph (A) exceeds 
the limitation amount determined with respect 
to the taxpayer for such month under para-
graph (3), such excess may be carried forward 
to any subsequent month during the taxable 
year for purposes of determining the credit 
amount for such month under this paragraph. 
‘‘(3) MONTHLY LIMITATION.— 
‘‘(A) IN
GENERAL.—The amount deter-
mined under paragraph (2) for any month of 
the taxpayer shall not exceed the sum of— 
‘‘(i) the amounts contributed to a 
health savings account of the taxpayer for 
such month, plus 
‘‘(ii) the premiums paid by the tax-
payer for creditable coverage. 
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‘‘(B) CARRYFORWARD OF MONTHLY LIMI-
TATION IN CASE HSA CONTRIBUTIONS AND PRE-
MIUM
PAYMENTS
EXCEED
MONTHLY
CREDIT 
AMOUNT.—In the case of any month for which 
the amount determined with respect to the tax-
payer under subparagraph (A) exceeds the cred-
it amount determined with respect to the tax-
payer for such month under paragraph (2), 
such excess may be carried forward to any sub-
sequent month during the taxable year for pur-
poses of determining the limitation under sub-
paragraph (A). 
‘‘(4) ADJUSTMENT FOR LIMITED BENEFIT IN-
SURANCE.—In the case of a taxpayer whose only 
health insurance coverage for a month is limited 
benefit insurance (as defined in section 123(b) of the 
World’s Greatest Healthcare Plan of 2017), the 
amount determined under paragraph (2) shall be de-
creased by such proportion as the Secretary, in con-
sultation with the Secretary of Health and Human 
Services, determines appropriate, taking into ac-
count the ratio of the actuarial value of such limited 
benefit insurance to the average actuarial value of 
health insurance coverage that is not limited benefit 
insurance. 
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‘‘(5) ADJUSTMENT FOR GEOGRAPHIC AREA AND 
AGE OF COVERED INDIVIDUAL.—The amount deter-
mined under paragraph (2) shall be adjusted, in a 
manner specified by the Secretary, in consultation 
with and based on data collected by the Secretary of 
Health and Human Services, to take into account, 
for a taxpayer or other covered individual of an age 
and residing in an area, the ratio of the average cost 
of typical individual health insurance coverage for an 
individual of such age and residing in such area to 
the national average cost of such typical health in-
surance coverage. Such adjustment shall be made in 
a manner so that the application of this paragraph 
is estimated not to change the aggregate amount of 
the credits allowable under this section for taxable 
years ending in a year. 
‘‘(c) COORDINATION
WITH
EMPLOYER-PROVIDED 
HEALTH INSURANCE TAX SUBSIDY.— 
‘‘(1) CREDIT LIMITED BY EMPLOYER-PROVIDED 
HEALTH INSURANCE TAX SUBSIDY.—The credit al-
lowed under this section for any taxable year shall 
not exceed an amount equal to the excess (if any) 
of— 
‘‘(A) the maximum credit which would be 
allowed for all months of the taxpayer during 
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the taxable year (determined under subsection 
(b)(2) and without regard to this subsection, 
the limitation under subsection (b)(3), and any 
reduction under subsection (d)(1)), over 
‘‘(B) the taxpayer’s employer-provided 
health insurance tax subsidy for the taxable 
year. 
‘‘(2) EMPLOYER-PROVIDED HEALTH INSURANCE 
TAX SUBSIDY.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘employer- 
provided health insurance tax subsidy’ means, 
with respect to any taxpayer for a taxable year, 
the sum of— 
‘‘(i) the Federal income tax subsidy of 
the taxpayer for the taxable year, plus 
‘‘(ii) the Federal payroll tax subsidy 
of the taxpayer for the taxable year. 
‘‘(B) FEDERAL INCOME TAX SUBSIDY.— 
The term ‘Federal income tax subsidy’ means, 
with respect to any taxpayer for the taxable 
year, the excess (if any) of— 
‘‘(i) the amount of tax that would 
have been imposed by this chapter for the 
taxable year had such tax been determined 
without regard to this section and by in-
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‘‘(II) the amount of tax that 
would have been imposed by chapter 2 
on any self-employment income of the 
taxpayer for such taxable year had 
self-employment income been deter-
mined without regard to any deduc-
tion from gross income for amounts 
paid for insurance which constitutes 
medical care for the taxpayer, the tax-
payer’s spouse, and any qualifying 
children (within the meaning of sec-
tion 152) for whom the taxpayer is al-
lowed a deduction under section 151 
for the taxable year, over 
‘‘(ii) the amount of tax imposed with 
respect to the taxpayer during such taxable 
year under chapter 21 and for such taxable 
year under chapter 2. 
‘‘(d) RECONCILIATION
OF CREDIT
AND ADVANCE 
CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit 
allowed under this section for any taxable year (after 
the application of subsections (b) and (c)) shall be 
reduced (but not below zero) by the amount of any 
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advance payment of such credit under subsection 
(e)(1). 
‘‘(2) EXCESS ADVANCE PAYMENTS.— 
‘‘(A) IN GENERAL.—If the advance pay-
ments to a taxpayer under subsection (e)(1) for 
a taxable year exceed the credit allowed by this 
section (determined without regard to para-
graph (1)), the tax imposed by this chapter for 
the taxable year shall be increased by the 
amount of such excess. 
‘‘(B) LIMITATION ON INCREASE.—In the 
case of a taxpayer whose household income is 
less than 400 percent of the poverty line for the 
size of the family involved for the taxable year, 
the amount of the increase under subparagraph 
(A) shall in no event exceed the applicable dol-
lar amount determined in accordance with the 
following table (one-half of such amount in the 
case of a taxpayer whose tax is determined 
under section 1(c) for the taxable year): 
‘‘If the household income
(expressed as a percent
of poverty line) is: 
The applicable 
dollar 
amount is: 
Less than 200% ..............................................................
$600
At least 200% but less than 300% ................................
$1,500
At least 300% but less than 400% ................................
$2,500. 
‘‘(e) SPECIAL RULES.—For purpose of this section— 
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‘‘(iv) Any information provided to 
such person necessary to determine eligi-
bility for, and the amount of, such credit. 
‘‘(v) Information necessary to deter-
mine whether a taxpayer has received ex-
cess advance payments. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to any coverage with respect to 
which reporting under section 6051 is required. 
‘‘(3) INDEXING.— 
‘‘(A) IN GENERAL.—In the case of any cal-
endar year beginning after 2016, each of the 
dollar amounts in subsection (b)(2) and in the 
table contained under subsection (d)(2)(B) shall 
be equal to such dollar amount multiplied by 
the ratio of— 
‘‘(i) the current dollar gross domestic 
product (as determined based on the third 
estimate of the Bureau of Economic Anal-
ysis of the Department of Commerce for 
the second quarter of the previous year), to 
‘‘(ii) the current dollar gross domestic 
product (as so determined) for the second 
quarter of 2015. 
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‘‘(B) ROUNDING.—If the amount of any 
change under subparagraph (A) is not a mul-
tiple of $50, such change shall be rounded to 
the next lowest multiple of $50. 
‘‘(f) DEFINITIONS.—For purposes of this section— 
‘‘(1) CREDITABLE COVERAGE.— 
‘‘(A) IN GENERAL.—The term ‘creditable 
coverage’ has the meaning given such term for 
purposes of title XXVII of the Public Health 
Service Act. Such term shall not include cov-
erage under any health plan that includes cov-
erage for abortions (other than any abortion de-
scribed in subparagraph (B)). 
‘‘(B) EXCEPTION.—The second sentence of 
subparagraph (A) shall not apply to an abor-
tion— 
‘‘(i) if the pregnancy is the result of 
an act of rape or incest, or 
‘‘(ii) in the case where a woman suf-
fers from a physical disorder, physical in-
jury, or physical illness that would, as cer-
tified by a physician, place the woman in 
danger of death unless an abortion is per-
formed, including a life-endangering phys-
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ical condition caused by or arising from 
the pregnancy itself. 
‘‘(C) SEPARATE ABORTION COVERAGE OR 
PLAN ALLOWED.— 
‘‘(i) OPTION TO PURCHASE SEPARATE 
COVERAGE OR PLAN.—Nothing in subpara-
graph (A) shall be construed as prohibiting 
any individual from purchasing separate 
coverage for abortions described in such 
subparagraph, or a health plan that in-
cludes such abortions, so long as no credit 
is allowed under this section with respect 
to the premiums for such coverage or plan. 
‘‘(ii) OPTION TO OFFER COVERAGE OR 
PLAN.—Nothing in subparagraph (A) shall 
restrict any non-Federal health insurance 
issuer offering a health plan from offering 
separate coverage for abortions described 
in such subparagraph, or a plan that in-
cludes such abortions, so long as premiums 
for such separate coverage or plan are not 
paid for with any amount attributable to 
the credit allowed under this section (or 
the amount of any advance payment of the 
credit). 
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‘‘(2) QUALIFIED RESIDENT.—The term ‘quali-
fied resident’ means an individual who is a citizen or 
national of the United States or otherwise lawfully 
residing in the United States under color of law.’’. 
(b) DISQUALIFICATION FROM EXCHANGE PLAN SUB-
SIDIES FOR INDIVIDUAL ONCE THEY ELECT TAX BENE-
FITS.—Section 36B(c)(1) of such Code is amended by 
adding at the end the following new subparagraph: 
‘‘(E) DENIAL
OF
CREDIT
FOR
THOSE 
ELECTING UNIVERSAL CREDIT.—In the case of 
an individual who is allowed a credit under sec-
tion 36C for any taxable year, no credit shall be 
allowed under this section to such individual for 
such taxable year or any subsequent taxable 
year.’’. 
(c) GUIDANCE.—The Secretary of the Treasury shall 
issue such guidance as is necessary— 
(1) to assist employees and employers in adjust-
ing Federal income tax withholding to take into ac-
count the health insurance tax credit under section 
36C of the Internal Revenue Code of 1986 (and any 
advance payment thereof), and 
(2) to require employers to report to each em-
ployee with respect to periods not longer than quar-
terly the employer-provided health insurance tax 
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subsidy (as defined in section 36C(c)(2) of such 
Code) with respect to such employee for such period. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 36B the following 
new item: 
‘‘Sec. 36C. Health insurance tax credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2015. 
SEC. 132. APPLICATION OF PORTION OF UNUSED TAX 
CREDITS BY STATES FOR INDIGENT HEALTH 
CARE. 
(a) COMPUTATION OF UNUSED CREDITS.—The Sec-
retary, in consultation with the Secretary of the Treasury, 
shall calculate for each State for each year, beginning with 
2017, using the most recent data available — 
(1) the maximum aggregate amount of credits 
under section 36C of the Internal Revenue Code of 
1986 that would have been allowed for the year for 
qualified residents of the State for taxable years 
ending in the year if all eligible qualified residents 
had qualified for such credits; 
(2) the aggregate amount of credits under such 
section that were allowed for taxable years ending in 
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that the year by qualified residents of such State; 
and 
(3) 25 percent of the amount by which— 
(A) the amount determined under para-
graph (1) with respect to qualified residents of 
the State for such year; exceeds 
(B) the amount determined under para-
graph (2) for such State for that year. 
(b) APPROPRIATION.—For the purpose of making 
grants to States under this section, there is hereby appro-
priated to the Secretary, out of any funds in the Treasury 
not otherwise appropriated, for each year (beginning with 
2017) an amount equivalent to the amount determined 
under subsection (a)(3) for all States under subsection (a) 
for the year in which such fiscal year ends, subject to ad-
justment under subsection (d)(2). 
(c) GRANTS
TO STATES
FOR INDIGENT ASSIST-
ANCE.— 
(1) APPLICATION.—A State may file with the 
Secretary (in a form and manner specified by the 
Secretary) an application to provide assistance in 
furnishing health services to indigent individuals re-
siding in the State. Such application shall dem-
onstrate the manner in which such assistance is fur-
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nished in an equitable manner to individuals residing 
in all parts of the State. 
(2) AMOUNT OF FUNDS.—From the funds ap-
propriated under subsection (b) for a year, the 
amount of funds paid to any State in any year 
under this section with an application filed in ac-
cordance with paragraph (1) is equal to an amount 
specified in the application, but not to exceed the 
amount computed under subsection (a)(3) for the 
State and the year. 
(3) USE OF FUNDS.—Funds paid to a State 
under this subsection may be used only to assist in 
the furnishing of health services to uninsured indi-
viduals residing in the State or for purposes of in-
creasing the payment adjustments made under sec-
tions 1886(d)(5)(F) and 1923 of the Social Security 
Act (42 U.S.C. 1395ww(d)(5)(F), 1396r–4) to hos-
pitals that serve a disproportionate share of such in-
dividuals in the State. 
(d) INITIAL ESTIMATE; FINAL CALCULATION AND 
RECONCILIATION.— 
(1) USE
OF
ESTIMATES.—The calculations 
under subsection (a) for a year shall initially be esti-
mated before the beginning of the year. Payments 
under this section to a State for a year shall be 
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made, subject to reconciliation under paragraph (2), 
based on the amount so estimated. 
(2) RECONCILIATION
BASED
ON
FINAL
CAL-
CULATION.—The calculations under subsection (a) 
for a year shall also be made after the end of the 
year. Insofar as the amount calculated under this 
paragraph for subsection (a)(3) for a State for a 
year exceeds (or is less than) by a material amount 
from the amount for subsection (a)(3) estimated and 
applied for the State and year under paragraph (1), 
the amount calculated under subsection (a)(3) for 
the State for the 2nd year beginning after such year, 
shall be reduced or increased, respectively by the 
amount of such excess or deficit. 
SEC. 133. MEDICAID OPTION OF ENROLLMENT UNDER PRI-
VATE PLAN AND CONTRIBUTION TO AN HSA. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, a State plan under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.) may make available 
to an individual, who is entitled to medical assistance for 
a full range of acute care items and services under such 
title and at the individual’s option, instead of the medical 
assistance otherwise provided, medical assistance con-
sisting of coverage under a health plan that qualifies for 
a tax credit under section 36C of the Internal Revenue 
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Code of 1986, but only if the State provides for the indi-
vidual medical assistance, in the form of a deposit into 
a health savings account for the individual, an amount 
equivalent to the amount by which the amount of tax cred-
it for the individual under such section exceeds the cost 
of coverage of the individual under the plan. 
(b) FFP TREATMENT.—The payments by a State de-
scribed in subsection (a) for coverage under a health plan 
and for deposit into a health savings account shall be 
treated as medical assistance for purposes of section 1903 
of the Social Security Act (42 U.S.C. 1396b) and subject 
to Federal financial participating, including the applica-
tion of State matching payments, in the same manner as 
other medical assistance furnished under title XIX of such 
Act, except that such amount shall be reduced by the 
amount of .any health insurance credits provided under 
section 36C of the Internal Revenue Code of 1986 with 
respect to such coverage or deposit. 
SEC. 134. REPEAL OF THE TAX ON EMPLOYEE HEALTH IN-
SURANCE PREMIUMS AND HEALTH PLAN 
BENEFITS AND RELATED REPORTING RE-
QUIREMENTS. 
(a) EXCISE TAX.—Chapter 43 of the Internal Rev-
enue Code of 1986 is amended by striking section 4980I. 
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(b) REPORTING REQUIREMENT.—Section 6051(a) of 
such Code is amended by inserting ‘‘and’’ at the end of 
paragraph (12), by striking ‘‘, and’’ at the end of para-
graph (13) and inserting a period, and by striking para-
graph (14). 
(c) CLERICAL AMENDMENT.—The table of sections 
for chapter 43 of such Code is amended by striking the 
item relating to section 4980I. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2019. 
(2) REPORTING
REQUIREMENT.—The amend-
ment made by subsection (b) shall apply to calendar 
years beginning after December 31, 2016. 
TITLE II—IMPROVING HEALTH 
SAVINGS ACCOUNTS TO PRO-
MOTE ACCOUNTABILITY 
SEC. 201. TRANSITION TO NON-DEDUCTIBLE HSAS. 
(a) NON-DEDUCTIBLE
HSAS.—Subchapter F of 
chapter 1 of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new part: 
‘‘PART IX—HEALTH SAVINGS ACCOUNTS 
‘‘Sec. 530A. Roth HSAs. 
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‘‘SEC. 530A. ROTH HSAS. 
‘‘(a) IN GENERAL.—A Roth HSA shall be exempt 
from taxation under this subtitle. Notwithstanding the 
preceding sentence, the Roth HSA shall be subject to the 
taxes imposed by section 511 (relating to imposition of 
tax on unrelated business income of charitable organiza-
tions). No deduction shall be allowed for any contribution 
to a Roth HSA. 
‘‘(b) DOLLAR LIMITATION.— 
‘‘(1) IN GENERAL.—The aggregate amount of 
contributions for any taxable year to all Roth HSAs 
maintained for the benefit of an individual shall not 
exceed the sum of the monthly limitations for month 
during such taxable year that the individual is an el-
igible individual. 
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is 1⁄12 of— 
‘‘(A) in the case of an eligible individual 
who has self-only creditable coverage as of the 
first day of such month, $5,000, and 
‘‘(B) in the case of an eligible individual 
who has family creditable coverage as of the 
first day of such month, the amount in effect 
under subparagraph (A) for the taxable year 
multiplied by the number of individuals (includ-
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ing the eligible individual) covered under such 
family creditable coverage as of such day. 
‘‘(3) ADDITIONAL
CONTRIBUTIONS
FOR
INDI-
VIDUALS 55 OR OLDER.—In the case of an individual 
who has attained age 55 before the close of the tax-
able year, the applicable limitation under subpara-
graphs (A) and (B) of paragraph (2) shall be in-
creased by $1,000. 
‘‘(4) COORDINATION WITH OTHER CONTRIBU-
TIONS.—The limitation which would (but for this 
paragraph) apply under this subsection to an indi-
vidual for any taxable year shall be reduced (but not 
below zero) by the sum of— 
‘‘(A) the aggregate amount paid for such 
taxable year to Archer MSAs of such individual, 
‘‘(B) the aggregate amount contributed to 
Roth HSAs of such individual which is exclud-
able from the taxpayer’s gross income for such 
taxable year under section 106(d) (and such 
amount shall not be allowed as a deduction 
under subsection (a)), and 
‘‘(C) the aggregate amount contributed to 
Roth HSAs of such individual for such taxable 
year under section 408(d)(9) (and such amount 
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shall not be allowed as a deduction under sub-
section (a)). 
Subparagraph (A) shall not apply with respect to 
any individual to whom paragraph (5) applies. 
‘‘(5) SPECIAL
RULE
FOR
MARRIED
INDIVID-
UALS.—In the case of individuals who are married 
to each other, if either spouse has family coverage— 
‘‘(A) both spouses shall be treated as hav-
ing only such family coverage (and if such 
spouses each have family coverage under dif-
ferent plans, as having the family coverage with 
the lowest annual deductible), and 
‘‘(B) the limitation under paragraph (1) 
(after the application of subparagraph (A) and 
without regard to any additional contribution 
amount under paragraph (3))— 
‘‘(i) shall be reduced by the aggregate 
amount paid to Archer MSAs of such 
spouses for the taxable year, and 
‘‘(ii) after such reduction, shall be di-
vided equally between them unless they 
agree on a different division. 
‘‘(6) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No contribution may be made to a Roth 
HSA under this section by any individual with re-
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spect to whom a deduction under section 151 is al-
lowable to another taxpayer for a taxable year begin-
ning in the calendar year in which such individual’s 
taxable year begins. 
‘‘(7) MEDICARE ELIGIBLE INDIVIDUALS.—The 
limitation under this subsection for any month with 
respect to an individual shall be zero for the first 
month such individual is entitled to benefits under 
title XVIII of the Social Security Act and for each 
month thereafter. 
‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE-
COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN-
NING OF THE YEAR.— 
‘‘(A) IN GENERAL.—For purposes of com-
puting the limitation under paragraph (1) for 
any taxable year, an individual who is an eligi-
ble individual during the last month of such 
taxable year shall be treated— 
‘‘(i) as having been an eligible indi-
vidual during each of the months in such 
taxable year, and 
‘‘(ii) as having been enrolled, during 
each of the months such individual is 
treated as an eligible individual solely by 
reason of clause (i), in the same high de-
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ductible health plan in which the individual 
was enrolled for the last month of such 
taxable year. 
‘‘(B) FAILURE TO MAINTAIN CREDITABLE 
COVERAGE.— 
‘‘(i) IN
GENERAL.—If, at any time 
during the testing period, the individual is 
not an eligible individual, then— 
‘‘(I) gross income of the indi-
vidual for the taxable year in which 
occurs the first month in the testing 
period for which such individual is not 
an eligible individual is increased by 
the aggregate amount of all contribu-
tions to the Roth HSA of the indi-
vidual which could not have been 
made but for subparagraph (A), and 
‘‘(II) the tax imposed by this 
chapter for any taxable year on the 
individual shall be increased by 10 
percent of the amount of such in-
crease. 
‘‘(ii) EXCEPTION FOR DISABILITY OR 
DEATH.—Subclauses (I) and (II) of clause 
(i) shall not apply if the individual ceased 
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to be an eligible individual by reason of the 
death of the individual or the individual 
becoming disabled (within the meaning of 
section 72(m)(7)). 
‘‘(iii) TESTING
PERIOD.—The term 
‘testing period’ means the period beginning 
with the last month of the taxable year re-
ferred to in subparagraph (A) and ending 
on the last day of the 12th month fol-
lowing such month. 
‘‘(c) ROTH HSA.—For purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘Roth HSA’ 
means a trust created or organized in the United 
States as a Roth HSA exclusively for the purpose of 
paying the qualified medical expenses of the account 
beneficiary, but only if the written governing instru-
ment creating the trust meets the following require-
ments: 
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (f)(5) or sec-
tion 220(f)(5), no contribution will be accept-
ed— 
‘‘(i) unless it is in cash, or 
‘‘(ii) to the extent such contribution, 
when added to previous contributions to 
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the trust for the calendar year, exceeds the 
sum of— 
‘‘(I) the dollar amount in effect 
under subsection (b)(2)(B), and 
‘‘(II) the dollar amount in effect 
under subsection (b)(3). 
‘‘(B) The trustee is a bank (as defined in 
section 408(n)), an insurance company (as de-
fined in section 816), or another person who 
demonstrates to the satisfaction of the Sec-
retary that the manner in which such person 
will administer the trust will be consistent with 
the requirements of this section. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(D) The assets of the trust will not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(E) The interest of an individual in the 
balance in his account is nonforfeitable. 
‘‘(2) QUALIFIED
MEDICAL
EXPENSES.—For 
purposes of this section— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
medical expenses’ means, with respect to an ac-
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count beneficiary, amounts paid by such bene-
ficiary for medical care (as defined in section 
213(d) as in effect on the day before the date 
of the enactment of the World’s Greatest 
Healthcare Plan of 2017) for such individual, 
the spouse of such individual, and any depend-
ent (as defined in section 152, determined with-
out regard to subsections (b)(1), (b)(2), and 
(d)(1)(B) thereof) of such individual, but only 
to the extent such amounts are not com-
pensated for by insurance or otherwise. 
‘‘(B) LIMITATION ON HEALTH INSURANCE 
PURCHASED FROM ACCOUNT.—Such term shall 
not include any payment for health benefits cov-
erage that is not creditable coverage (as defined 
in section 36C). 
‘‘(C) 
EXCEPTIONS.—Subparagraph 
(B) 
shall not apply to any expense for coverage 
under— 
‘‘(i) a health plan during any period 
of continuation coverage required under 
any Federal law, 
‘‘(ii) a qualified long-term care insur-
ance contract (as defined in section 
7702B(b)), 
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‘‘(iii) a health plan during a period in 
which the individual is receiving unemploy-
ment compensation under any Federal or 
State law, or 
‘‘(iv) in the case of an account bene-
ficiary who has attained the age specified 
in section 1811 of the Social Security Act, 
any health insurance other than a medi-
care supplemental policy (as defined in sec-
tion 1882 of the Social Security Act). 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the Roth HSA was established. 
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(B) Except as provided in section 106(d), 
section 219(f)(5) (relating to employer pay-
ments). 
‘‘(C) Section 408(g) (relating to commu-
nity property laws). 
‘‘(D) Section 408(h) (relating to custodial 
accounts). 
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‘‘(d) ELIGIBLE
INDIVIDUAL; CREDITABLE
COV-
ERAGE.—For purposes of this section— 
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 
individual’ means, with respect to any month, any 
individual if such individual is covered under cred-
itable coverage as of the first day of such month. 
‘‘(2) CREDITABLE COVERAGE.—The term ‘cred-
itable coverage’ shall have the meaning given such 
term in section 36C(f). 
‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) AMOUNTS USED FOR QUALIFIED MEDICAL 
EXPENSES.—Any amount paid or distributed out of 
a Roth HSA which is used exclusively to pay quali-
fied medical expenses of any account beneficiary 
shall not be includible in gross income. 
‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED MEDICAL EXPENSES.—Any amount paid 
or distributed out of a Roth HSA which is not used 
exclusively to pay the qualified medical expenses of 
the account beneficiary shall be included in the gross 
income of such beneficiary. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
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any Roth HSA of an individual, paragraph (2) 
shall not apply to distributions from the Roth 
HSAs of such individual (to the extent such dis-
tributions do not exceed the aggregate excess 
contributions to all such accounts of such indi-
vidual for such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution described in para-
graph (5) or section 220(f)(5)) which exceeds 
the contribution limitation with respect to the 
individual for the taxable year. 
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‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 
USED FOR QUALIFIED MEDICAL EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a payment or dis-
tribution from a Roth HSA of such beneficiary 
which is includible in gross income under para-
graph (2) shall be increased by 10 percent of 
the amount which is so includible. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account beneficiary becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(C) 
EXCEPTION
FOR
DISTRIBUTIONS 
AFTER MEDICARE ELIGIBILITY.—Subparagraph 
(A) shall not apply to any payment or distribu-
tion after the date on which the account bene-
ficiary attains the age specified in section 1811 
of the Social Security Act. 
‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
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‘‘(A) IN
GENERAL.—Paragraph (2) shall 
not apply to any amount paid or distributed 
from a health savings account (as defined in 
section 223) or a Roth HSA to the account 
beneficiary to the extent the amount received is 
paid into a Roth HSA for the benefit of such 
beneficiary not later than the 60th day after 
the day on which the beneficiary receives the 
payment or distribution. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a 
health savings account or a Roth HSA if, at 
any time during the 1-year period ending on the 
day of such receipt, such individual received any 
other amount described in subparagraph (A) 
from a health savings account or Roth HSA 
which was not includible in the individual’s 
gross income because of the application of this 
paragraph. 
‘‘(6) TRANSFER OF ACCOUNT INCIDENT TO DI-
VORCE.—The transfer of an individual’s interest in 
a Roth HSA to an individual’s spouse or former 
spouse under a divorce or separation instrument de-
scribed in subparagraph (A) of section 71(b)(2) shall 
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103 
‘‘(ii) PRORATION
FOR
FIRST
TWO 
TIERS.—If the aggregate amount of bo-
nuses under clauses (i) and (ii) of subpara-
graph (A) for a category of Medicaid bene-
ficiaries for quarters in a reform year ex-
ceeds the limit specified in subparagraph 
(B)(ii) for the reform year, the amount of 
each such bonus shall be prorated in a 
manner so the aggregate amount of such 
bonuses is equal to such limit. 
‘‘(iii) PRORATION FOR NEXT THREE 
TIERS.—If the aggregate amount of bo-
nuses under clauses (i) and (ii) of subpara-
graph (A) for a category of Medicaid bene-
ficiaries for quarters in a reform year is 
less than the limit specified in subpara-
graph (B)(ii) for the reform year, but the 
aggregate amount of bonuses under clauses 
(i) through (v) of subparagraph (A) for the 
category and such quarters in the reform 
year exceeds the limit specified in subpara-
graph (B)(ii) for the reform year, the 
amount of each bonus in clauses (iii), (iv), 
and (v) of subparagraph (A) shall be pro-
rated in a manner so the aggregate 
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